Reassessment 2012: What About All Those Sheriff Sale Properties?

Posted By Cliff Tuttle | December 30, 2011

No. 778

Photo: Jim Dolanch

From all reports, the assessment notices that started arriving in City and Mt Oliver mailboxes yesterday were full of assessment values that are double and triple the 2002 numbers.  With all of the sheriff sale properties on the market, how can this be?  Good question.

The Sheriff’s deed, which frequently represent a very small bid of costs and taxes, are culled out of comparables for assessments.  Those are not considered to be arm’s length transactions between a willing buyer and a willing seller.  However, the recently foreclosed properties that are being dumped on the market are being sold for very low prices.  Moreover, they are driving the market down. As many would-be sellers will testify, it is very hard for a seller these days to compete with foreclosure properties.

The sales market has not been robust for a long time.  There has been a sharp decline in residential  lending for a variety of reasons, some of which are subtle.  Credit standards are significantly higher than they were ten years ago, due mostly to the 2008 debacle.  But low interests, fueled by the Fed, are actually a disincentive to portfolio lenders.  Low interest loans create a future interest rate risk problem for community lenders who do not sell their loans to investors.  In this environment, the sales that are happening involve the best qualified buyers.

By the same token, many potential sellers cannot sell because their properties would not yield enough to pay off mortgages obtained during better times.  Thus, a substantial portion of would be buyers and sellers are sitting on the sidelines.  Where then are the sales coming from?  Sellers with lots of equity and well-qualified buyers are playing a larger role.  But so are buyers of distressed properties.

Although we don’t know about the methodology used in this reassessment, it would not surprise me if the sheriff sale property resales are being ignored  in favor of the highest comparable sales available.  If there is a range of sale prices for comparable properties, the median of the group, not the highest or lowest, is the best expression of value.  However, if the assessors are consistently choosing the highest price in the range is this any wonder?

The assessment values, even if they pass statistical tests, may not reflect the true picture of the housing.  Appeal, and then dig up some of those post-sheriff sale transactions that the assessors buried when they determined comparable sales for your property.

CLT

Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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