Andrew Wetzel's Musings

November 30, 2020

2020 Delaware County PA Reassessment Results

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The court-ordered Delaware County (PA) reassessment project is nearing its conclusion.  When  completed, the County will have a total value for all of its over 203,000 parcels of Real Estate.  Then they will determine the “millage rate” or tax due per thousand dollars of Real Estate owned needed to generate the tax revenue required to fund the different parts of government including school districts.

I served on 1 of 5 auxiliary tax reassessment appeal boards and have reported on various aspects of my experiences including the purpose of the process and suggestions on how to appeal your proposed assessment.  The purpose of this report is to provide an overview of my board’s results.  I have no way of knowing how these compare to the other boards nor do I know what happened after my board rendered its decisions.  Those whose appeals were rejected had a final opportunity to appeal our decision.  Some may have accepted our decision or decided to wait to see what happens to their taxes.  Perhaps some whose appeals were accepted decided to appeal further, seeking an additional reduction.

As far as my experience, our board remained intact for 26 days of hearings, we were scheduled to hear 1389 appeals, 329 appellants did not report for their hearing (23.7%), 59 appeals were withdrawn after being scheduled, 13 scheduled appeals were re-scheduled and we actually heard 988 appeals (71.1% of those scheduled).  493 (49.9%) of the appeals were done virtually, meaning over the phone.  18 of the appeals resulted in our not making a decision due to their complexity so we referred them to the Board of Assessment.  Few appellants used attorneys.  In a number of cases, both in-person and virtually, a school district sent an attorney to observe or listen.

In a number of our hearings it was a school district appealing the proposed assessed values, seeking to raise them which, while perhaps adversely affecting individual property owners, spread the school tax burden more uniformly.  Only a few property owners appeared to refute their school district’s argument and some of them were able to retain the County’s proposed assessment.

A significant number of appeals were accepted.  The people who came prepared, generally succeeded.  The best preparation consisted of one of two strategies:  appraisals, if based on the July 2019 timeframe, substantiated the contention that the proposed assessed value overstated “market value” and pictures demonstrated that the County had an incorrect view of property condition, especially when the interior of the property was in “below average” condition since the process relied on exterior views.  Unfortunately, for a variety of reasons, too many came to their hearing unprepared to document their case, with many assuming that the new assessment would proportionately increase their tax burden.

While a few questioned the “constitutionality” and/ or purpose of the project, many seemed unaware of the basic information that had been provided by the County.  Board members are County residents so we got the same information as the appellants.  The County and the media provided a lot of information about the process as well.  Admittedly, I realize that different people interpreted the information differently but I do not know why so many did not realize that they had the burden of proving the new value incorrect, coming to the hearing expecting us to make a change based solely on what they told us.  It did appear that some of the confusion lessened as the project progressed which suggests that people heard from others who had already had their appeal.  At the very least, there was one final appeal after our involvement.

I had an opportunity to discuss how one school district’s appraiser arrived at their value and proved something that I raised with several property owners.  As I have reported before, a number of property owners attempted to appeal their proposed assessment by using an argument based on “price per square foot” which we generally denied as not being an “apples to apples” comparison of supposedly similar properties.  The school district appraiser I mentioned used that as a method to complete his assignment.  He stated that he had not visited any of the properties in question, that he relied on public records for lot size and living space and that he reduced his comparables to a “price per square foot” to arrive at what he thought was a “fair market value” for the properties in dispute.  Please keep in mind that the property owners will get a chance to refute his argument and I am not sure why so many did not attend what they were apparently advised was a hearing to raise their assessed values and therefor their tax burden.

I asked the appraiser directly about using “price per square foot”, specifically suggesting that it did not account for different “property conditions” that might influence a prospective buyer.  He agreed that it (and therefore, he) did not factor property condition into his conclusion.  A lender’s appraiser or one hired by a homeowner would have entered and viewed the “subject property” although the current pandemic has apparently resulted in some “drive-by” appraisals.  As far as the reassessment project itself, it was physically impossible for the process to include in-person visits.

Overall, I found this an interesting process and came away with several thoughts to share.

