Property Tax 'Consultants' Thrive in a Gloomy Market

Connecticut is the latest state to look into services that claim they can help homeowners save money on their property taxes. Companies that claim to be expert property tax consultants have been doing quite nicely in an era of plunging real estate values but consumer protection officials in several states warn that many of the services do little or nothing to earn their fee.

Texas, California and other states have also cracked down on mass mailings and Internet ads claiming that consumers are guaranteed to save big bucks on their taxes.

Connecticut Attorney General George Jepsen is asking ValueAppeal LLC, of  Seattle, for more information about the property tax appeal services it has been offering to Connecticut consumers after complaints were raised about the company in New Britain.

New Britain officials challenged the accuracy of the information in the letters ValueAppeal LLC purportedly sent to local property owners. The letters represented that consumers' properties were over-assessed, calculated the amount of the over-assessment and any tax overpayment and offered to process an appeal of the assessment for a one-time fee of at least $99.

Jepsen wrote yesterday to ValueAppeal’s chief executive officer asking for information about any business it has done in Connecticut since Jan. 1, 2011. Among other questions, the Attorney General asked the company to explain how it determines that properties are over-assessed, as well as to fully describe the services it provides in exchange for payment.

The Attorney General also asked about the number of Connecticut residents solicited, the number of residents who used the service and the number who successfully appealed their local tax assessments.

“This information is important to help my office evaluate whether Connecticut residents are being offered valid business services for the fees charged or, instead, are being deceived,” Jepsen said. The company was asked to respond before the end of the month.

Caution urged

Jepsen's concerns are similar to those voiced last year by Texas Attorney General Greg Abbott, who noted that while some municipalities were still valuing property for tax purposes at bubble levels, that doesn't mean homeowners should rush out and hire a property tax consultant.

In a 2009 case, Texas investigators found that O'Connor's representatives routinely - and improperly - filed property tax protests without the actual homeowners' consent. Sometimes, O'Connor representatives failed to appear on their clients' behalf at scheduled tax protest hearings.

As a result, property owners who thought O'Connor & Associates was formally representing them at appraisal district hearings lost valuable tax protest rights.

California in 2009 sued two brothers who authorities say "ripped off homeowners" seeking help in reducing their property tax assessments are in hot water. California filed suit against Sean and Michael McConville and their businesses, "Property Tax Reassessment" and "Property Tax Adjustment Services," seeking an end to the scam and at least $2.5 million in civil penalties.

What to do

What should you do if you think your property tax bill is too high?  Some jurisidctions adjust assessments every year but many do not. That could mean your home is worth less than the local tax assessor believes.

However, unless the assessor takes it upon himself or herself to update property values, against which taxes are typically levied, it's up to you to appeal your tax bill.  This is something you can do yourself -- and it is most assuredly not something you should hire an out-of-state company to do for you without going through some very rigorous investigation of the company's credentials and track record.

Keep in mind that the property tax procedure is strictly local, administered by your town, city, county, township or whatever jurisdiction may apply in your area. There is no one-size-fits-all procedure. 

The best way to start is to visit your local town hall or county building to learn the local system, its rules and your rights to appeal. Don't assume the assessor isn't already at work for you, but also don't assume he or she is. In many areas, assessors are elected, so they're motivated to be responsive to homeowners.  Even if they're not elected, their bosses -- the city or county council -- are looking over their shoulder, so you shouldn't have too much trouble getting answers.

The Federation of Tax Administrators can point you to your property tax assessor or administrator where you can get all the details you need for appealing your property tax.

Many are behind

Keep in mind also that, with all the turmoil in the real estate market the last few years, many assessors are having trouble keeping up, so even with the best intentions they may not have reassessed your property as often as they should have. 

Be polite and factual in your dealings.  Browbeating the assessor and his or her staff isn't likely to produce a good outcome. 

Assessments are based on the value of the property and the buildings that sit on that property.  One way that value is determined is by the sales price of other, similar properties in your neighborhood.

So, if you're surrounded by new McMansions that are selling for $700,000 and up, don't expect your assessment to be $150,000, even if your house is older and smaller than the new ones.  By the same token, if sales prices have plummeted in your area, your assessment should reflect that. You can request that the assessor survey recent prices in your neighborhood if he hasn't already done so.

Don't bother pointing out that your garage needs a new roof.  That's your problem, not the tax assessor's.