Meeting Dates

Appealing Your Assessment

Taxpayers are justifiably concerned about rising property taxes.  But how can anger at higher taxes be turned into effective protest and a successful appeal of assessed value?  Act according to three important principles and you may halt rising taxes and file a successful appeal.  Even if you can't change anything, you will understand more about what really needs to be changed.

1. Separate the issue of higher taxes from the issue of the accuracy of the assessed value of your property.  Elected officials, school boards and other special taxing authorities establish your tax bill. Assessors estimate the market value of your property.  An increase in value doesn't mean your taxes will go up.
2. Understand how the assessor arrived at the value of your property.  If you do file an appeal, this information will help you construct your case.  Find several properties similar to yours, called comparables, preferably in the same neighborhood.  Find out what their assessed values are or the prices at which they sold, if they have sold recently.
3. Establish a cooperative, not an adversarial, relationship with the assessor's office. The office can and will provide you with the information you need to evaluate your assessment, find similar properties and file your appeal.  Be sure to follow instructions carefully.  A missed deadline or incorrect filing can cause an appeal to be dismissed.

What determines value

    Assessors estimate the fair market value of a property, that is, the price most people would pay for it in its condition as of the assessment date.  The best indicator of fair market value is market activity.  Buyers and sellers create market value by their transactions.  In an appeal, the best evidence of market value is sale price--the sale price of the subject property or of similar properties, called comparables.

    However, sale price is not necessarily the same as market value.  The assessor carefully examines all sales, qualifies the sales and adjusts them for special circumstances that might decrease or inflate prices.  An owner in a hurry to sell might sell for less.  If the seller includes substantial personal property in the sale or provides discounted financing, the sale is likely to be inflated.  Although the sales comparison approach is not the only approach used, comparable sales are recognized by courts as the best evidence of market value.  Residential taxpayers who appeal successfully usually do so by finding comparable properties that have lower assessed values or that have recently sold for less than the assessed values.

    Many taxpayers are angered at increases in assessed values because the property has not changed.  But physical change is not the only reason for a change in property value.  The market is.  If a town's major industry leaves, property values collapse.  Conversely, as decaying neighborhoods with good housing stock are discovered by young home buyers, prices gradually rise, and then soar as the neighborhood becomes fashionable.  A shortage of detached houses in a desirable city neighborhood can send prices to ridiculous levels.  In a recession, larger homes may stay on the market for a long time, but two-bedroom condominiums are in demand, so their prices rise.  In a stable neighborhood, with no extraordinary pressure from the market, inflation increases property values.  Home buyers, home sellers, bank appraisers, real estate analysts and the assessor all pay attention to the same market factors in valuing property.

How assessors value property

    The first step in valuation is data collection.  The assessor's office collects quantities of information about each property in the jurisdiction.  The information is recorded on a property record card, which may be reviewed for accuracy by the taxpayer.

    The assessor's office also collects sales and other data on social, economic and environmental factors affecting property value, such as employment, population and income patterns; interest rates; construction costs; regional location factors such as access to parks, churches, schools and public transportation; zoning, and rent control.  Complete and accurate maps are essential to the assessor's office.  Many jurisdictions now have computerized geographic information systems that are used by many branches of government.  These systems integrate ownership records with information about zoning, sewage systems, land use, soil types, communication networks, geologic structure and a host of other data.

    In short, the assessor's office has an abundance of data relevant to the value of your property.  Incidentally, this information makes the office an important community resource.  To apply this information to valuing property, the assessor constructs a model-- a simplified representation of how market factors affect value.  Most residential property is valued with a cost model or a sales comparison model.

    A cost model says the estimated market value of your property equals the value of the land and the cost of constructing a replacement, less depreciation.  Replacement cost is usually found by a cost manual that shows regional construction costs for all building elements.  Depreciation depends largely on age, condition and the current desirability of the property's features and location.  Sales comparison models are usually more important in appeals.  A sales comparison model says the estimated market value of your property equals the sale price of a comparable property, with adjustments to the sales prices for differences between your property and the comparable.  For example, if your property has a swimming pool and two bathrooms, but the comparable has no pool and three bathrooms, you would add the value of the pool to the comparable's sale price and subtract the value of a bathroom.  The result would be evidence of the price at which you might expect to sell your property.

    Assessors use more than one comparable, usually three to five.  Also, they use more complex models that incorporate many more factors.  And rather than considering properties one at a time, assessors use computer software to appraise at one time many properties of the same general type, for example, townhouses or raised ranches.

