Are your property taxes really correct?

Oct 28, 2022

In this episode, we talk all about property taxes with Steve Anderson. Steve has been a licensed real estate broker in Oregon since 1988. Since 2011, he has represented over 2,000 taxpayers at boards of property tax appeals, over 300 taxpayers at Oregon Tax Magistrate Court, and over 100 taxpayers at Washington Boards of Equalization hearings. From 2015 to 2019, he hosted  "The Property Tax Avenger Show," a weekly radio call-in show on the AM radio station KBNP 1410.

 

Steve discusses whether or not you should appeal your bill and breaks down the appeal process. If you’re looking to save money on property taxes, listen to this episode now!

 

[00:01 - 05:28]  How to Appeal a Property Tax Bill

• Steve tells us his background
• He explains the appeal process in detail
• Don’t wait too long to challenge the bill you received
• The appeal is based upon a value that the assessor has come up with on the property
•  The majority of appeals are resolved without going to trial, but a small number do go to trial
• The difference between the local-level and state-level appeal process

 

[05:29 - 08:43] Dos and Donts When Filing an Appeal

• Ensure that the appeal makes sense for you and the property
• Pay attention to sales in the neighborhood if it’s residential or sales in the community if it's a commercial property
• Be aware of comparable sales or appraisals on the property for that particular timeframe
• If it's below the real market value on the assessment, that's a good basis for an appeal

 

[08:49 - 16:28]  Understanding Property Taxes

• For pre-buys, it’s important to study the market and the potential tax bill
• Consider the county employee turnover rate and that you’re probably dealing with different people all the time
• Get advice or representation from people who have local knowledge
• The initial review is usually free or very low cost
• Run from people who guarantee results
• Educate yourself as a property owner and make a decision based on the information that you have

 

[16:29 - 17:29] Closing Segment

• Reach out to Steve! 
• Links Below

• Final Words

Tweetable Quotes

 

“The way I do that is I make sure I have a clear conscience going to bed and not taking advantage of people.” - Steve Anderson

 

“When the market is negative, which I've been involved with, the county doesn't seem to chase that value down as the market does.” - Steve Anderson

 

“Someone like myself can break in and look at the marketplace locally and get a apples to apples comparison on your property.” - Steve Anderson

 

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Connect with Steve Anderson at [e-mail] and 5038694349 and visit propertytaxavengers.com. 

 

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Want to read the full show notes of the episode? Check it out below:

 

[00:00:00] Steve Anderson: Well, the county comes up with a value for the property every year to send you out a statement saying, we either believe it's going to be this amount or it is this amount, one or the other. And then you have a certain amount of time after that letter sent to you to either challenge it or agree. If you don't want to challenge it, you agree to it, okay? And the biggest problem is a lot of my clients don't know that, and so we need to kind of, you know, let them know, Hey, look, you've got 10 weeks or two months or whatever it is to respond to this and file the appeal. And the appeal basically is based upon a value we come up with on the property. So it might be based on comparable sales, might be based on our appraisal on the property, might be based on the purchase of the property itself.

[00:00:47] Sam Wilson: Steve Anderson is a property tax appeals specialist. Steve, welcome to the show. 

[00:00:52] Steve Anderson: Thank you, Sam. 

[00:00:53] Sam Wilson: Absolutely. Steve, there are three questions I ask every guest who comes in the show, in 90 seconds or less, can you tell me where did you start, where are you now, and how did you get there?

[00:01:01] Steve Anderson: I started in 2007. I was approached by the local county to be on the proper tax appeals board there. I did that for four years for over 2000 cases as a hearings officer. And then in 2011 I started to hang my shingle out and help taxpayers ,that I think they're getting a very good shake with the tax appeals board and the assessors. And so doing that now for 11 years, we work in Wilton, Oregon, and Washington. We're the largest filer in Oregon, both as local level on state level. And we've helped thousands of customers save millions of dollars in property taxes. 

