Andrew Wetzel's Musings

May 22, 2021

The Type of Market and How it Affects Searching for Price

I recently wrote a blog on “Multiple Offers” and how two different agents viewed them.  I want to explore one of their comments further.  One agent said that multiple offers are the result of pricing a property too low.  While I don’t agree, I do feel that there is something to this.  Let me explain.

Suppose an agent is working with a buyer “pre-qualified” and comfortable spending up to $300,000 on a house.  Pick any price.  What “price range” should they search?  I say “range” because no one would search for one specific price.  You can start at a certain number or go up to a certain number.  This is why pricing is different than before we had the Internet.  Agents have to “factor in” what a consumer may be thinking rather than trying to interact with the mindset of an experienced, trained and educated agent.  Let’s start with the minimum first.

For some buyers, such as investors, I do not set a minimum.  They may be open to considering whatever is in their search results and open to driving by or studying what I send them to eliminate houses that do not appeal to them.  Buyers looking for their next home, especially if they are financing the sale, may need to pick a starting point to meet their needs and abilities as well as the requirements of their financing.  Some houses simply need too much work.  How far they look below their “top number” depends.  Sometimes the areas that interest them or the features they include will provide some guidance.  Otherwise, they may evolve into “knowing” that anything below $x is a waste of time.

What about the top end?  They are “pre-qualified” and comfortable spending “up to $300,000” so why wouldn’t that be the number?  This is where it gets tricky.  The market will suggest or dictate what you should do if you want to succeed.  In a buyer’s market, if houses are getting less than full price, you can search higher than their top number.  That does not guarantee success as there may be competition even in “slower” moving markets.  A seller may still want full asking price.

In a seller’s market, when houses are getting more than full price, you may want to search lower than $300,000, expecting to have to raise your offer, if given the chance.  In a hot market every house will not sell so this is not a blanket statement but you may not succeed by offering full price.

The MLS offers data comparing the selling price to the opening and final asking prices.  However, “data integrity” may be lacking if incorrect information is entered, possibly impacting the overall report.  An agent has to look “within the numbers” to see what is really happening with pricing.

A buyer needs to know their financials, including their comfort level, and an agent needs to interpret the market so that they can properly advise their client.  How much to offer is still the buyer’s decision.  In some markets, offering “full price” will get a house “under contract”.  In other markets, the “asking price” is where the bidding starts.  The price is either a ceiling or a floor.  Ultimately, prices have to appeal to buyers, agents and appraisers.   Even cash sales have some parameters.  Sellers set the asking price and buyers determine the value.

That being said, some sellers and their agents purposely underprice a house to expose it to more people in the hope of generating multiple offers.  As I often say,  Real Estate is not retail!

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

HIRE WISELY:  We are not all the same!

April 24, 2021

My Buyer’s Offer Did Not Get Accepted. What Can They Do? Part 2 of 4: The Search

Whether you are starting the process of buying a home, actively engaged in house hunting or you have already been denied a house you wanted, I want to share some time-tested advice.  I am going to cover this from four perspectives.  This is part 2 of 4, The Search.  This is a broad topic with no “one size fits all” answers.  My advice comes with two disclaimers:  this is not intended as legal advice and it is not meant to interfere if you have an existing business relationship.

I provide my buyer-clients with knowledge that I have gained through my years of experience, training and education.  I have also learned a lot by conducting mediations between buyers and sellers and listening to ethics complaints about agents.  Fundamentally, I believe that the process of buying or selling Real Estate is best looked at as a business decision, not a personal one.  It is also not a retail transaction.

Looking for a house can become a full-time job but it is worth it.  Your life will get back to normal after you succeed.  Bad decisions can be costly and their effects can last a long time.  How long do you plan to live in your “next home”?  Real Estate is typically our largest investment so buying or selling it requires planning and preparation.  It deserves our full attention.  How a buyer and their agent conduct “the search” will help determine the outcome.  Is the buyer convinced that they are aware of every house that is a potential match?

As I discussed in part one, Planning and Preparation, I suggest that buyers do three things before they even start looking at houses and this includes not visiting open houses or looking online.  Once you have hired an agent, spoken to a lender to determine your financial comfort level and thought about your “needs” and “wants”, you are ready to move forward.  There is no guarantee of success but working on those three items can be a real asset later.  All you can do is put yourself in the best position to compete.  The search then becomes the focus.

If you have not already set up a search, now is the time.  If you already have one set up, I suggest you re-evaluate it.  Your search criteria may change so I suggest that you keep your agent informed so that they know what you are looking for.  You may even have more than one search set up.  My point is that you and your agent should be searching for the same properties for you to consider.  Otherwise, you may miss an opportunity.

