Wednesday, June 6, 2018

Why Tax Appeal Consultants Must Use AVM to Discover Over-assessed Parcels

Why Property Tax Appeal Consultants MUST Use AVM to Scrutinize the Tax Roll

1. Comparing independently developed Automated Valuation Model (AVM) Values to County Market Values (CMV) will point to the areas of failure, meaning over and under valued (leading to assessments) on the Roll. Often, the higher value properties are under-assessed while the lower value properties are over-assessed. If the comparison of "AVM to CMV" 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-valued (assessed) segment of the population.

2. In choosing AVM Vendors, Consultants must make sure that those AVM Values are developed specifically for the Tax Status Date. If the Tax Status Date is 01-01-2018 but the AVM Values were developed in June 2017, those values would produce a flawed picture when connected to the County Values. It is therefore advisable to work with AVM Vendors that develop specialized models for the Appeals industry, per se.

3. Many AVM Vendors also sell Comps Reports. However, the Appeals Consultants must be careful in working with the specialized AVM Vendors who additionally tie their AVMs to the Comps production. In other words, the specialized AVM Vendors who use the model coefficients to adjust their comps via the Comps Adjustment Matrix do not necessarily produce the most optimal comp reports as AVM (top down) and comps reports (bottom up) are diametrically opposite solutions. If a Consultant is looking for a long-term AVM vendor, this is a question always worth asking, meaning if they tie their comps (reports) to the model coefficients.

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 Comps Adjustment Matrix shows a 'Lot SF' coefficient of .10 (10 cents per Lot SF, assuming it's transferred from the regression model producing the AVM model values), it would be difficult to explain to a client looking for self-explained comps. It would be a clear indication that the vendor is working with totally unqualified "make-shift" modelers. Obviously, while no AVM Vendor would be forthcoming to show their AVM models, they might share a sample Comps Adjustment Matrix. It could be telling!

FYI - Many Consultants use our free home valuation site - - to work up samples. Homequant, unlike other free/brokerage sites, is self-directed, thus allowing users to arrive at their own value conclusions. It comprises a host of advanced features like subject simulation, comps selection & quantitative adjustments, distance matrix, time adjustments, flexible valuation dates, multiple ranking methods, interactive spatial interface, comps grid, value analysis, an all-inclusive report, to name a few. In addition, no log-in or registration is required.

Some use our 60-second top-down home/condo valuation site - - to get a "quick look" into the subject valuation. It's also free, requires no registration and mobile-friendly (no special Apps needed).

To learn more about AVM, please read our trend-setting books on AVM (search 'Sid Som's Books' on Amazon). Also, check out our offering on Appeals AVM (click on the link below):

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