[00:01:29] Sam Wilson: That's great. I know that's music to practically everyone who's listening to this show. Property taxes are by and large, I think almost every investor's largest expense. So, you know, I think this is obviously worth paying attention to. Steve, I just have some questions for you about the process. You mentioned their hearings officer, a bunch of things that kind of made me go cross-item, probably a lot of your clients do. But can you break down what is the property tax appeals process in a nutshell? 

[00:01:58] Steve Anderson: Well, the county comes up with a value for the property every year to send you out a statement saying, we either believe it's going to be this amount or it is this amount, one or the other. And then you have a certain amount of time after that letter sent to you to either challenge it or agree. If you don't want to challenge it, you agree to it, okay? And the biggest problem is a lot of my clients don't know that, and so we need to kind of, you know, let them know, hey, look, you've got 10 weeks or two months, or whatever it is to respond to this and file the appeal. And the appeal basically is based upon a value we come up with on the property that assessor has. So it might be based on comparable sales, might be based on appraisal on the property, might be based on the purchase of the property itself. You would think the county would just go ahead and adjust those values. They don't because obviously just doesn't benefit then. So that's what we do here. And our review process pretty much is, free to the client. I want to qualify that we don't do multifamily projects. We don't do you know, shopping centers for free, but we'll charge you by the hour. But if that's a single-family dwelling or single-tenant commercial, typically, we do that for free, give back to you, recommend what we think we should do, what the value is and what the potential savings are. And then if they decide to engage us, we go forward. 

[00:03:02] Sam Wilson: And when you go forward, what's that process with the city or the county? 

[00:03:07] Steve Anderson: Typically, you file an appeal. In Oregon, you're pretty much required to have an interior inspection of the property. So we coordinate that with the property owner. We actually attend on their behalf. A lot of my owners don't even show up for this. They just give me a key or leave a key somewhere, and we go through the property and look at it with the county. There, they're going to take pictures of the property looking for verifying square footage, looking for a condition, that kind of stuff of the property. And after that takes place, typically we start negotiating back and forth on based off that inspection. And 95% of our cases get resolved for they go to trial. But we've also very picky about what we select. There's properties that we look at and go, this isn't worth fighting. There's just not money here to make it worth our while to be involved and, or you know, do you really want the county to come out there and look at what you have that they don't know about 'cause there are things, you know, we can run the spreadsheets on properties that weren't weren't ever, you know, permitted or additions on properties weren't ever permitted, that kind of stuff. And I advise my clients, potential clients, look, don't, don't file, because they're going to come out there and they're going to add value over what they're at right now, and I don't want to do that to you. So that's what I kind of do. 

[00:04:10] Sam Wilson: That's really interesting. So you guys file the appeal, you said 95% of them get resolved without ever going, and you use the word to trial?

[00:04:19] Steve Anderson: Right.

[00:04:20] Sam Wilson: The other 5%, what is going to trial mean? 

[00:04:23] Steve Anderson: Well, at the local level, we meet with a three-person board here in the county, and this, we, we submit a value and the county submits a value. We go from the board and kind of arm wrestle over that value back and forth. I use that word loosely, but yeah, we go back and forth on what the value really should be. The county war makes the decision. It's an independent third party. It's not presumed up for the assessor. There are three local citizens-based taxpayers that are appointed by the county commissioners. At the state level, the tax court, we have magistrates and judges there that we submit and file property information to there, and we actually have physical trials there. We actually go down to, in our case, about 50 miles away, we go down to a courtroom down there and testify and have, you know, appraisers and that kind of stuff too, testified too. But I haven't been in the state tax court in about three years. Then we filed 59 cases there last year. So that gives you an idea of our ratio there. Although I foresee it happening this year, we probably have more cases next year going to trial than we did this year, so, or in the last two years, I should say.

[00:05:17] Sam Wilson: Got it. That's really interesting. Thanks for breaking that process down. I know for a lot of us, that's probably something that we don't deal with on a daily basis. So I think just understanding the mechanics of how, you know, these get resolved. So Steve, I guess the question I have for you is you mentioned that there are projects that aren't worth looking at. You gave an example there of, hey, you know, maybe there's, you know, more buildings on the property than what maybe we're committed, things like that. We don't want to increase the value. Are there other situations where you'll look at a potential appeal and just say, hey, this isn't worth pursuing and what are those if so? 