For many buyers, the initial search results can be overwhelming:  do not get frustrated or complacent with the number of possibilities or how to evaluate them.  You will likely find that many are not real matches so do not think that a high number of search results guarantees accuracy or ensures success.  Some of the houses on the list may already be under contract or close to it:  you are not the only one seeing the information.  On the other hand, there are probably houses you might like that do not appear in your search results.   I will cover this further in part 4 but will tell you that any search results are only as good as the information a listing agent uploads and the criteria a buyer or their agent uses.  This is why searching on your own can be deceiving.

If there are only a few houses in your search results, you can wait to see if any house sales fall through and what houses come on the market.  Or, you can revisit your comfort level or your wants and needs to try to expand your options.  Your time frame and patience will determine what you do.  If there are many houses, you may want to consider adding to your search criteria or prioritizing the list before starting any showings.  Again, do not take comfort in thinking you have many options.  In either case, do not feel pressured into pursuing the best of a number of bad choices.  Buying a house is a major life decision.

Buyers need to stay on top of new and updated property listings.  Again, you are not the only one getting this information.  Where and how frequently you get information are things to consider.  You need to decide which houses to visit unless you are willing to make an offer “sight unseen”.  Showings add a potential new task to the list and it frustrates some buyers.  Let me explain what I mean.

I have shown buyers just one house while I have shown a few buyers as many as 20 or so houses during one tour.  I have found that showing a buyer about 5 houses makes a good tour if there are that many to see.  This allows buyers to take their time and remember what they saw.  A tour should not be a race to get done.  After the initial search results, unless a buyer makes a major change to their criteria, you may only see a house or two on any given tour and that is fine.  Waiting until you have more to see only allows other buyers to get there first.

If there are 5 or fewer houses in your search results, we should try to see them all.  Of course some may already be under contract or our schedule may conflict with an owner’s which can create an issue if you really like one we see but you want to wait to see one or more we couldn’t get in to see.  What do you do?  If you wait, the one you like may be sold to another buyer and you may find that any you waited to see were not right for you.

Suppose there are 10 houses in your search results.  We could try to see them all but let’s assume that we need to go out twice.  If a buyer has prioritized their list from “best to worst”, they may have eliminated some and we can start looking at the best.  Then, if they see something they like during our first tour, they may be able to commit to making an offer knowing that the remaining houses did not measure up to what we saw.  In slower markets you may be able to see a house a second time.  You may want to compare two or more or have someone whose opinion you value take a look.  In hot markets, especially with low inventory, there is little time to waste.

How buyers prioritize their list is subjective but technology has made it easier.  The MLS and Internet allow more pictures and longer descriptions than in the past.  That being said, some agents use far too many pictures while others upload no pictures at all or only a few.  Some delay uploading pictures:  do you wait to see them?  Many listings have pictures of low quality but at least a buyer gets to see more than they could years ago.  The MLS and Internet can really help with eliminating houses instead of wasting your time and effort.  Every day you spend looking at houses that you don’t like could let another buyer get one you would have liked.  Buying Real Estate can be very competitive.  It can be like shopping on Christmas Eve for that new toy.

If there is time, especially if we will need to go out several times to see all of the options, I encourage buyers to drive by houses first so they can prioritize where to start showings.  This is especially true if the pictures or description are lacking.  The initial search results tend to offer the most possibilities which means more drive time than may be needed later.  Future results will likely be fewer in number making this easier.  Some buyers just want to get inside and question why they should take the time to drive by.  When you buy a house, you are buying the neighborhood and a lifestyle.  I have had many sellers tell me they wish they had spent more time looking to see if a better option were available.  Some just wished they had bought a different house.  Their houses tended to be harder to sell and provided lower equity than others they might have bought.

Driving through neighborhoods on your way to see houses on your list will help you learn more about different areas and your potential neighbors, especially if you are looking in unfamiliar areas.  In addition to gathering information, you may even see a “For Sale” sign on a house not yet listed.  I have had buyers add or eliminate areas to their searches based solely only on their driving through neighborhoods.  The better informed and more comfortable a buyer is, that goes back to planning and preparation, the better off they will be when they commit to making an offer.  Hesitation and indecision are not good, especially when there is competition.  Driving by houses is a great way to prioritize the list.  Some buyers may need to consider compromising between the best area and the nicest house.  You can change or update a house but the neighborhood is what it is.

Ideally, when a buyer finds a house they really like, if they have done the planning and preparation and are satisfied with how we have searched for options for them to consider, they will feel more comfortable making an offer.  They may learn something later that affects their decision which is why we have contingencies like property inspections.  Looking online is not the same as walking through a house and, unless you are a contractor, you won’t have a complete understanding of a house after a showing.  Again, this is not retail.  The process has several steps, allowing buyers and sellers opportunities to change their mind.  If there is doubt when making an offer, it can get magnified later.