  1. While using “market value” as a way to levy taxes makes sense, there is no perfect way to analyze and categorize over 203,000 parcels of Real Estate given their having different layouts,  locations and uses.  Even if in-person visits were used, we have different opinions and there would be too much subjectivity.  Numbers are objective and provable although predicting a future buyer’s behavior is impossible;
  2. The process used to arrive as a basic assessment makes sense and, given that the property owners were provided with information to dispute as far as what the County had on record for their property and their proposed assessment/ valuation, I am not sure what else could have been done.  Many owners never reported errors until the hearing and many did not show up or canceled their hearing for whatever reason.  Owners can appeal their taxes every year and many may decide to do that next year if they are not happy with their tax rates in 2021;
  3. The process relied on the last assessment and employed a variety of tools to compare the current property to what was “known” during the last assessment in 1999/ 2000.  I believe that many properties likely remain under-assessed for a variety of reasons and do not know how to remedy that.  Computer algorithms can only do so much.  If improvements are made without “permits”, errors will occur.  Vacant land presented issues.  We had about 50 lots whose assessments were questioned but the amount in question was usually significant.  The technology used “assumed” that most of the lots were “buildable” and considered them “primary” space, assessing them as such.  However, if it was proven or obvious that land was unbuildable, we reduced its assessment.

We also saw a number of interesting anomalies that defied the algorithm.  We saw instances where a property owner owned two adjoining parcels with one being a vacant lot.  In one case there was a house that sat partially on both parcels which the system picked up as two parcels with structures on both.  The owner said he received tax bills for both parcels but that he was not over-taxed.  The reassessment could have created an issue.  We also saw cases where a property owner essentially rendered their “extra lot” unsaleable and wanted the lot’s assessment lowered even though it was their action, unintentional as it was, that essentially rendered the lot unsaleable.  In one case an owner installed a driveway on an adjoining lot to access their residence which was situated on the adjoining parcel.  In another, a property owner installed a patio enclosure that ended at the boundary between the two parcels in conflict with a “set back” requirement that would have affected both properties had they been separately developed.  When an owner owns an adjoining lot, you have to ask why they bought it.  While it may be too small to build on or have some other defect that renders it unbuildable, it does add value to their residence, even if only for privacy, so the issue is not as clear cut as some might want to suggest.

All in all, while I found this process interesting, I have to admit that I was not prepared for many of the sad stories we heard, largely centered on whether property owners could afford to remain owners after their taxes were raised.  As I mentioned earlier, many assumed that their taxes would rise in proportion to the change in their assessed values.  It was very typical to see an assessed value double simply due to the change in “target dates” between reassessments.  Regardless, it is always sad whenever a property owner fears losing their home, especially when their concerns may be unfounded.

Reassessments are rare so I wonder how long it will be before the next one.  How many of the people we met will be asked to go through the process again?  Hopefully, we prepared them for a final appeal.  The purpose of reassessment boils down to fairness and uniformity:  property taxes should be objectively levied based on relative property value and not any subjectivity.  The County is not allowed to see a windfall as a result of the process but the tax burden will be reallocated with some seeing a reduction, some seeing an increase and some remaining consistent.  I wonder how many bought or are in the process of buying without having any idea what their taxes may be let alone knowing that the County has even been undergoing a reassessment.  My personal experience with prospective sellers and buyers proves this. Regardless of how their hearings turned out, my board attempted to make sure that everyone understood the origin of the reassessment, meaning that it was court-ordered, that they knew that the goal was to assess everyone based on the July 2019 “fair market value” of what they owned to ensure that their tax burden was “fair and uniform” and that there was another appeal if they disagreed with our decision.  We also explained what we were looking for in terms of proof that the County number was incorrect.  While some were disappointed and blamed others for their not understanding the purpose of the process or their hearing, many did seem to appreciate our explanations and thanked us for taking the time to help them better understand the overall process.

November 28, 2020

Delaware County PA October 2020 Residential Housing Report

Bright MLS has released their Residential Market Statistics (which they call Local Market Insight) for single family homes in Delaware County Pennsylvania through October 2020.  If you would like information about this or any other County or any specific municipalities in the Delaware Valley, please contact me.  I am only a text, email or phone call away!  I respond promptly to all inquiries.

The overall market continues to be affected by the pandemic and resulting economic impact.  However, generally speaking, the results in many areas are encouraging and, as always, your experience may differ depending on your location and how you have been personally impacted.  As I always say, the decision to buy or sell Real Estate is a personal one and the current environment typifies that.

