Some Property Tax Consulting Home Business Questions and Answers1. Question: How long does it normally take to complete the documentation for one client? Answer: Meeting the client, explaining the service, getting some facts, filling out the forms should take less than 1 hour. Digging up information to put together the actual appeal information Answer: With a Power of Attorney agreement, you have the right to represent your client. The opposing attorney may make motion to stop you from representing a client by virtue that you are not a licensed attorney. As far as speaking for a client, you are not representing them in a criminal case, you are not practicing law. You may have a limited power of attorney to speak for your client only on property tax matters. You only present property tax evidence. Certain lawyers hide behind the legal system and want to freeze everyone out. They want the easy easy bucks for themselves and you may have to go toe to toe with them to establish your property tax consultant turf-rights. Many state jurisdictions permit you to represent a client without that client having to be present. You will likely not get challenged by attorneys and you’ll have no problems using the system. This is accomplished by having your client sign a limited power of attorney form (Advisor/Agency Form). With this signed document you can present evidence and make the case for your client. Other options include working with an attorney and/or appraiser on a contingency basis since you are the rain-maker. You set up the deal and you get the big cut. These deals work out nicely with larger properties, multi-family homes, office complexes and industrial properties. This aspect of the business is where the really BIG money lies. Also, some states or maybe even countries, require that you to be a licensed real estate appraiser in order to present accepted market values to the county tax appeal court. However, many times they recognize you as a “recognized” professional tax consultant and will allow you to present your evidence. There are may be ways around this. Sometimes you can challenge the gatekeepers to allow your unlicensed professional evidence into the hearing. In the end, what matters is presenting believable well referenced information that leaves an impression with those peers overseeing and making judgment on the property in question. Answer: You should be winning 70% of your cases to start. After you have a few under your belt you should be in the 90% category. Answer: Research facts from real estate MLS "SOLD" listings. Computerized online services such as http://www.electronicappraiser.com provide excellent results as well. Their fees range from $9.40 to $29.95 (15+ recent comparable sales). Some municipalities have comparative information online as well. Most areas tax consultants charge a non-refundable up to $95 fee to determine if the prospect has an equalization problem. Make sure you test market your fees before putting them in concrete. The prospect has the peace of mind that their property taxes are correct if they have no case and you are off the hook. And if they have a case, you have a very valuable prospect indeed. Answer: You'll have a signed contract from the client and the stipulation that they are required to forward any information regarding the matter to you. A signed promissory note for the contingency agreement amount is solid evidence. Public record will show that the assessment was reduced. If you get a layer involved for collection it is a simple matter for them. You'll be likely able to get find an attorney who will take the case on a contingency bases.
6. Question: When I'm making adjustments in the areas of site, view, neighborhood, noise and the things that can't be cost out using Marshall Swift, do I use the matched pair method to value say the neighborhood or view. Is there a better way to make adjustments in these areas ? Answer: To answer your question, the authentic and best method is to do matched pairs. But, because of a lack of exact comparable's or time restraints, that is not always feasible. If you go back further in time looking for matched pair comparable's, you'll get some sort of idea for adjustment values for a view, neighborhood, 3-car garage vs. 4-car garage, etc. Then you can extrapolate that valuation in order to make an educated valuation guesstimate.
7. Question: I may lose an account because the client's wife feels that lowering their taxes will effect the amount of money that they can get for the house when they sell it. She thinks It will change the value of their home.What presentation would you give to clear up her misunderstanding and get back in my corner again? Answer: When the time comes for client to sell the house, there is no telling what the real estate market will be like. The market could drop like a rock or it inflation sets in the price of homes could skyrocket. No one's going to be looking at property taxes to gauge value, rather what comparable homes are selling for. When it comes to buying a home, most would relish the thought of have a low tax base. Nevertheless, the main reason someone buys a home is that they like the house and the neighborhood. So why not enjoy property tax savings while you still live in the house? When the home is sold it will most likely be revalued at the new market value sold price. Whatever property tax that was previously associated with the home will have disappeared. Challenging your assessment does not affect the resale value of your home; it only affects what value your home will be taxed on.