As I mentioned earlier, house sales fall through putting some houses back on the market and new listings will appear.   Perhaps a price reduction makes a house an option that was not there before.  A buyer can wait, hoping or expecting something better to come along.  Maybe it does; maybe it doesn’t.  If a sale falls through, what happened?  Is there an inspection report available or was there a financing issue?  In general, how is the market evolving during your search?  Are prices rising, stable or falling?  What is the trend in the interest rate?  Any of these can add pressure, especially if you are not completely comfortable with what we are doing.  There is a lot that goes into buying Real Estate!

The simple fact is that there are many variables when it comes to identifying houses to consider buying and how to react to the information you have.  Some are controllable; some are not.  The challenge may seem endless and the “fun” aspect can evaporate.  All any buyer can do is put themselves in the best possible situation to identify and react to any choices they have.  They may or may not have a lot of time to see a house or decide whether to make an offer.  They should not assume they will have a second chance to reconsider how interested they are.

Any buyer can readily get a lot of the data and information from numerous sources but most need a professional to provide the knowledge and insight required to navigate the entire process.  When is it time to stop and make a decision?  Once you think you have identified the BEST house for you, how do you get to own it while protecting yourself if something goes wrong?  In part 3 I will discuss The Offer.

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

HIRE WISELY:  We are not all the same!

April 16, 2021

Is it a Better Time to Sell or to Buy Real Estate in Spring 2021?

As is usual, my best answer is it depends!  Can the answer be a “tie”?  I would like to think that when Real Estate is sold that both people “won” but Real Estate is a competitive process where two people have opposite if not adversarial motives.  No buyer ever said I want to give the seller as much money as possible unless, of course, they know there is competition or they intend to use their successful offer as leverage to negotiate something to their benefit later such as inspection results.  No seller ever said they wanted to give a buyer the lowest price unless they wanted to dump the property or intended to make no repairs.  Most sales happen between those extremes.  Getting to settlement is another matter.

The market today, Spring 2021, is as competitive as I have ever seen and I have been doing this since 1996.  The years from 2003 through 2008 were fairly hectic but that was a true “bubble” fueled by government manipulation to increase home ownership that relied on loose lending standards which financially destroyed many of the buyers it was supposed to help.  Sadly, many who bought were not really qualified to manage the finances and, frankly, many flippers took advantage of the market and sold bad rehabs.  I could go on but my main point is that this is NOT what is happening today.

Today is very different.  The market has been created by a combination of perpetually low interest rates, extremely low inventory and pent-up demand delayed by the pandemic.  Lending standards appear to be solid so buyers are better situated today, at least financially.  That being said, this cannot go on forever.  Interest rates have been rising slightly but there is plenty of money to lend.

Two significant variables are likely to change.  One is the number of buyers.  If this is anything like the “bubble years”, buyers have jumped off and over the proverbial fence and decided to buy earlier than they had been planning.  Sooner or later the market runs low or out of qualified buyers and I hope that does not result in easing lending standards.  The other variable is the inventory level.  My best guess is that the number of properties for sale will rise once whatever is holding owners back changes.  Just as the number of buyers was inflated by a number of factors, I believe that owners have been held back by a number of factors.  These diverging trends produced what we are seeing today.

Real Estate depends on “supply and demand”:  buyers and sellers are on opposite ends of a proverbial see-saw.  The supply of one often exceeds the supply of the other causing prices to rise and fall.  Competition drives prices up; excess inventory drives them down.  External factors like interest rates, the general economy and other variables like a pandemic play a vital role.  So back to the original  question, is it a better time to sell or to buy?  Let me break it down this way.

I believe that the group that has or had the most to gain in the current environment are the owners of properties which they were not selling to buy something else.  I call these “extra” properties.  Whether they are vacant, used for investment or the owners were willing to go into a rental or some other arrangement, those owners only had to focus on getting the most they could for their property.  What they achieve is determined by their understanding of what is going on and their risk tolerance.  Did they sell too soon or did they wait too long?  Many will regret missing the opportunity to “cash in”.

While I value home ownership and embrace the concept of owning compared to renting, I fear that the group who may have the most to lose are the buyers who jumped in without really thinking long-term.  It is nice to talk about building equity and owning a home for almost the same monthly payment as your rent but home ownership is more complicated than numbers.  A home purchase decision can easily become regrettable if one or more of the following happens:  you spend your savings for a down payment and suffer a loss where your savings are needed, you buy without doing the legwork to see if a neighborhood or house fits your lifestyle (having to resell in the short term can be costly), you made an offer you come to regret (did you buy “sight unseen” or waive inspections to make your offer more competitive?).  Long term, Real Estate tends to be a great investment.  However, the short term is more volatile.  Either way, you have to live somewhere but Real Estate is an investment and subject to risk.

