The site values were extracted from sales that took place in 2004 and 2005. Fortunately (or unfortunately, if you live in the area) there has been no increase in the average sales prices of homes in that market area for several years; in fact, the average sales prices have stabilized after years of decline. What, then, is happening to the property taxes of the people who live there? Have they gone down to reflect the change in the market? What should we say to an appraiser who states in his appraisal that he is basing his opinion of site value on the Auditor's assessed values? And how much confidence can we place in Automated Valuation Models (AVMs) that crank out their value estimates based on Public Records data?
Let's compare the extracted site values, from the actual sales, to the Auditor's appraised values for 2001, 2004, and 2006 from his data base and see:
Parcel | Extract | Auditor 2001 | Auditor 2004 | Auditor 2006 |
#1 | $4,003 | $2,810 | $8,020 | $8,020 |
#2 | $4,797 | $2,100 | $5,920 | $5,920 |
#3 | $4,381 | $2,660 | $7,290 | $7,290 |
What about the actual land sale on 3-17-2004 for $5,500? Well, it turns out that it resold to a builder on 11-30-2004 for $3,500. Hmmm. That was not an open-market sale, and we don't know if it was at arm's-length. It does, however, fit the pattern. The Auditor's 2001 value was $2,340, the 2004 value was $1,600, and the 2006 value ( a new house was built on the lot in 2005) was $8,020. Did the bare land suddenly become more valuable just because a new house was built on it? If the house were destroyed and the land put up for sale, would you buy it at the new value?
Every six years, Auditors in Ohio are required to do a reappraisal of all real estate. The last reappraisal occurred in 2001, and Auditors across the state are currently compiling their new numbers this year. The Auditor's appraised site values for these properties jumped 280% - 285% between Tax Years 2001 and 2002. This may have been a result of fraudulent property flipping by investors in this market (which this appraiser has been aware of since 1998), and may also have been partly a result of Federal government statistics which show increasing sales prices, also influenced by those fraudulent, non-arm's-length transfers.
The dirty little secret is this : the Auditor does not appraise homes at market value. He is not bound by the Uniform Standards of Professional Appraisal Practice, and does not typically employ licensed or certified appraisers. He relies on data from other government agencies to build his computer models for valuation, and cranks out a number. Property values across Ohio have stabilized (best case) or declined since the end of 2005. The data collected by the government is always outdated by the time it filters down to the agencies that use it. Will the 2007 Auditor appraised values reflect the boom years of 2002 - 2005, or will they reflect current conditions in 2007? Only your checkbook will know for sure.
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