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Printed from the Charlotte Observer - www.CharlotteObserver.com
Posted: Sunday, Jan. 30, 2011

See how 2010 sales could change your home value

By Lisa Hammersly and John Fryman
Published in: Property Revaluation
  • Visit the county's website at reval.charmeck.org. Read Observer coverage at www.charlotteobserver.com/revaluation.


  • The Observer analyzed more than 12,990 residential property sales in Mecklenburg County in 2010 and compared them against their 2003 property assessments. The study concentrated on the same sales that county appraisers use to set the 2011 property revaluation values.


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    When Mecklenburg homeowners receive their new property revaluation notices next month, county assessors say they believe "most" will see their tax values rise.

    They are reluctant to be more precise. That's because their effort to set new assessed values for the first time in eight years has been a moving target as foreclosures have steadily risen and home prices have continued to fall.

    To help you get a sense of whether your neighborhood's values are likely to go up or down, the Observer analyzed all 2010 sales of homes in the county and plotted them on a map.

    And to get a sense of how those neighborhood sales might affect the new assessed value on individual homes, the Observer is debuting an online interactive map with details of the nearly 13,000 home sales last year.

    The price of home sales and their location are key in setting tax values for 2011. In the county's property revaluation, your home's new value depends largely on the price of recent sales of similar homes nearby. If most homes like yours sold above the 2003 assessed value, your home's new property value probably will rise about the same amount.

    The analysis doesn't duplicate the full appraisal process, but will help you prepare to assess your tax value.

    "The basis is sales price," said Eric Anderson, Mecklenburg's assistant assessor. "It's a neighborhood by neighborhood process."

    The Observer's analysis of all Mecklenburg home sales in 2010 shows about half were equal to 2003 tax values or higher.

    Those sales that exceeded tax values dominated uptown, south Charlotte and northern Mecklenburg, as well as almost all the county's perimeter. Almost one in seven sales were much higher than current assessed values - at least 30 percent more.

    Below-tax-value sales were not quite as widespread. They were more prevalent in 13 of the county's 29 ZIP codes, including an arc across north Charlotte that's heavy with foreclosures and other distressed sales.

    For the first time in memory, assessors are factoring in foreclosures and other distressed sales. That's because of their rising numbers; they accounted for just over half of all home sales last year in Mecklenburg.

    The Observer's analysis and its online map include traditional market sales between a willing seller and buyer - as well as sales at foreclosure auctions, resales by investors, lenders or government agencies and forced or short sales under pressure from lenders. The study includes purchases of houses, townhomes and condos. Those are the same sales that county appraisers use to estimate new assessed values for all 280,000 residential properties. The county expects to mail those 2011 notices in February.

    The Observer talked to three county revaluation experts about how sales in your neighborhood affect your new property values: Anderson, county assessor sales analyst Phil Henderson and revaluation team leader Chuck Hicks. They also talked about the revaluation process and what the county is doing now.

    Q: In looking at home sales in my own neighborhood on the interactive map, what information would help me gauge my new tax value?

    Consider the same factors the county does.

    First, look at whether a nearby home sale and the home you live in are similar, says Anderson. "If you have a three-story home built two years ago, it won't be comparable to a Cape Cod that's 30 years old," he said.

    Compare this: square footage, age, style, condition and even building materials.

    Location is critical. The closer the sale house is to yours, the more likely it will have an influence. The county tries to look no farther than your own neighborhood. Ideally, that's your subdivision. Residential neighborhoods considered by county appraisers range from 25 homes to 1,200 and average about 250.

    County assessors also look for the most recent sales - late 2010 if possible.

    If your house is close to the sale house, and a close match in these other categories, the sales price will probably have an impact on your tax value.

    Q: How many comparable sales do I need to find?

    The county looks at every sale in your neighborhood that is similar to your house. "Every sale is a potential comp," says Hicks.

    Q: What if I can't find a nearby sale of a home a lot like mine?

    If the houses are different, you can make a rough guess on value. If your house is bigger than the nearby house that sold, it's probably worth more. The same is true if it's newer or has more amenities. The reverse is true if your home is smaller and older than a nearby sale.

    Q: What if I don't find home sales in my neighborhood?