Don’t get me wrong, private home ownership is one of the many blessings we have in America.  However, with any opportunity comes responsibility.  Buying Real Estate is an emotional decision justified with logic.  “Normal” markets generally allow a buyer time to really consider whether it is the right time for them to buy and whether a specific house really fits their “wants” and “needs”.  You may have time for a second showing or to have family and friends take a look.  Sadly, I have worked with many sellers who told me they wish they had bought another house.  I have heard many stories of how they made their decision, what they wish they had done differently and how their decision impacted their life.  Where you live affects the quality of your life.  A poor decision can rob you of equity.

The current market does not generally allow a lot of time to think and ponder, let alone compare your options.  It may compel buyers to make unwise offers they may come to regret.  I have heard many buyers respond to being told that a seller accepted another offer by saying “it wasn’t meant to be”.  That is a great response, especially if they meant it.  I have also seen people react as if their world were crumbling.  I try to prepare my clients as best I can and hope that they are ready for the process.  Planning to buy Real Estate requires a serious commitment and can be like a full-time job.

If the last frenzy was any indication, I suspect that 10 to 15 years from now, some of today’s buyers may find that their house is worth about what they paid, no more and hopefully no less.  At least that means that they “broke even”.  You have to live somewhere.  After 10 to 15 years of paying rent you walk away with nothing and, chances are, your rent has gone up dramatically.

On the other hand, unless they are forced to sell, I don’t see sellers reminiscing about a house they sold, wishing they could get it back.  Cars have that effect but not houses.  That is not to say that all sellers succeed.  Their motivation or sense of urgency may cause them to accept an offer that was not the best.  On the other hand, patience is a virtue but it can be expensive.  Contingencies within an offer can cost them money even if the price seemed nice.  A seller needs to be informed about the market just as buyers do.  Are they more focused on the money they achieve or how long it takes to sell?

There is one more group to consider:  the seller who needs or wants to sell one house to buy their “next home”.  In this market, they may be facing an uphill battle especially if they have competition.  That type of contingency can really impact the process.  It also impacts prospective buyers for their house.  I see listing contracts expire or get canceled because a seller wants a buyer to give them time to find a house or they want a short-term rent-back.  Any of that may be a concern for buyers.

If a seller is buying their “next home”, aside from how they manage an agreement with their buyer or the seller of the home they like, they need to compare their market with that of their “next home”.  It may be a great time to sell, convincing them that they may never have another chance to get what this market offers.  However, what will their “next home” cost them?  One of the ironies I have seen a number of times is the owner who expects top dollar for their home and thinks they can get their “next home” cheap.  There is a serious disconnect there.  On the other hand, while the two processes have to be coordinated, I have seen sellers who really needed to reduce their asking price but refused to even consider it.  If a reduction makes buying impossible I understand that but ego can get in the way.  If the seller’s property’s market value is flat or declining and the cost of buying is rising, we have a conflict.  Every day, week or month that passes is costing them more than they are gaining.  Some sellers are willing to rent so that they can sell and, ideally, buy later when prices stabilize, whatever that means.

Buying or selling as a single, disconnected act is one thing.  No one can predict what tomorrow will bring and decisions always look clearer in hindsight.  Tying a sale to a purchase or a purchase to a sale takes the game from checkers to chess and expands the thinking.  The possibilities can be endless!  All you can do is get the best information you can, decide what you want and need to accomplish and know when to make a move or when to hold back.

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

HIRE WISELY:  We are not all the same!

My Buyer’s Offer Did Not Get Accepted.  What Can They Do? Part 1 of 4: Planning and Preparation

Whether you are thinking about buying a home, are actively engaged in house hunting or you have already been denied a house you wanted, I want to share some time-tested advice.  I am going to cover this from four perspectives.  This is a broad topic with no “one size fits all” answers.  I strongly believe that planning and preparation will put you in the best position to identify houses that may interest you and, when you find one, maximize your opportunity to own it.  There are many variables in the home buying process, some of which you can’t control.  I encourage serious buyers to control what they can.

My advice comes with two disclaimers:  this is not intended as legal advice and it is not meant to interfere if you have an existing business relationship.

