Are appraisers on the same page as the assessor? - by Richard Seman

The purpose of this article is to address problematic or confusing issues which may help assessors and appraisers to better understand how to value real estate for tax assessment purposes. 

This article is based on my experiences as a residential real estate appraiser for 40 years and a municipal assessor for over 25 years. In my two professions, I have found many misunderstandings, which have led to significant confusion with the valuation of properties. Issues include how assessors and appraisers value real estate, revaluations and appraisal considerations for the Board of Assessment Appeals (BAA). 

This article is not intended to be all inclusive but to touch on a few issues so that both professions can get a better understanding of each other’s thought processes. 

Real Estate Valuations. Most assessors are primarily administrators with real estate valuations being a part of their responsibilities. The certification process of a Connecticut Certified Municipal Assessor (CCMA) includes successfully completing at least two real estate valuation courses. However, assessors generally don’t have the expertise of a certified or a professionally designated real estate appraiser. In contrast, appraisers focus on valuations, which typically gives them more expertise in property valuations. Assessors often rely on the expertise and experience of specialized appraisers, such as those who specialize in the valuations of cell towers or supermarkets. 

Revaluations. Each town in Connecticut is required by state statute to re-value all properties in their jurisdiction every five years. Each town is on a separate revaluation schedule. The effective date for all revaluations is October 1^st of the revaluation year (this should be the effective date for the assessment appeal appraisals). Most towns contract with a revaluation company to re-appraise each of the town’s properties. However, the assessor is ultimately responsible for defending the values/assessments. Revaluations typically do not use the sales comparison approach for residential properties. Revaluation mass appraisals are based on residential cost modeling, considering cost, depreciation and land value. On the other hand, when appealing a residential property assessment, appraisers typically use the sales comparison approach. 

Appeal Process. Each property owner has the right to appeal their assessment. In reviewing appraisals for the BAA, I frequently see issues with the appraisals. When property owners question their assessments, I first review the property field card with the owner and ask if all the information is correct. I suggest the appraiser do the same. Both appraisers and assessors need to have the physical components correct (dwelling size, bathroom count, etc.) before the valuation is performed. If physical characteristics of the improvements don’t match the field card the valuation may not be supportable. Based on my assessing experience, assessors will correct a field card for a factual error when it is brought to their attention. In other words, you should approach the assessor first about factual errors, possibly avoiding the need to go to the BAA. 

Appraisal Reports for the BAA. I recommend to property owners who are considering hiring an appraiser for an assessment appeal to ask for a two-phase appraisal. The first phase is for value finding. If the estimated market value supports the assessor’s value, then there is no need to spend time and money for the second phase of the assignment. If the appraiser’s value is significantly lower than the assessor’s value, the second phase is creating an appraisal report with supporting documents and analysis to present to the BAA. Additionally, some property owners and appraisers present their case to the BAA by appealing their assessment just on the land value or the improvement value. Based on my experience, the BAA and potentially a judge want to know what the entire property is worth. In other words, it may appear the appellant is cherry picking the appeal with segregated values. 

Appraisal Audience. It is important for the appraiser to tailor the report to the intended client and use. This should be evident throughout the entire report, not just listing the owner of the property as the “client.” Please avoid some of the boilerplate and tone down the lending industry jargon. The opinion of value should be supportable and in language that can be understood by lay people, since assessors and BAA may lack practical appraisal experience. Know your audience.

The appraisal must conform to USPAP, i.e. the Uniform Standards of Professional Appraisal Practice, but keep it simple. Only employ exhibits and include photos that have relevance to support the value estimate. The report should not be written to satisfy Fannie Mae and Freddie Mac guidelines. The BAA members, or potentially a judge, will only be distracted from the value and supporting information with excessive exhibits and required lending underwriting comments such as “well and septic systems are common to the area.” Remember, less is more. 

Furthermore, I don’t see a problem of using form reports for assessment appeals; however, the reader of the appraisal should not be inconvenienced with having to look in a different section of the report to see what “C4” or “Q2” stands for. When possible, keep all the relevant information and comments together. For instance, rather than referring to addendums, explain the sales comparison approach reconciliation on the same page as the adjusted sales. This makes the report much easier to read. 

Conclusion. The assessment and appraisal fields are different. Nevertheless, when the two professions overlap, each profession should have a basic knowledge of the other. The goal is to be on the same page in understanding property valuations for assessment purposes. 

Richard Seman, Jr., SRA, is designated appraiser with the Appraisal Institute with an independent appraisal practice in western Connecticut. Credit: Tom Caputi, appraiser/assessor, contributed to this article.