8. Question: In Colorado we get the valuation for the present year in May. You have 30 days to file the property tax appeal for that year. The study period for comparables for 2009 are from 2006-2008. The assessor's office says the new comps for 2007 and 2008 will be listed on their site May 1, 2009. Does that mean that you will just have 30 days to select good comparables, do the adjustments and file for your clients. That seems like a small window to do the work. How many clients is a reasonable number to shoot for if you have to do all the workups in less than 30 days each year? I think I can get more clients than I can work up in 30 days. Answer: It depends on ambition. You can line up an unlimited number of clients by doing a preliminary property tax analysis using a resource such as http://www.propertytaxconsult.com/electronicappriaser.htm and charging a small fee. If you advertised for a reasonable you could get a lot of initial customers and not get bogged down with tire kickers. Then cull those who would have the highest estimated reduction numbers (generally the more expensive homes) and negotiate to take them on as appeal clients. When they say 30 days, they mean thirty days. Postmarks, most likely, don't count; they don't want to make it easy. When close to the deadline, it's best to hand-deliver if they don't count the postmarked dates. When working up the actual appeal, use real estate broker sold information gleaned from the multiple listing service that the particular real estate agency is a member of for sold data. The information is more complete and oriented toward the buyer. For instance they might say it had an updated kitchen, appliances and bath which would result in a big adjustment. You'll not see that type of info from a assessor's or municipalities supply of in-house comps. Personally, I'm more laid back and not that ambitious and, starting out, 10 or so good cases might not be an overwhelming work load.
9. Question: Date Of Sale for subject property 5-1-09 Date Of Sale for Comp 1.) 5-28-05 = 49 months difference .049X $365,700 = $17,919 as the adjustment. How many "0"s do I add when I am figuring the adjustment? If I added 2 zeros behind the decimal point the adjustments would make more since. Aren't these figures a bit high for an adjustment $40,203 for sure and $17,919 maybe. Answer: First of all, your should be looking for sold comparables that are within a few months from the assessment date for the year you are appealing. The closer the sale and the fewer months between the assessment date you are appealing for, the more acceptable the comparable is. 49 months difference for Comp #1 is too much of a difference! The Comp is not valid. If you find that the price of housing has declined, let's say by 12% over the last year, a 1% per month adjustment to the comparative sales would be in order. So for your comp #2 assuming a 12% decline in market price over the year, 1% of $446,700 equals $4,467. Multiplied by 9 months = $40,203 as an adjustment. Make sure you can back up whatever you say the decline in price has been with accepted public statistical data that you've gleaned that from a news source such as state figures, the Multiple Listing Service or Realtor organization figures.
10. Question: I am very interested in your course. who would pay a property tax consultant? The property owner or would the client get a refund from the tax assessors office? Answer: The client would pay after you won the case and the tax credit was recorded and credited to him. Let's say his property tax bill was $10,000. You reduced it to $7,000 and charge your client $3,000 spread over 3 years. The client would get a notice that credits them for the taxes they have already paid as well as an adjustment to their total tax bill. In other words, the client pays you but it is not costing them anything in the sense that they are paying less property taxes. Since you've spread payment over 3 years, the client is actually $2,000 dollars a year ahead of the game. The client is much better off since he met you.
11. Question: I am interested in getting the Property Tax Consultant package and have a couple of questions. Answer: Property tax appeals can be filed for the same property every year if necessary but they have to be filed within the filing deadlines ... usually 1 or 2 months after your client receives his/her notice. In the "dead" months I recommend another good business, Judgment Recovery and Small Claims Processing that can be worked from a home office. You don't have to work with an appraiser. If you teamed up with an appraiser they would expect to see a large chunk of the win and may not want to work on a contingency basis. Nevertheless, you could if you wanted to. The necessary math and computations can be done on a simple Excel spread sheet. No costly software comes with the program. The math is quite simple, basic addition, subtraction, and a little multiplication and division.
12. Question: I live in Michigan and am looking for a home based business venture. Presently I don't think I would be able to be away from home to represent the client in court--although this situation may change in the next year or so. Do you have any ideas on how I could make this work by having the client represent himself and just giving him all the necessary information that he would need?
Answer: You could, as you say, coach your client all the information so that he/she has a complete work up of the important facts to emphasize and what facts to attack that the town assessor might bring up. You could do all the legwork, finding the comparables and doing the work up and they present the case. Since your clients are investing their time and efforts, a lower contingency fee would seem fair. It can be done. For another similar business that can be run from home that doesn't require strict imposed appointments or schedules, you might consider http://www.smallclaimsprocessing.com/
13. Question: With the economy being so bad and the unemployment high, will this have a huge effect to get this business going? What is the average % will I hear from the letters that I send out? Answer: Opt in rates vary. Depends on your headlines, bullet points, call to action and other factors. Just finished taking a coarse about direct mail that cost me about $900. Seems one of the most effective ways is to send out postcards that have a call to action that goes into a voice recording 800 number and at the end of the message a "push 1" feature to leave name and address. In mail order anything above 2% is considered good. With an effective postcard expect 10% or greater opt in and a 50% or greater conversion resulting from replying to those leaving their name and telephone number. The call to action in that case is promising something for free such as a call back and discussion of their situation.