Let me start with the premise that a buyer (or perhaps you) made an offer and it was rejected.  If a buyer makes what they think is a reasonable offer and the seller does not accept it, they should have no regrets.  Easy for me to say.  If yours was the only offer, I would assume that you had a chance to negotiate but that you could not reach a mutually beneficial solution.  If you were competing with other buyers, only one offer could win.  Did the buyer have the right expectations about the process and how it might go?  Could or should their agent or the listing agent or the seller have done anything differently?

If the seller was given an opportunity to review all offers and was properly informed of any possible interest that existed and they accepted what they thought was the best offer, there may be no valid  reason to complain about the outcome.  Every signed agreement does not close so you may get another chance, if you want one, but do not assume you will.  In fact, depending on the type of Real Estate market, you may want to assume that you will not have a chance to change your initial offer.

I provide my buyer-clients with knowledge that I have gained through my years of experience, training and education.  I have also learned a lot by conducting mediations between buyers and sellers and listening to ethics complaints about agents.  Fundamentally, I believe that the process of buying or selling Real Estate is best looked at as a business decision, not a personal one.  It is also not a retail transaction.

Looking for a house can become a full-time job but it is worth it.  Your life will get back to normal after you succeed.  Bad decisions can be costly and their effects can last a long time.  How long do you plan to live in your “next home”?  Real Estate is typically our largest investment so buying or selling it requires planning and preparation.  It deserves our full attention.

I suggest that buyers do three things before they even start looking at houses and this includes not visiting open houses or looking online.  The goal is avoid being teased or distracted.  They may not even be consciously thinking about buying a house.  If they are, most buyers want to jump right in.  Frankly, looking at houses and imagining “what if” is the fun part although that can “get old” really fast especially after an offer has been rejected or terminated.  Easier said than done but if they see something they like and want to schedule an appointment or make an offer without really being prepared, the “process” can be frustrating, especially if a better prepared buyer likes the same house. 

So what are the three things?  They are all part of the “planning and preparation” that any serious house hunting requires.  If you fail to plan and prepare, you need to be prepared to fail.  Is failure an option?  What constitutes failure anyway and what happens next?

The order may vary but here is what I suggest doing:

  1. Hire an agent.  You want an experienced, trained and educated agent to protect and promote your interest throughout the process.  Sellers have an agent, so should you.  Hiring an agent includes related topics like understanding agency representation, contracts and the agreement of sale.  We do more than open doors and write offers.  You can find a lot of information about buying and selling Real Estate on my website AndrewWetzel.com.  Having agents you will not hire show you houses can be a problem, especially if you find the right house with the wrong agent.  I understand that committing to one agent, especially at the beginning of the process, seems challenging.  Tell us your concerns and let’s have a conversation.
  2. Get financially pre-qualified with a local, reputable lender.  Local and reputable are important.  I believe that only a live person can provide the information and service you will need.  Be wary of online offers, advertisements and “teaser” rates.  They may be “too good to be true”.  The interest rate is important but what are the total costs?  Do NOT overlook the quality of the service.  A serious buyer needs to know how much they can borrow, what it will cost them and, in some cases, whether they can actually get a loan.  Many buyers learn that they cannot get financing or that they need to do some work to get a loan.  It will be very frustrating if you learn either of these after finding the house of your dreams.  Some buyers may want to get a larger loan so they can buy a house they really like rather than settling for less.  Once you learn how much you can borrow, you need to determine your comfort level in terms of the monthly payment and your out-of-pocket expenses.  Knowing your comfort level will help determine the price range to search.  The type of market will complicate this:  is a seller’s asking price the “floor” or the “ceiling” for negotiating?
  3. Determine your “needs” and “wants”.  What is absolutely NON-negotiable?  Locations, schools, the number of bedrooms and bathrooms and other factors are important for most buyers.  “Quality of life” issues require some investigating and that can take time.  What would be nice to have?  Needs and wants add cost to a purchase.  Some buyers need to consider “trade-offs” or reducing their expectations while others can add to their “wish list”.  Your search criteria may change but you need a starting point to focus your attention.

Once you have managed these three, you can set up a search, start reviewing the possibilities and take action to own your “dream house”.  If there is competition, there is little time to waste getting into houses or making a decision.  Of course, if you have already started looking, you may have a search set up.  Now would be a great time to re-evaluate the search criteria. 

In part two, I’ll discuss the search for your first or “next home”.

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

HIRE WISELY:  We are not all the same!

April 5, 2021

My New Audio Course is LIVE on Listenable.io

I received an email from the staff at Listenable.  They provide an online platform that offers “powerful, bite-sized audio courses authored by well‑loved experts”.  They said:  “Congratulations on launching your first course on Listenable!  We’re excited to have you on board!  We sincerely appreciate the work you’ve done to create such an outstanding course and we are proud to have you on the Listenable team.”

