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| Check back regularly - We will add/edit articles as they become relevant to the current market trends. |
Foreclosures may alter home values
Friday, November 14, 2008 - In a sign of how the real estate market has
imploded, property appraisers plan to figure in foreclosure sales when they value
homes next year.
State Department of Revenue rules advise county property appraisers to ignore
foreclosures and other types of "distressed" sales in favor of arms-length deals
between willing buyers and sellers.
The belief is that such open market sales are truer indicators of home values. But
that's only the case when foreclosure sales are relatively rare, not rampant like
they are now, property appraisers are saying.
"The number of foreclosure sales we are dealing with now is so much greater than
I have ever seen that I believe they have become part of the market," said Pam
Dubov, Pinellas County's property appraiser-elect.
Warren Weathers, Hillsborough County's chief deputy appraiser, said that Dubov
is right and that his office also will look at how to gauge the effect of foreclosure
sales on values. In Pasco County, Appraiser Mike Wells has already done so for
this year's tax roll.
"Some of the Department of Revenue rules are for a normal market," Weathers
said, "and this is not a normal market."
Dubov and Weathers have yet to come up with a method for weighing how the
inclusion of foreclosure sales will effect homeowners' property tax bills.
It's complex and uncharted territory, they said. Next week, appraisers from across
Florida are meeting in St. Petersburg, and Dubov said she plans to raise the issue.
"We have to do some gaming of this and see what it looks like," she said. "I just
know we can't do business as usual."
But both she and Weathers agree one likely result is that homeowners in areas
with lots of foreclosure sales whose homes are assessed near market value will
see their property tax bills drop next year, assuming governments don't raise tax
rates.
In Pasco, Property Appraiser Wells said that in the spring he told his staff to
consider foreclosure sales when developing the current tax roll. Wells said he did
so after talking with his staff, his attorney and few others. He has yet to hear
complaints from the state, or from homeowners who saw their tax bills dip.
"I believe it allowed me to come up with a fairer picture of the market, and what
is going on out there," Wells said.
Jim Overton, Duval County property appraiser and president of the Florida
Association of Property Appraisers, said he was unaware of Wells' move but isn't
surprised others are eager to follow. The issue was discussed recently among
appraisers at the national level, he said, and will be taken up by his association in
coming months.
According to Dubov, Gov. Charlie Crist's office has asked the Department of
Revenue for a review of the matter. Other than to say two or three appraisers
have been in contact about the issue, the department declined to discuss what
Dubov, Weathers and others plan.
Hernando County Property Appraiser Alvin Mazourek said he also was
considering how to incorporate distressed sales into next year's values.
Though some homeowners may see their tax burden lift a bit, the decision by
property appraisers to include foreclosure sales in their market analysis could
reduce the amount of revenue going to already strapped local governments.
Incoming Pinellas administrator Bob LaSala said that in such a precarious
economy it makes sense for appraisers to innovate and change their practices,
even if it makes his job tougher.
"I wouldn't begrudge the homeowner who is struggling with a tax bill a solution
that might make sense in this broader picture just because I've got constraints as
well," LaSala said.
Florida is second only to California in the number of struggling borrowers who
have lost their homes to lenders. In Tampa Bay area counties last month, 26
percent of real estate deals involved banks selling off properties reclaimed
through foreclosure. Another 9 percent were "short sales," where borrowers
behind on mortgages settle with lenders for less than what's owed.
That means in October more than one in three deals were distressed. The figure
in September was 28 percent.
By comparison, in September 2007, 6 percent of sales were distressed; in
September 2006, just 1 percent.
Peter K. Murphy, a real estate consultant with Home Encounter in Ybor City who
provided the data on distressed deals, said that last month banks were selling
foreclosed homes for 60 percent of market value.