How to do successful property tax appeals

How to pursue property tax appraisal work:

• Expand your network
• Lean into your specialization
• Understand your jurisdiction
• Offer effective appraisal solutions

Are you interested in tax appraisal?

Given the large slowdown of finance-related appraisal engagements, CRE valuation firms are seeking to insulate their business practices through diversification. This all starts by gaining understanding of what business lines to pursue that provide the greatest potential for professional expansion, revenue growth, and long-term staying power. 

Expanding into property tax valuation is one of the best options right now considering the velocity by which tax appraisers are retiring that is coinciding with a surge in demand for tax appeal services. In fact, according to industry experts in this field, CRE property tax appeal volume has increased as much as 300% in 2023 depending on location, and is anticipated to remain high for the next 18 to 24 months.

If you are interested in diversifying your appraisal practice by adding a new business line, property tax valuation represents a prominent and growing segment in the commercial real estate industry. This segment has become a significant aspect of the commercial real estate industry, with the management of property taxes being crucial to ensure expense management for property owners and tenants.

With fewer than 2,500 full-time real estate tax consultants working in the United States today, and more and more commercial appraisal professionals retiring, tax appeal valuation presents a huge opportunity for appraisers who want to get into this space.

Here are some recommendations on how pursue property tax appraisal work:

• Expand your network 
• Lean into your specialization
• Understand your jurisdiction
• Offer effective appraisal solutions 

Expand your network

Property tax appeal valuation and consulting is a specialized field and you can’t just jump in blindly. If you’re looking to get into property tax appeals, it’s important to have a thorough understanding of the nuances of this niche segment. This will allow you to get armed with the relevant knowledge, education and tools needed to succeed. 

In each jurisdiction there are attorneys and tax consultants that specialize in property tax appeals. Complete the research to identify the key players and network with them to absorb industry knowledge and share your expertise. The American Property Tax Counsel website would be a great place to start with a list of property tax representatives by state and a host of property tax resources.

Partnering with a mentor or education program can be extremely helpful in getting started. If you struggle to find a mentor, you might try asking local tax consultants who they hire for tax appeal appraisals. Networking at Appraisal Institute and American Society of Appraisers events is also recommended. Don’t be shy about asking which appraisers are working on tax appeals and how you can get involved learning the ropes.

In order to be a real pro in property tax appeals, you need to be compelling in the defense of your value opinions, not only in your appraisal reports, but also orally in various public settings including tax court. You might need to build some skills around being an effective expert witness in ligation. If available to the public, consider attending some property tax appeal hearings to see firsthand how the process works. The Appraisal Institute has a litigation certificate program that is recommended for any appraiser that is pursuing any type of appraisal litigation.

It’s also important to stay up-to-date with industry trends and changes. Reading earnings reports and reviewing state assessing authorities’ appraisal guidelines can be an invaluable resource for anyone looking to succeed in this industry. Staying on top of trends in the assessment community will help you see issues from all angles. Consider visiting the International Association of Assessing Officers website and even attending conference events. With the right education, tools, and mentorship, you can successfully navigate the world of property tax appeals and carve out a profitable niche for yourself.

Brush up on 2023 appraisal industry trends

Lean into your specialization

If you have an existing specialization, this is an excellent way to position yourself as a subject matter expert for tax appeals. According to industry experts, property types that are ripe for potential appeals include office, data centers, retail impacted by ecommerce, hospitality in some cases, and new construction for a variety of assets.

Additionally, industrial properties are going up in value, and understanding the impact of remote work on offices is key. When it comes to specialty properties like self-storage or manufactured housing, it’s important to have a deep understanding of the data resources you’re using and the definition of value, especially if assessors are simply using a retail value. By broadening your understanding of different property types and valuations, you can be better prepared to appeal property taxes no matter the market.

If you’re looking to successfully appeal property taxes for a commercial real estate property, there are a few things you need to keep in mind. Additionally, it’s important to understand there are opportunities for expansion, beyond the core property types. Consider looking at data centers, which are often misunderstood in terms of how they should be valued, or business leisure hotels, which are seeing an uptick due to remote work.

Learn what property types Valcre supports

Understand your jurisdiction

Firstly, it’s important to note that there are more than 3,100 different taxing counties in the United States, each with their own unique ways of assessing and taxing real estate. This can make it difficult for commercial property owners to understand how their properties will be impacted by real estate taxes each year.

To overcome this challenge, specializing in a specific commercial property type can be beneficial. This allows you to gain a deep understanding of the tax laws and regulations that apply specifically to that property type, making it easier to identify areas where you can appeal property taxes.

One key element is to understand the definition of “simple market value” in your state, as well as the competency needed to navigate the complex world of property tax appeals.

 In summary, specializing in a specific commercial property type can help you navigate the complex world of property taxes and successfully appeal taxes when necessary. With the right knowledge, preparation, and documentation, you can help ensure that your opinion of value stands up in court.

Learn how Valcre Assist saves appraisers even more time

Offer effective appraisal solutions

Understanding the types of appraisal products needed for the tax appeal process will allow you to better position your business to capture market share. Although every jurisdiction has its nuances, there are typically multiple phases involved in the appeal process starting at the initial board of appeals and ending at tax appeal court.

Here is how you might offer phased tax appraisal services:

• Provide services contract that clearly defines each phase of the process
• Phase 1 research and validate supportable value in a restricted appraisal
• Phase 2 complete a full appraisal report that is litigation ready
• Phase 3 establish time and charges billing rate for meetings and court

In order to successfully appeal property taxes it is critical that your appraisal reports are technically sound enough to stand up in court. Utilize commercial real estate appraisal software and other available technology and tools to collect comprehensive data, including nuanced information and opinions from industry experts, to build a compelling case.

It is also essential to understand the complexities and subtleties of commercial real estate that tax assessors may not be familiar with, particularly in light of the current remote work trends. Adding property tax consulting as an additional service can be profitable, and e-courses are available to help train individuals in this field. Be prepared to use different techniques, like the band of investment approach, to find the cap rate in areas where transactions may not occur. Stay ahead by understanding what’s happening in the industry of each specific property type.

Ask us about Valcre’s proven ability to support successful appraisal work

Valcre supports tax appraisal services

Importantly, don’t underestimate the power of technology to streamline your transition into new practice areas and establish market credibility. Valcre is the commercial appraisal industry’s trusted technology platform and includes extensive support for tax appeal work with specialized engagement and report templates, as well as the most comprehensive property type coverage available. With Valcre, you can grow your business faster and optimize appraisal production with end-to-end support. Valcre is your tax appeal appraisal partner.

Ultimately, by being prepared, utilizing resources and understanding the game, you can increase the chances of winning an appeal or getting an adjustment to an assessment.

Learn how Valcre can help you complete 2-3 more reports per month in 90 days or less

Is tax appeal appraisal for you?

Successfully expanding into tax appraisal requires identifying key players that hire appraisers, leveraging technology, specializing in the industry, obtaining mentorship, and researching your jurisdiction. This is an exciting time for real estate tax appraisers, as it is a transitional moment in the industry combined with the current market cycle. Real estate taxes are a major operating expense that warrant attention from property owners.

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Conclusion

Use these tips to grasp the art of property tax appeals, unlock profitable opportunities and take your career as a commercial real estate appraiser to the next level.

Download the companion guide PDF for your easy reference.