[00:05:51] Steve Anderson: We learned that a lot in the multifamily and commercial properties here locally because their real market value is really kind of, could be kind of high, but they're actually paying taxes on a lower value because of the way the taxation system works here in our area. So they could have maybe a $4 million valuation put on by the county, and the person goes, it's not worth $4 million. And they call me up or email me and I look at it and go, yeah, you're only paying tax. That's going to be half a million dollars. And he paid $2.4 million five years ago. So it's hard for me to go and form a board and say, it's only got up a hundred thousand dollars in value in the last five years. I mean, then especially in our market, it's been, you know, pretty good and multifamily are pretty good here. So a lot of times it's just, it's educating that client.  Secondly, if there's a situation where they're going to save like a hundred bucks, by the time they pay me, they're negative on the whole thing. And some people will say, I want to do it for the principal thing. Well, I'm not involved in that. I should say that I am, but I'm not, because I don't want to waste people's money's for what it boils down to. And I have to sleep at night. And the way I do that is I make sure I have a clear conscience going to bed. And that's not taking advantage of people. That's why I don't want to do that. But I get that all the time. Well, I want to make it right. Yeah, we make it right, but it's not going to solve anything. It's not going to, you know, it's not going to save me any taxes and why pay me to do that? That just makes sense at all.

[00:06:53] Sam Wilson: Well, and especially for a large commercial project, if it doesn't move the needle in any, who really cares?

[00:06:58] Steve Anderson: Right.

[00:06:59] Sam Wilson: In the end, not that we're all in this just to make money, but it does need to be profitable. And so there's a profit motive there. If it's not there, then it's kind of a moot point. So that's really, really interesting. What are things that you think people could or should be doing as it pertains to the appeals process? 

[00:07:16] Steve Anderson: Pay attention to sales in the neighborhood that's residential or sales in the community if it's a commercial property. Just look at what's going on around you, et cetera. And then also be aware of the fact that that assessment coming from the county is based upon a certain day of the year. And our case is January 1st. So even though the bill comes out in October, is based upon a value 10 months ago. So you need to be aware of comparable sales or appraisal on the property or sale of property in that particular timeframe. Usually, it's about six months that we decide on what will work in our appealing process with the county.

[00:07:46] Sam Wilson: Right. Is there anything else, you know, that you guys are using to build value or to build, you know, I guess what the county sees as the value of the property other than recent sales?

[00:07:56] Steve Anderson: In the hierarchy of evidence, the arm's length transaction, number one. So if you got a sale on the property, that's the strongest you can have. That basically is on the market for a while, someone come in, made an offer to them, and wasn't compelled to do that. Secondly, would be an appraisal on the property. Third would be comparable sales. And if that doesn't work for it, next is the listing activity. Property's with the market for a certain amount of time, around that timeframe we talked about when the session date is, if it's in a market value, below the real market value on the assessment, that's a good basis for, you know, an appeal because the fact that the market's not reacted to a lower number based upon the asking price of the property on the mobile listing service.

[00:08:29] Sam Wilson: Got it. That seems to make a lot of sense and probably something that's overlooked is the comparable properties that are listed out there. Yeah, and you say, okay, look, these have all been in the market for 180 days and none of 'em have moved for a price lower than what you're saying my property is worth. That's a really interesting piece of information there. What process or what would you recommend to anybody on a potential pre-buy as it pertains to looking at taxes, looking at how we incorporate that into our projections, things along those lines? 

[00:08:57] Steve Anderson: I would take a look at what the county has assessor has on the property, what the potential real tax bill is right now, and basically, you know, try to process what it'll be going forward. If the market's going to have 8% tax, probably about 8% with that. So just kind of factor that in. I mean, everybody talks about it's a great market, all that. Yeah, but your taxes go up, the taxes fall the market pretty much in almost every little moment. And that happens in a great market, you know, you're going up 10, 15% in taxes every year, and that's a hard, you know, pill to swallow, especially if you're an investor because you got to factor that back into the rent or, you know, somewhere it's got to come back out of the, you know, to affect the bottom line. Secondly, I found that it's kind of interesting when the market is negative, which I've been involved with. The county doesn't seem to chase that value down as the market does. So it's on the board and county-wide, the average net was a negative was 18% across the board and the county reduces properties values by 11% because it said it was market justified. I'm a real estate broker, right? I've got the same data they do. I'm going, no, it's 18%. It's across the board, 18% and they went down to 11% because it, obviously, it benefits them to do that. They're not, you know, they want to give away the farm, so to speak. 

