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[fusion_dropcap boxed=”no” boxed_radius=”” class=”” id=”” color=””]A[/fusion_dropcap] significant part of my practice recently has been performing commercial tax appeal appraisals. So, the 2019 IAAO convention in Niagara Falls came at the perfect time. I was able to visit with assessors across the country about tax appeals and was ready to listen and learn.
One of the takeaways was the similarities between the fee and mass appraisal world when it comes to providing individual reports and oral testimony during the commercial property appeal process. While not all states require a USPAP Standard 1 & 2 report, but many do. When USPAP is required, the hearing process is one of the few times the fee and assessor worlds intersect. They are placed on the same field, playing the same game by the same rules. (Being a Kansas City Chiefs fan, the football analogy only seems natural right now.)
This type of work can be exciting and like other forms of litigation work, can be stressful. But, you also learn a lot about the appraisal and legal process along the way. Further, you get an opportunity to defend your opinion while watching others defend theirs. Above all, you will grow as a valuation professional during the process.
3 Keys to Defending a Commercial Tax Appeal
1. Be competent.
Know the rules for state statutes and how they apply in the property you are valuing. Likewise, be knowledgeable about prior rulings/cases and requirements. Many jurisdictions require the following: effective date of January 1, a valuation of the fee simple interest, and a definition of value based on state statute.
Similarly, you need to know the overall market. Stay in touch with local market participants including real estate agents, developers and fee appraisers by building a network. These people appreciate knowing someone in the valuation profession. Being cooperative will go a long way in your information gathering process.
In addition, know the property type and submarket. What are the trends and projections? Lots of free information is publicly available. Further, don’t forget to use information provided by third-party experts, such as other fee appraisals on similar properties. Likewise, always follow the golden rule: be objective and unbiased.
Finally, stay informed of appraisal standards. It is important to understand generally accepted appraisal practices within the industry.
2. Ensure your data is accurate and relevant.
Firstly, compile and organize accurate data from reliable sources. The data you provide in hearings must be error-free, clear and accurate. Use a quality technology product to prepare for hearings. It will help you avoid errors and maintain consistency. In addition, don’t overwhelm the reader with extra information. Rather than include data gathered for another purpose, use only the data relevant to the property being appraised. Including long cap rate studies and other attributes gathered during mass appraisal can bury your point. There is no substitute for concise analysis and opinions. If you know your market and have accurate data, this becomes much easier.
Use technology that allows you to present the information clearly and be confident in your report. Less time double-checking the math means more time to focus on your analysis. A crisp single-property narrative appraisal report will make a stronger case – and do it in just a few pages. So, take advantage of the most up-to-date report-writing technology. This will help guarantee your accuracy during your commercial property appeal process. Also, it will help you make a persuasive case to the judge.
3. Prepare yourself.
Most importantly, there is no substitute for preparation. Go over your report with your hearing officer or attorney in advance. Know your attorney’s strategy so you know the expectations when giving testimony. In addition, familiarize yourself with the types of questions typically asked by opposing counsel during a commercial tax appeal. It can be helpful to observe a hearing/trial in your jurisdiction ahead of time. Moreover, let the attorney know the strengths and weaknesses of your analysis so they can prepare in advance.
Meanwhile, on the date of the hearing, dress professional but comfortable and arrive early. Familiarize yourself with the hearing room. Certainly, bring a hard copy of your report and work file even if they have been provided digitally. I find it easier and less distracting to have a hard copy of the report in front of me rather than trying to use a laptop. Now, relax knowing you have reduced the chance of unforced errors because your report is sound and well supported.
About the Author
Tim is CFO at realquantum and the president of Keller Craig and Associates, a commercial real estate appraisal firm with offices in Overland Park, Lawrence and Topeka, Kansas. Tim has been an expert witness in numerous condemnation, tax appeal or other litigation issues. Read his bio here.
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Realquantum helps assessors and the appraisers they work with create rock-solid cases in matters of commercial property tax appeal. The realquantum database and calculation engine empower you to prepare and successfully defend more tax appeals. Are you ready to see how your jurisdiction could benefit? Sign up for a demo today.
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