14. Question: Doing this for the first time I was a bit unorganized. I was able to file 3 property tax appeals this may. My clients were happy and actually so was I. The meetings with the assessor went well. I asked her if she would tell me where my adjustments were good and where they need work. She balked at that but finally agreed to give me some information in September. I guess that's when I will find out how successful I was with my adjustments. I was surprised how many people were angry with the assessor, but the evidence they presented was terribly inadequate. I felt good about the facts and adjustments that I brought to the meeting. I ran an ad on Craig's List just as a test. I have not gotten any interest yet.
What do I do next as far as advertising? Do I wait until when say September to start advertising or can I pick up a few people all year long "which is what I hope to be able to do". Next May the study period is the same as this year so I can still have a good pick of comparables. Answer: Most people don't put out fires until they perceive that they have a problem. The best time to advertise is just before the assessment notices come out and immediately after they come out to get the most bang for your buck.
15. Question: I have a few more questions about the business before I purchase it. Answer: 1. No, that is why you enter into a contingency relationship with them. But you or your client can always buy one. Appraisers are expensive in that the appraiser will charge around $225 - $350 for the appraisal and about $800 to hang out for the municipal hearing with no guarantee they will win. That is a prime reason the common man is not able to justify using them. 2. No. You enter into a power of attorney relationship with your client. You are not practicing law, you are guiding your client in a valuation procedure in which you are an expert at. Worse case you can act as an expert witness with the facts you've uncovered.
3. Yes, there is a fee for both the municipal board of equalization and the state appeal board but they are minimal, usually less than $50
4. To meet the client and sign them up takes about an hour. If you decide to go ahead and appeal the property will take about 4 hours. If the tax assessor agrees you'll have invested 1 hour. If you have to go to the municipal appeal board you do not know if your case comes up in the morning or afternoon. Worse case, you could waste a whole day. State court is quicker, likely 2 hours at most.
16. Question Interesting to note that a large national firm (with 20 offices) stated in their web site that their success rate was 64% and reduced the client's property tax rate at 15-18%. This could be last year's stats. What do you think the stats of this company? at this current market? Answer: It all depends on the case. If there are marginal cases a 64% success rate I suppose are OK. If there are flagrant disparities I would expect a 95%+ success rate. 17. Question: I was looking for up to date adjustment values because the values that my "paid for" professional appraiser used was much different than the county appraiser used for the same item. For example the pro appraiser used +3K for 3 car garage over a 2 car while the county value was +8K.
Answer: That specific data, to be done accurately, requires a multiple regression analysis. That type of analysis is very lengthy and exacting and is something academic rather than practical.
So ... unless you come up with figures on a cost analysis basis less depreciation basis, your fate will be left to guesswork supplied by both your appraiser and the the tax assessor. Accordingly, if you don't do you homework for this specific item of contention, guess who wins?
18 . Question: How long does it take to complete your course? Answer: It probably will take a few days to read through all the material. However, this type of training is best learned by applying it. What I mean is that if you found a prospect who was interested in appealing their property taxes, you'll be applying and reinforcing the principles you studied as well as have a reference for adjustments you'd need to make to solidify their tax appeal case. Since every home is different, there will be different adjustments you'll be making on a case by case bases, but many of these are typical and the process is the same. After you've put together and followed through on a few cases you'll get up to speed and ready for more.
19. Question: The methods and criteria for property valuation are the same in the US and Canada. Answer:
20. Question Answer: After the tax assessor has prepared the assessments and sent them out relying on either last year’s assessments or a recent blanket appraisal, his guard is up. Likely he’ll get besieged with dozens of phone calls and a flurry of inquires. When the tax assessor is approached during this season of angst, it will be generally harder to achieve a meeting of the minds since his guard is up. Getting to them outside the busy appeal window when their guard is down and they are least excited is the best opportunity for a meeting of the minds. Adjust your business to work the off-season for getting the best change of assessment results for your client. Your prime focus should be achieving success at the appraiser level. |
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