Sunday, April 26, 2015

Why Property Tax Appeals Consultants MUST Use AVM Values - Upfront - to Validate Values on Tax Roll

1. Comparing independently developed AVM Values to County Market Values will point to the areas of failure - over- and under-assessment - on the Roll. Often, the higher value properties are under-assessed while the lower value properties are over-assessed. If the comparison points in that direction, the Property Tax Appeals Consultants ("Consultants") must work up a small sample - using comps - to further authenticate the discovery. If the comps sample validates the discovery, Consultants must pay special attention to that over-assessed segment of the population. 

FYI - many such Consultants use our free Homequant site to work up samples. Our site, unlike other free valuation sites, allows users to arrive at their own value conclusions. Homequant is a true valuation site with advanced features like specific comps selection and adjustment mechanism, distance matrix, time adjustment, flexible valuation date, multiple ranking methods, interactive spatial interface, comps grid, value analysis, to name a few. In addition, no log-in or registration is ever required.

2. In choosing AVM Vendors, Consultants must make sure that those AVM Values are developed specifically for the Tax Status Date. If the Status Date is 01-01-2015 but the AVM Values were developed in June 2014, those values would produce a flawed picture when compared to the County Values. It is therefore advisable to work with AVM Vendors that develop specialized models for the Appeals industry, per se. It is also in the best interest of the Appeals Consultants to work with such vendors.

3. Many AVM Vendors also sell Comps Reports. However, the best bet for the Appeals Consultants is to work with those specialized AVM Vendors that additionally tie their AVMs to the Comps production. In other words, the specialized AVM Vendors who connect model coefficients and adjustments to the comps Adjustment Matrix tend to produce the most optimal values. If a Consultant is looking for a long-term vendor, this is a question always worth asking.

4. In course of the due diligence Consultants may ask for a sample Adjustment Matrix for the comps production. The sample itself could say a lot about the quality of their valuation process. For example, if the Adjustment Matrix shows Lot SF coefficient of .10 (10 cents per Lot SF, assuming it's transferred from a linear regression-based AVM model), just dump them and move on (Hint: it's not multi-collinearity). It would be a clear indication that they are working with totally unqualified "make-shift" modelers. While no AVM Vendor would be forthcoming to show their AVM models, they might share a sample Adjustment Matrix. It could be telling! 

FYI - To learn more about AVM, you may request complimentary copies of our trend-setting books on AVM: How to Build a Better AVM and Alternate Applications of AVM.


Sid Som
President, Homequant, Inc. 

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