I am happy and excited to add my content to their impressive lineup of courses.  The title of my course is “The Basics of Selling Residential Real Estate”.  Why did I create it?

My passion for Real Estate led to my writing blogs and recording podcasts.  Someone at Listenable heard my podcasts and contacted me to ask if I would be interested in creating an audio course for them.  The subject matter was up to me and this topic seemed an obvious choice.

As I have learned over the course of my career as well as through my involvement in various roles within the Real Estate community, Real Estate is not rocket science by any means although many make it far more complicated than necessary.  The process of selling or buying residential Real Estate generally involves a number of basic steps that must be completed in order to succeed.  Hiring a professional should increase your chances for success.  Our experience, training and education can provide the knowledge and insight typically needed to navigate the home selling or buying process.

My course consists of 13 lessons averaging about 8 minutes each.  I break the steps of selling Real Estate down into “the basics” and explain what we do and why we do it.  My goal is to take some of the mystery out of what people think we do and clarify it so that the typical listener will be more comfortable with the process.  I discuss the entire selling process from hiring an agent through settlement/ closing.  I hope that you will listen to it and recommend my course to people you know.

Here are the lessons:  The “Five Steps to Selling Real Estate”; Hiring an Agent; Preparing Your House for Sale; Marketing Your House to Sell; Pricing Your House to Sell; The Listing Contract; Your House is on the “Active” Market; Congratulations, You Have an Offer; Contingencies; Closing the Sale.  I included two “bonus” lessons:  Andrew’s Time-Tested Real Estate One Liners and The Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS.

Here is a direct link:  https://listenable.io/web/courses/380/the-basics-of-selling-residential-real-estate/   To enjoy14 free days of Listenable, use this link:  https://listenable.io/?rf=CMO1BEOO

I have an extensive catalog of blogs and podcasts posted on several websites including my primary site AndrewWetzel.com.  If you haven’t followed them, I encourage you to give them a try.  If you have read and listened to my material, thank you.  I will keep adding new content.

Best wishes and thank you for listening and reading!  As always, I am a phone call, email or text away if you have any questions.

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

HIRE WISELY:  We are not all the same.

December 5, 2020

2020 Delaware County PA Tax Reassessment Results

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 time frame, 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!

October 25, 2020

Delaware County PA September 2020 Local Real Estate Market Insight

Bright MLS has released their Local Market Insight statistics for all single-family homes, meaning both detached and attached, in Delaware County Pennsylvania through September 2020.  If you would like more detailed information about Delaware County 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 and 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.

This 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, if you are 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 have the experience to provide you with the knowledge and insight critical to helping you decide what works for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data are 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?  Many sales take 45 to 60 days to close, sometimes longer if there are issues, so the market today may be different.  Up-to-date information, even if not perfect, is important!

As far as the statistics, there were 6417 properties listed for sale through September 2020 compared to 7370 listed through September 2019, a decrease of 12.9%.  Low inventory levels are having a major impact on the Real Estate market in many areas, with many buyers competing.  There were 4893 closed sales through September 2020 compared to 5296 through September 2019, a decrease of 7.6%.  Compare units listed to closed sales and it is obvious that many houses did not sell.  The median selling price through September 2020 was $250,000 compared to $230,000 through September 2019, an increase of 8.7%.  Interestingly enough, all statistics just for September 2020 are much improved over September 2019, suggesting that the market has continued to rebound after a sub-par spring.  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.  I still see people who regret decisions they made or did not make during the last boom.  During the shutdown when “in-person” Real Estate activity was not permitted, many buyers made offers “sight unseen” or without inspections.  The effects of that remain to be seen but Real Estate, perhaps with the exception of properties 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 and inspections.  Technology, however advanced, has its limitations.

What about the properties that did not sellMany came off the market and still remain unavailable.  As the pandemic continues to evolve, 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 other issues they are dealing with.  My main concern is whether people are making an informed decision or reacting to what they “think” is happening in the market.  As always, some opinions are just that.

For example, I am sitting on one of five Auxiliary Property Reassessment Appeal panels in Delaware County and to date my panel has heard over 600 appeals by owners questioning whether the new assessed value assigned to their property is realistic or not.  Many who purchased their homes during the past few years are telling us that they overpaid for their homes and they are questioning why their assessments are being based on what they actually paid.  It remains to be seen how people buying this year feel going forward.

Buyers need to do the same planning and preparation that buying always requires.  Selling involves the same planning and preparation as in the past.  Anyone looking to sell or buy just 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.  The reassessment adds another dimension of uncertainty as far as what your tax rate will be going forward.  As always, the effects of buying and selling remain for years.

