Citizens of Fluvanna– BEWARE!
October 16, 2006 |
Those that know me will surely tell you that I am no doomsayer. Actaully, many people would call me an optimist almost to a fault (if that is possible). Sometimes, however, I cannot help but think that things have the possibility of becoming very, very, bad indeed.
In the latest issue of the Fluvanna Review, I came across their regular review of the most recent meeting of the Flvuanna County Board of Supervisors. Most of the stuff was pretty mundane, as usual. There was one little section, however, that certainly caught my attention. It read:
Supervisors were briefed on the progress of the latest countywide real estate reassessment.
According to Blue Ridge Assessments, the work is approximately half done–Lake Monticello has been completed. All fieldwork is scheduled to be finished by December 1, although a request to the court for a deadline extension will be needed to complete the documentation.
If the entire reassessment process is completed by February 1, then real estate property owners should see the reassessment reflected in their July 1 tax bills. While the company did not make a firm projection as to the probable size of the reassessment increase, a spokesperson said that it was likely to be in the 30 to 50 percent range.
Let’s keep in mind that the latest reassessment in Fluvanna County was sent to property owners in the beginning of 2004. I would imagine that even those who do not follow the real estate market are able to reason that a 30%-50% value appreciation over that time seems unlikely.
After reading the article, and putting my eyes back in my head, I decided to crunch some numbers. I went to the MLS and looked up all the sales that have closed in October so far. I then compared the sales price to the current tax assessment for those properties. I then increased the current assessment by 30% (the low end of the stated increase range) to see if the new assessment would be in line with market value. I only took the properties that have sold in Lake Monticello because the article stated that the work at Lake Monticello had already been completed, so they must be getting the 30%-50% figure from those assessments.
I found that there have been seven closed sales thus far in the month of October in Lake Monticello. Below is a list of the sale prices for those properties, and then the assessed value of those properties AFTER the 30% increase.
1)$188,000—–>$203,580
2)$205,000—–>$214,890
3)$219,900—–>$235,560
4)$225,900—–>$258,830
5)$244,900—–>$239,850
6)$265,000—–>$287,430
7)$299,500—–>$332,280
I want you to take notice of the fact that ONLY ONE of those properties sold at or above its adjusted assessment. The rest of the properties did not sell for the adjusted assessment value, and in some cases, the difference between the two was 10% or more. What this basically means is that 6 of the 7 homes that have sold thus far in October will be overtaxed when the assessments go out next year, unless they can acheive remarkable appreciation in the iterim. Given the current market conditions, that isn’t likely. Of course, in the event that the county adjusts the assessments of those 7 properties to reflect he most recent sales price, they will be right on target. That fact, however, is of no help to their neighbors.
For the sake of argument, I went back and checked the September sales as well. That search yielded similar results. I had to go back to February before the results started to make any sense at all. I wonder, however, will their be new assessments for the people who purchased their homes in February? Some of the current assessments for those homes reflected the sales price. To increase that assessment now by 30% would be horrific for those homeowners.
After examining the data, it would appear that Fluvanna has simply chosen a very bad time do conduct the reassessment. The rapid appreciation of 2004 and 2005 is what triggered the assessment, but the fact that it has been conducted in 2006 is very bad timing, indeed. The market has changed tremendously since only the beginning of the year, and many of the assessments that were done in February and March probably wouldn’t be considered accurate in November and December.
I sincerely hope that someone will be paying attention to the issue, and lower the proposed assessment increase. If that doesn’t happen, my fear is that the homeowners of Fluvanna will have to spend a considerable amount of time and effort challenging their individual assessments, or face the risk of being severely over-taxed on their property.
[tags] real estate, realtor, charlottesville, fluvanna, assessment, property tax [/tags]
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8 Responses to “Citizens of Fluvanna– BEWARE!”
