Buyers find relief to costly hints of homes' past worth

Appeals soar as market value sinks far below assessments

  • "It just makes you feel like, 'Lord, I'm being held up without a gun,' " says Richard Landis, 68, who bought this house in Anne Arundel County for $165,000 last spring, but the state -- for tax purposes -- values it at $268,000.
"It just makes you feel like, 'Lord, I'm being… (Baltimore Sun photo by Jed…)
December 13, 2009|By Jamie Smith Hopkins |

Richard Landis bought a house in Anne Arundel County for $165,000 last spring, but the state - for tax purposes - values it at $268,000. The disparity isn't, so far as he can tell, because he got a screaming good deal. It's because the state last assessed his neighborhood two years ago, before prices really began to fall.

"It just makes you feel like, 'Lord, I'm being held up without a gun,' " said Landis, 68.

So he appealed, rather than wait another year for assessors to return to his Severn neighborhood.

Local real estate experts call it a little-known option, but more and more Marylanders are realizing that they don't have to wait for their turn in the three-year reassessment cycle to challenge the state's figures.

Such "petitions for review" jumped from fewer than 5,200 for the last tax year to more than 15,500 for the current one - especially from the recent buyers, second home owners and real estate investors who do not benefit from a tax break aimed at longer-term owner-occupants. Most Baltimore-area assessment offices are seeing similar numbers of petitions coming in now for the next tax year, which begins July 1; the deadline to file for a review is Jan. 1.

"We're sitting at about 1,200 residential petitions," said James W. Roesner, supervisor of assessments in Baltimore County. "Before this recession hit, we only got about 300 total. That would be a typical year before the bottom fell out of the real estate market, and at that time, most of those were commercial."

Baltimore-area home sale prices in November were 16 percent lower on average than they were two years ago, and some communities have seen much sharper drops. That has struck some firms as a business opportunity.

Dominion Properties, a Baltimore real estate investment company, has been appealing the assessments of so many of its rentals and rehab projects that it recently started a service to appeal other people's properties. Advantage Title Co. in Eldersburg opened Advantage Tax Appeals a year ago after many home-buying and refinancing clients asked about the process.

Barbara Floyd, who started the Glen Burnie-based Property Tax Reduction Specialists in 1991, an earlier down market, said business is definitely up.

"It's not trying to cheat the government of what they're legally entitled to, but there's no reason you should be paying more than your fair share," she said. "The assessment people will tell you that, too."

Some see national - and lasting - potential. Charlie Walsh founded the Seattle-based ValueAppeal this year to offer an online appeal-assistance service for $99. The firm covers five counties in three states so far, with plans to expand into other markets, including Baltimore, next year.

Walsh, who has a master's degree in real estate development from the Massachusetts Institute of Technology, said studies suggest that the mass-assessment process used by government agencies invariably misses the mark on a large chunk of properties, even when the market isn't rapidly changing.

"I don't blame them," he said. "It's just not feasible to do it any other way. But one of the things that's beautiful about real estate is that each individual property is unique."

Landis, a retired signalman for CSX, appealed because he doubts he could resell the small house he bought in April for the $165,000 he paid for it, let alone the $268,000 assessed value. It's being taxed on $242,000 of that amount this year, but an increase to the full amount is scheduled in July as part of the normal three-year phase-in process. That would mean a $250 increase over this year's tax bill, and $1,000 more than if the assessed value equaled his purchase price.

Landis said he's never appealed a property assessment before, "but I thought that was just too much."

He's appealing more for his son than for himself. Landis, who lives a few houses away from the newly purchased property, is in the process of transferring it to the state trooper, who wasn't in a position to buy when it hit the market. The next tax bill will be Dwayne Landis' to pay.

Jordan Takas, 32, who went to Advantage Tax Appeals to handle his petition, moved from one home in Canton to another this year and is trying to get the assessment on the first one lowered. He thinks he has a good argument: The assessed value is $454,000, but he got "no offers, no bites" when the property was on the market last summer for $5,000 less.

"The assessments in the city are somehow, in this horrible real estate market, going up," said Takas, a medical-device salesman.

Absent intervention, his taxable assessment will rise slightly in July as part of the phase-in process. He's especially interested in lowering the figure, and thus the tax bill, because he thinks it would help him sell. The annual property tax tab comes to about $10,000, which he figures is a turnoff for buyers.

Takas also expects to appeal the assessment on the home he moved to, about $250,000 above the price he paid.

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