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 any 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 property was available to look at or purchase.  I have recorded a blog and a podcast on that very subject based on two very recent experiences, one with a seller and the other with a buyer.  Some buyers may even make a “full price” offer 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 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.  An educated consumer faces better odds than a lucky one!  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 doing it 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.

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

HIRE WISELY:  We are not all the same!

October 3, 2020

Data Integrity: How Accuracy Impacts Searches and Profits

“Data integrity” ensures that reported information is accurate and can be relied upon.  In Real Estate this could be the status of a property, the price, the type of property and its features.  The importance of accurate information cannot be overstated as people make costly decisions based on what is reported.

A seller needs a “ready, willing and able” buyer to complete a sale.  Buyers “acquire” Real Estate information from a variety of sources.  They expect that all properties matching their search criteria will be in their search results so that they can evaluate them and decide whether to take any action.  Suppose they get wrong information or they do not know that a property is available?  They may never get to see it so they cannot buy it.  Houses may sit on the market unsold causing the listing agents to ask the sellers for an unnecessary and costly price reduction which reduces their proceeds but does not make it any easier for buyers to find their property in their search results.  Think Google search.

Errors will affect a market analysis for both sellers and buyers.  Sellers looking to price their property according to its location, features and condition may rely on bad information causing them to overprice or underprice their property.  Their house could sit on the market unsold or they could accept less than they should have.  Buyers need accurate information when deciding how much to offer a seller.

Houses that do not sell typically have a pricing or a marketing problem.  By marketing I mean wrong or missing “searchable” property features, missing or poor-quality pictures and missing or poorly written property descriptions/ remarks sections.  In addition to excluding properties that really matched their search criteria, poor marketing may cause buyers to dismiss properties because they “look” bad.

Bad information can also impact the mortgage appraiser.  They evaluate selling prices based on reported comparable sales.  They rely on and verify what is reported but how would they know if something is missing?  Appraisers rely on pictures, features and the public remarks to try to identify the prior sales most similar to the house they are appraising.  What is the cost of inaccurate or missing information?  If relying on bad information makes it appear that a buyer paid too much, their sale may stop unless the seller lowers their asking price OR the buyer comes up with more money OR they somehow work it out.  Mortgages are based on a percentage of the appraised value so errors matter.

To conclude, data integrity is a BIG deal.  Many sellers have wasted months or even years on the market when they really had little chance of selling given the inaccurate information.  I call these “fatal errors”.  Marketing exposes property information to potential buyers, their agents and anyone else who may need or want to rely on what they hope is accurate information.  Garbage in; garbage out!

The Internet has made this more complicated.  Most buyers “shop” online, many even after hiring an agent.  The MLS syndicates property information to the major search engines.  If the MLS information is inaccurate, this magnifies the problem because the information is going directly to the consumer, unfiltered. Your printout is literally like a resume.  Unless your house is on a well-traveled street exposing your “For Sale” sign to lots of traffic, the MLS and Internet may be the only ways anyone will know you want to sell.  Does that make you feel comfortable?  What is the cost of delaying your plans or being asked to accept less money than you should?  What does your printout look like?

I recently met two couples looking to work with me, one to buy and the other to sell Real Estate.  Both plans involved my searching the market to identify comparable properties.  Let me briefly discuss my experiences with both.

First let me discuss the buyers.  They are ready to buy their first home, have saved the necessary funds, done a little exploring on their own and are ready to conduct their search.  We discussed their budget, their “needs” and their “wants”.  Fortunately, my experience enabled me to share how the best search can get messed up because listing agents or those they utilize to upload the details of their property listings often enter incorrect information or, just as bad, incomplete information.

These buyers had two specific “wants”:  a porch and a yard.  I performed a search without those features, found 26 “results” and sent them to my clients.  Then I did two additional searches, adding the two specific “wants” separately.  I found only 3 listings that showed there being a porch and only 3 showing some yard.  I knew that seemed low but never expected the results to be so wrong.

I looked at the more basic search with 26 results and identified an additional 17 properties with porches, raising the real total to 20, and found an additional 21 properties with a yard, raising that total to 24.  How pathetic!  If I wanted to take the time I might review the pricing history to see how long the incorrect listings had stayed on the market and then to see how many took price reductions.  The bottom line is that I assume nothing:  porches and yards are salable features but not present on every home so not entering them when they are present can be costly.

The other couple is looking to sell a 4-unit building.  It features a large lot with a detached 2-car garage and ample parking so nothing is truly comparable.  However, determining a range of potential pricing should not be as difficult as it was.

Using my experience, I knew that I had to start my analysis by looking at multi-unit properties without specifying the number of units.  When I do this I often find “commercial” properties, meaning they offer more than 4 living units, but that did not happen here.