[00:10:01] Sam Wilson: Right. Yeah. I'm thinking of a project that we had looked at and it was appraised. This was in, oh gosh, this was in Cook County, Chicago. 

[00:10:11] Steve Anderson: Okay. 

[00:10:11] Sam Wilson: Oh yeah. We looked, we looked at the appraised value and then we looked at what it would, and they were in a reappraisal year, which I don't know, you know how that all functions 'cause I think everybody's on their own schedule. But they were in a reappraisal year and how it ended up working out was that if we had bought it for the price that we thought it was worth, the taxes would've then just, it made the whole deal just not even pencil. 

[00:10:34] Steve Anderson: Right.

[00:10:34] Sam Wilson: It was like, okay, Cook County's going to reappraise this and then suddenly we're going to go flat broke owning this asset. So we had to walk. I don't think it ever traded hands. Is there a way around situations like that for sellers? 

[00:10:46] Steve Anderson: Not really. I mean, they're going to re-appraise. They're going to re-appraise. That's what it boils down to. They're in a cycle, I think every seven years here where I'm at. But it sounds like what they go back to and look up stuff, they don't physically look at it. They do it by computer. And I had a case here a couple of years ago, just kind of interesting story for you. We had a hotel, it was built. It came online in 2019, and so their first bill was in 2020. What happened 2020 in March? You had COVID hit, okay? And so the county had based the value based upon a full hotel at the room rate that they were anticipating, okay? Versus the hotel was 19% occupied at a lot lower rate to get someone to stay there, okay? So, We had about an 8 million differential but the county said, it worked with what we had on an MI appraisal. So we knocked the county off for about 200 grand on two years on that one. My client was very happy with that one because it was also a basis issue. We were establishing value that particular year. So we lowered that basis value to begin with. And so they'll have an artificial should lower number, if you will, versus our competitors going forward because the fact that COVID was there and it affected the marketplace. And here's the other thing I need to tell you and kind of, I mean, I don't want to brag about what we do. But I've found that pretty much everywhere I go, the average turnover rate in an assessor's office, about 22% per year. Now, think about that for a minute, okay, every five years someone brand new's sitting there, right? So there's not a whole lot of, I mean, what I get, a lot of my opinion is the Wizard of Oz kind of reminds me of the guy behind the curtain. They're pulling a lot of levers and all this other stuff, but the people that are doing this stuff down there, for the most part, are either learning what they're doing or don't know what they're doing, one or the other. And you, the poor taxpayer, when you call in the office, in the help desk, the newest person in the county is sitting there answering the phone for you. So you can imagine what kind of level of information you're getting from the county when you call in, typically. It's not very good usually. And their attitude is pay the taxes and get 'em out the phone. That's what they want you to do. So there are people like me that do this nationwide, I'd recommend getting someone who has a little local knowledge, if you will. Much of my competitors are in international and national and all that. They're just going to send you some, some printed-out comps from sales and all that, that no breakdown on what those sales are. Someone like myself can break in and look at the marketplace locally and get a apples for apples comparison on your property. So that helps you. 

[00:12:50] Sam Wilson: Should we appeal every tax bill?

[00:12:53] Steve Anderson: You can. And I have clients I call frequent flyers in my airline that they do every year. But it has to make sense. And a couple of them are, hey, look, this isn't going to work this year. Let's try it again next year. And I have like 3000 clients that I look at every year just for the, you know, just, just looking at 'em right now., going through the process 'cause they're in my books, so to speak, and just review 'em every year what their situation is based on their, the new tax value coming out from the county. 