    You may have trouble in some areas. County appraisers did.

    Their job has been tougher in the past year because Mecklenburg had a sharp decline in home sales, down to 12,990 market and distressed sales in 2010. That compares with 19,536 in 2002, when home sales for the 2003 revaluation were examined.

    So county appraisers sometimes group your neighborhood with other neighborhoods similar in style, age, price and square footage. These neighborhoods might compete with yours for the same homebuyers. Sometimes county appraisers also have to look at late-2009 sales to find something comparable.

    Q: How can those older sales, or sales outside my neighborhood, tell me what my home is worth now?

    Appraisers have formulas to adjust the values for the differences. The adjustments for Mecklenburg homes are designed to come up with a market value for each house, townhome and condo as of Jan. 1, 2011.

    Q: I've read that foreclosures and other distressed sales are up. Should I count them when I look at the sales map?

    Yes. The county counts them, and you should, too.

    "Every sale in the market area is a potential comp if it shares similar attributes" with your home, Hicks says.

    The more distressed sales, the heavier their impact will be.

    Distressed sales such as foreclosures usually sold below tax value last year. If your street and neighborhood have mostly foreclosures, they'll set the market value.

    The same is true if you see mostly market sales in your area, which are more likely to be above the 2003 tax value. The newspaper's interactive map uses the county's data to classify each sale as "market" or "distressed."

    Q: How can I tell if my property taxes are going up or down?

    Naturally, that's the question we all want answered. But you can't know anything for certain now. Tax rates are decided by county commissioners, city councils and town boards later this year, usually by July 1.

    Meanwhile, here's how to think about home sales, your home's value and what it could mean for taxes.

    The county's revaluation staff expects the median home assessment will go up 6 percent to 8 percent. That means half of homes will get property values that are greater than that increase; half will be lower.

    A 6 percent to 8 percent median rise in property values suggests that if your value rises by that amount - and government officials set a tax rate designed to keep revenue close to the current year's levels - your taxes would stay about the same. If houses like yours are selling for a lot higher percentage over their 2003 assessed value - say, 20 percent, 30 percent or more - you shouldn't be surprised to see your taxes go up. The same holds true for steeply lower assessed values; those owners probably would have lower tax bills.

    Q: What factors do assessors look for when setting values?

    What the county does revolves around three different methods:

    Sales comparison approach. That's the method the Observer's interactive map is designed to help you understand. It's also the central one the county uses for your revaluation estimate. It looks at sales near each property. It requires county appraisers to scrutinize every sale to learn of any issues - such as a seller in a hurry - that would keep it from representing true market value.

    Construction costs. The county is required to complete one set of estimates based on how much money it would take, at current material and labor costs, to replace your structure with an exact replica. These costs are then depreciated based on the age and condition of the home, the county's revaluation website says. The estimate also includes land value.

    Income approach. This is typically used to estimate the value of income-producing properties. It looks at operating expenses, taxes, insurance, maintenance costs, and the return most people would expect on such kinds of property.

    Q: Why are county staff predicting that most homeowners' property values will go up?

    They point out that current residential tax values are based on home sales prices in 2002. Home sales prices rose in many areas until about 2007. Then with the financial industry crisis, growing unemployment and rising foreclosures, they have dropped every year since.

    The respected Standard & Poor's/Case-Shiller index that analyzes housing data across the nation says Charlotte's home prices are now at 2004 levels, Hicks says. Even with that decline, he believes they should still be ahead of 2003 revaluation levels.

    Q: When do we get our new revaluation notices?

    The county plans to begin mailing them around Feb. 7. The staff is still finalizing the numbers. Henderson, in fact, expected to review them this weekend. The revaluation effort has been slowed by falling sales prices in 2010, including the rapid rise in distressed sales. County appraisers had to wait for the latest home sales data, then scramble to rework assessed values.

    Q: If I think my tax value is too high, how can I appeal?

    The county is expecting as many as 40,000 appeals. A form will be included with your new assessment. Forms must be returned within 30 days, with a date posted on your tax notice.

    You should appeal only if there's a basis for believing the county's estimate is wrong. You'll need to be specific, such as pointing out errors in your home's square footage or other factors. Or you need to point to sales of similar properties that suggest a different assessed value.

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