My search identified 22 properties.  7 were listed as offering 2 units; 1 was listed as 3 units; 1 was listed as a 4 unit.  All were correct but there were 22 in the search results?  13 properties were listed as only having ONE UNIT!  So sad and so avoidable!  My best guess is that the people who uploaded the data thought “unit” referred to “buildings” and not leased, income-producing units.  Who entered the information?  Did the property owners know?

Of the 13 errors, 11 offered 2 units and 2 offered 3 units.  Had I been searching specifically by number  of units and not known better, I would have missed information that could be helpful to these sellers.  I wonder if any buyers missed these 13?

One additional point.  Only 7 of the 22 showed annual income, an important measure used by investors.  I understand that some of these buildings had vacant units but think it important to enter “projected rent” rather than assuming that every investor knows the area they are searching.  Many investors own Real Estate located far from where they live.  One agent actually had the monthly rent instead of the annual rent.

The bottom line is that buying and selling residential or investment Real Estate can be challenging enough without hiding property from people.  Data integrity issues can cause buyers to miss the best listings and some sellers may take needless price reductions when price may not be an issue. 

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

HIRE WISELY: We are not all the same!

July 16, 2020

Delaware County Residential Property Reassessment 2020

On July 1, 2020, property owners in Delaware County PA were mailed letters advising them of their new “assessed values” to be used starting with the 2021 tax year.  This began the formal tax appeal process.  I have heard from many, especially on social media, concerned that their taxes may skyrocket given how much their “assessed value” had risen.  I empathize and ask people to remain calm.  There are additional steps to follow.

Taxation has ALWAYS been a point of contention for Americans going back to our founding.  However, I am finding that, with the combination of the pandemic, social protests, the economy and the upcoming election, some may not have been paying much attention as the reassessment process moved forward and they are now shocked as it starts to “get real”.  Reading both sides of the mailing should provide some comfort but many focus only on their assessed value and what it could mean.  Let me provide some background.  There is ample information available for anyone who wants to learn more and now is certainly the time to get engaged with the process.

Delaware County was last reassessed in 2002.  That was a major undertaking.  The current process seems easier because the information is more current and technology has improved.  There are over 203,000 parcels to assess so every property could not be visited.  Property owners have had two opportunities to appeal the new valuation.

The reassessment was court-ordered after two families filed lawsuits alleging that the system of determining assessments was not fair.  As a REALTOR I am very familiar with the complexity of trying to be uniform in determining assessments, especially across municipalities and with respect to new construction.  The judge ruled that assessments were so inconsistent that they violated the state constitution.  Property taxes are an “ad valorem” tax, meaning that they should be uniformly levied in proportion to property value.  The goal was to make the process more transparent by using “market value”, while specifically preventing a tax windfall to the County.  That is unlike what happened in Philadelphia and differs from what happened in the County in 2002.

Several steps were taken to determine a property’s value as of July 2019.  Owners were mailed initial paperwork to review to see if the County “knew” what they actually owned.  There was an “appeal” process if there was a disparity.  Now that the “final” values have been mailed there is a second, formal “appeal” process.   The last day to appeal is September 1 with all appeal hearings to be concluded no later than October 31 so that the new assessment rolls can be certified no later than November 15.  Only then can they can determine the millage and the actual taxes.

The “burden of proof” rests with the property owner to provide competent and credible evidence that their valuation is incorrect.  An appraisal is not required but can be very helpful as far as meeting the “burden of proof” standard necessary and an owner may wish to hire an attorney.  Absent an appeal, or if someone does not report for their hearing, the assessor’s value is presumed correct.   I have heard some say that they do not feel comfortable with the appeal process and I can appreciate that but that is how the system works.  Facts, not presentation skills, will determine the outcome.  If your value “appears” reasonable, you may decide to do nothing.  That is your choice.

The goal is to arrive at a County-wide assessment total.  Once that is established, the County will need to link that with their budget by determining the “millage”.  Only then will individual property owners have the opportunity to know their tax liability.  NOTE:  this article pertains only to residential properties.  While all parcels are part of the process, valuing non-residential properties follows different guidelines.

Two final points.  First, the new assessment is based on market value which explains why it “rose”.  The last assessment was based more on generalities such as square footage meaning that two similar properties could be assessed and taxed similarly even though one was “distressed”.  I have seen that in my Real Estate business.

Second, appeals are permitted every year based on an advertised schedule.  If a property owner misses an opportunity they will have another one but will risk overpaying until then.  I respectfully encourage everyone to remain patient, follow the deadlines and let the process play out.

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

HIRE WISELY:  We are not all the same!

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