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Disclaimer
My name is Daniel Rothamel. I am a licensed real estate agent in the Commonwealth of Virginia and a member of the National Association of REALTORS. As such, I adhere to a strict code of ethics and all laws with regard to equal housing, which is reflected in the content of this blog. My broker is Strong Team REALTORS, 86 Joshua Lane, Palmyra, VA 22963; (434) 589-5800. My VA Real Estate License number is 0225 077325. All of the opinions in this blog are mine, unless otherwise noted.
[...] About a month ago, I covered this in a post I wrote that attempted to show that increasing property assessments by even 30% would mean that the assessments would now be higher than market value. In light of the fact that with this latest story, Fluvanna seems to be preparing residents for a 40% average increase, I wanted to see how the data would shake out. [...]
Daniel -
If Fluvanna reassesses every four years, a 30% appreciation over that time period does not seem that unreasonable.
What about a move to get Fluvanna to assess their properties on an annual or biennial basis? That way the increase wouldn’t be so dramatic.
Have you spoken to anybody about whether they plan to lower the mil rate?
[Reply]
Jim,
The last assessment was done in 2005. 30% appreciation over that time would be pretty incredible. As I said in the post, for most properties, it just doesn’t add up. The county doesn’t do the assessments more often because the Commissioner of Revenue’s office simply doesn’t have the resources for it. The county already contracts the assessments out to an outside company, so doing them more often is probably out of the question right now.
My issue is that I can’t seem to get many answers from county officials. I contacted my Supervisor about this twice, but to no avail. I understand that the discussion is going to be had next year during budget time, but that may be a bit too late.
As far as the mil rate goes, the county is going to have to establish a “revenue neutral” rate, regardless of what the assessment increase is. I haven’t met many people who think that the rate will be lowered enough so as to be “revenue neutral.” The county has plans for a new high school, and the pipeline, etc., and all of the upcoming projects are going to need funding. I also doubt very seriously that the county is going to just let the increase in assessments stand, and the mil rate will be lowered to some degree. The new rate will probably be on the lower end. My opinion is that if the assessments are above market value, any mil rate that is higher than “revenue neutral” would be inaccurate. I don’t necessarily even have a problem with increasing the taxes to pay for some of the upcoming projects, I just feel that the process should be as accurate as possible.
[Reply]
Interesting. Thanks for the clarification. I was in a meeting the other day and was told that Fluvanna reassessed every four years. Guess they had it wrong.
Thanks again,
[Reply]
[...] The Fluvanna reassessments are out, and I can’t imagine that this is a fun week for the folks over at the Fluvanna County Commissioner of Revenue’s office. I talked about this twice before, and now that the time is here, our phones at the office has been ringing and I have been getting emails from clients past and present about the assessment. The most common question I am hearing from homeowners is, “can I really sell my house for that much?” The simple answer is, “probably not.” In just taking a quick glance at the December sales in Fluvanna and comparing them to the new assessments, it looks like about 95% of them sold for below their assessed value (in some cases, well below). More on that in upcoming posts. . . [...]
Daniel, in your initial post you wrote that assessments went out in early 2004. That would be 3 years ago. Here in Albemarle, we received assessments in 2005. I fully expect a 25% or so increase in my assessment over those two years, so 30% over three doesn’t seem so bad. Of course, YMMV.
[Reply]
Stormy,
The issue with the three years is that most people’s increase seems to be in the 40% range. 40% over three years doesn’t even SOUND right. While the appreciation was very good over the first two years, it was only around 5% on average for last year. I am going to post more stats soon, but in looking at the recent sales and their current assessments, it would appear that most of them are about 10% off.
If you live in Albemarle, you are probably right on the money in expecting a 25% increase in your assessment. Of course, the sales data would support that.
Thanks for offering another perspective on the situation.
[Reply]
I am wondering if there is an upcoming hearing about the tax rate in Fluvanna. Isn’t it common practice that the tax rate is reduced to reflect the increase in the assessment so your taxes are approximately the same? Please advise.
[Reply]