The report compares current year-to-date results to one-year ago, same time period.  As with all Real Estate statistics, two things are true.  First, the performance within individual zip-codes can and will vary significantly from the overall County.  Real Estate is local and results can vary from neighborhood to neighborhood and even block to block.  There is no such thing as a “national” Real Estate market any more than there is a national weather forecast so, whether you may be thinking about selling or buying, please contact me for details about your areas of interest.  I can provide current information and keep you informed about the evolving market.  Deciding whether it is the right time to sell or buy is a personal decision typically involving a number of variables.  I can provide the knowledge and insight to help you decide what works for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data is stale.  This is especially true if you are relying on Internet valuation models which use recorded data rather than up-to-date MLS information.  Even then, while a sale may be reported as settled or closed today, the real question is when was the offer negotiated?  Typically, sales can take 45 to 60 days to close so the market today may be different.  Up-to-date information, even if not perfect, is important!

As far as the statistics, there were 7282 units listed for sale through October 2020 compared to 8133 listed through October 2019, a decrease of over 10%.  Low inventory levels are the cause of related data points.  There were 5684 closed sales through October 2020 compared to 5879 through October 2019, a decrease of over 3%.  The median selling price through October 2020 was $250,000 compared to $227,500 through October 2019, an increase of almost 10%.  The large decrease in properties being listed had a relatively small effect on the number sold while substantially increasing their selling prices.  Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

Generally speaking, low inventory levels in some areas have produced multiple offers and a frenzy among buyers, some of whom may live to regret a hasty decision to get a property under contract.  During the shutdown when “in-person” Real Estate activity was not permitted, many buyers made offers “sight unseen”, some without inspections to improve their odds.  The effects of that remain to be seen but Real Estate, perhaps with the exception of those acquired strictly as “investments” with documented income, is generally not something given its expense and complexity that the typical buyer would want to purchase without an in-person showing let alone removing the protection of an inspection contingency.  Technology, however advanced, has its limitations.

What about the properties that did not sellMany came off the market and remain unavailable.  As the pandemic has evolved, some properties did come back on the market but many have not.  Did owners delay, change or give up their plans?  Buying activity has been strong but the sellers may be reluctant to allow showings or may have issues they are dealing with.  My only concern is whether people are making an informed decision or reacting to what they “think” is happening in the market.

For example, I recently sat on an Auxiliary Tax Assessment Appeal panel and heard almost 1000 appeals by people generally questioning whether their proposed assessed value is realistic or not.  While I understand their concern about how the new assessments based on July 2019 market values will affect next year’s tax bills, many are saying that the pandemic has lowered selling prices which is a debatable statement.  Whether true or not is easily demonstrated but, regardless, the new assessed values are based on July 2019 long  before the current pandemic was known.

Buyers and sellers need to do the same planning and preparation that those tasks typically require.   Anyone looking to sell or buy needs to understand their local market and decide how to react to the pandemic as a “variable” that was not here last year and, hopefully, will be gone in the near future.  However, the effects of buying and selling remain for years.  They are important decisions and likely require the knowledge and insight that a professional can provide.

I tell my clients that I cannot guarantee that their house will sell if it is on the market but am fairly certain that it won’t if they take it off the market.  Anyone trying to sell now may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

Despite the pandemic, every house will not sell.  Houses may get showings without generating offers unless buyers think they are priced within the range of their perceived “worth”.  Most property listings whose contracts are canceled or allowed to expire have asking prices considered high for their market and/ or they were poorly marketed, meaning that some buyers and agents may not have even known that a house was available to look at or purchase.  Some buyers may even make “full price” offers just to control the process only to have remorse later as inspection results are revealed. Of course this may well depend on the ratio of buyer and sellers so there is more to this than raw statistics.

If a market has a lot of inventory, some buyers may not be willing to look at houses priced high compared to the rest of the market:  why try to negotiate a price down when other similar properties are available at more competitive prices?  Many sellers open to negotiating their price will never get the chance.  I will be happy to discuss specifics with you.

The overall economy is coming back but many are still hurting financially.  Statistics aside, what are you planning to do?  Real Estate is generally a long-term investment unless you are looking to fix and flip it or planning to move within a short period of time.  There are opportunities out there.  As with the stock market, it is very difficult to pick the best time to make a move.  All you can do is get the best available information, determine what is in your best interests and then start the process.  I am a phone call or email away and getting started is easy once you take action.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are planning for the first time, it is never too early to start the planning and preparation.  Please do not wait for what you think is a better or the best time to start.  Buyers look all year long and can only see and buy properties that are available to see.  Based on what we experienced this year, is waiting for Spring something you would consider?

There is no time for inexperience, empty promises or false expectations! 

HIRE WISELY:  We are not all the same!

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