[00:13:18] Sam Wilson: Yeah. No, that's the frequent flyers. I like that. That's pretty funny. Yeah, I know I know some friends of mine in the business just have a habit of it. They say, hey, look, you know, we get a new tax bill, we're going to appeal it across our entire portfolio. It's just a course of action for us. And they seem to find value in that. I was really curious what you thought about that. Anything else that comes to mind that you think would be relevant or that we should really be paying attention to as it pertains to property tax, appeals, timing, you know, procedures, just anything along those fronts that you say, man, this is something that somebody should really be thinking about?

[00:13:53] Steve Anderson: Well, first of all, look at your bill when it comes. Open the envelope and look at it 'cause a lot of people don't do that. They just go ahead. Their bank's paying it, they don't care. Their mortgage fund's paying for it. They don't care. And then they call me in February and say, I want to appeal this. Sorry, you missed the deadline, it's December 31st, and you had four months to call me. You know, I can't change the timeline here. So that's the main thing is take a look at it. If you agree with it, if you look around the properties in your neighborhood and you've seen some sales take place, and then the number that county's saying is is about right, I would just, you know, pay the bill, okay. If you don't agree with it, get ahold of someone that myself and say, hey, look, can you take a look at this for me? And most of the people I know in my industry, usually won't charge or charge very little to have an initial review, initial consultation. But after that point in time, obviously, if you want to engage us, there's a letter of engagement that comes out and there's, you know, money exchange and that kind of stuff. But typically, the initial review typically is either free or very, very low cost, one or the other, depending on where you're at. And you know, we do, we're going to do between three and 4,000 of those here the next 90 days just in Oregon alone. 

[00:14:51] Sam Wilson: Wow. 

[00:14:52] Steve Anderson: So I have a team here that works with me, so I don't do it myself. Thank God. 

[00:14:56] Sam Wilson: I'm going to say you're moving fast if you're getting3,000e or 4,000 of those out here in short order. Last question for you. What is the percentage of appeals that you handle that actually have some sort of meaningful difference in the tax bill? 

[00:15:11] Steve Anderson: 94% of our clients last year got a refund from the county or state that we have file for. So we're an A student. How's that? 

[00:15:17] Sam Wilson: You are an A student. I love that. No and I don't ask just to ask, you know, your track record in particular, but really just to kind of paint a picture as to what a property tax appeal specialist, you know, probably in general can expect or we could expect to see, you know, results from. 94% of the time sounds pretty good to me. 

[00:15:34] Steve Anderson: Yeah, I don't know what that number is for the rest of the industry. I will tell you this. If someone in my industry guarantees you results, run, don't walk from them, okay? A lot of my competitors will say, oh, yeah, we can get this thing, we can get it done. Give me 500 bucks up front. I'll work on 'em for you. No, don't do that. Don't throw away $500 on something that's not getting, don't have the reason to be there, quite frankly, okay? Think it through. I mean, I obviously, tax bill creates a lot of problems. It's usually the largest bill people, check people write to the government every year, some property taxes over IRS, over in the state local taxes, if you will. There's not little you can do about it and people don't know them much about it. It's kind of interesting. It's the biggest check you write every year, but you don't really know what, you know, what's going on, so obviously figure it out a little bit, bone up on it as a property owner and just figure it out. You know, hey, what's going on around my neighborhood or my commercial building, what's going on there? And make a decision based off that information. Then maybe call someone like myself, say, hey, or email, hey, can you take a look at this for me? What do you think? And, you know, that's the way I would do it.

[00:16:28] Sam Wilson: Fantastic. Steve, thank you for taking the time to come on the show today. Certainly appreciate it. If our listeners want to get in touch with you or learn more about you, what is the best way to do that? 

[00:16:37] Steve Anderson: Email is [e-mail]. That's number 1, S as in Sam, T as in tango, C as in Charlie, P as in Papa.com. My phone number is 5038694349, our cell number, it's with me all the time. We also have our website. It's propertytaxavengers.com

[00:16:56] Sam Wilson: Love it. We'll make sure we put all of that information as well there in the show notes. Steve, thank you again for taking the time to come on today. I do appreciate it. 

[00:17:02] Steve Anderson: Thanks, Sam. Nice meeting you.