The appeals process

    Every jurisdiction in Michigan has an appeals process mandated by law.  The first step may be an informal meeting with someone in the assessor's office.  Sometimes this informal review is handled by telephone or mail.  Information on the mechanics of the assessment and deadlines for the entire appeal process will be explained at this meeting.  If the assessor has increased your assessment, it is mandatory that you receive a notice of that change, which will include meeting dates of the board of review.  During or before this informal meeting, you should review the property record from on your property to be sure all the information is correct.  Know the lot size, number of stories, square footage and condition of your property.  If you have an accurate survey of your property, be sure to bring it with you to the meeting.  You may also want to identify comparable properties and review their record forms.  These forms are available for inspection by the public, and it is your legal right to do so.  You may also copy this public information.

    The person conducting the meeting will probably give you information on comparable properties.  If you have assembled information on such properties, you should bring it to the meeting.  Almost all the information in the assessor's office is available to the public, and the office can help you find comparable properties.

    Your aims at this informal review, which is not yet an appeal, should be to verify the information on your property record card or correct it; to make sure you understand how your value was arrived at; to discover if the value is fair compared with the values of similar properties in your neighborhood; to find out if you qualify for any exemptions, and to be sure you understand how to file a formal appeal and how the office can help you, if you still want to appeal.

    The assessor would always prefer to settle problems at the informal review.  Appeals are costly, and assessors usually have tight budgets.  The person conducting the meeting may not commit to a change in value at this meeting, even though you have uncovered an error or all agree that the assessment is not fair.  The decision about a value change may have to be made by someone else and communicated to you in writing.  If this is so, find out when you may expect to hear from the office.

    The first level of formal appeal is to a local board of review.  Your appeal is more likely to be successful if you present evidence that comparable properties in the same neighborhood are assessed for less than yours.  Copies of property record forms on your comparables with records of their assessed values or sales prices are your best defense.  Note any differences between your property and the comparables and point out these differences.  The board of review will be interested only in the fairness and accuracy of the value placed on your property, not in whether you can afford to pay your taxes or whether taxes are too high.

    If you disagree with the local board's decision, the next level of administrative review is the Michigan Tax Tribunal.  After that, unresolved legal issues may be taken to the Michigan Court of Appeals and the Supreme Court.  You will receive a notice from the board of review informing you of its decision of your appeal.  Included in that notice will be the address of the Michigan Tax Tribunal and the deadline for filing an appeal with that agency.

    Always remember to view the assessor's office as an ally, not an adversary.  If you can be calm and polite, employees in the assessor's office are likely to be more helpful and can concentrate on giving the information you need for a successful appeal.

You cannot expect to receive a lower assessment from the board of review because:

1. You are assessed more than you paid for the house many years ago.  Inflation has hit the housing market, too.  The higher assessment reflects the fact that you can sell your house today for more than you paid for it.
2. Your house needs repainting, the carpet is threadbare, there is water in the basement and two storm windows are broken.  These items have been considered in the depreciation deducted by the assessor from the reproduction cost of your home.
3. Your property taxes have gone up, but your income is fixed.  However, the State of Michigan does provide a property tax credit, and you may be eligible for a return of a portion or all of your property taxes up to a maximum of $1200 from the state.  If you need assistance or more information about this program, contact the Michigan Department of Treasury.
4. The assessor and board of review cannot control noisy neighbors with too many cars or too many inhabitants next door, including the number of cats and dogs.
5. The board of review deals with two issues when reviewing assessments; the value of your property and its assessment in comparison with all other property.  If it feels you are unfairly assessed after considering these two factors, it will make an appropriate adjustment in your assessment.

You may receive a reduction in your assessment if:

1. Your house, recently acquired on the open market, was purchased at significantly less than its value as determined by the assessor.
2. Some houses in your neighborhood, similar to yours in size, style and condition, recently sold on the open market at significantly less than the assessor's valuation of your home.
3. Houses in your neighborhood--similar to yours in size, style and condition--are assessed significantly less than your home.
4. You can present documents from a certified or licensed appraiser stating that a recent appraisal values your home lower than the assessor's appraisal.
5. Your home is currently listed with a realtor at a price lower than the assessor's valuation or has consistently received written offers below the assessor's valuation.
6. Your home has suffered severe structural damage such as settlement causing severe cracking, water damage so extensive as to undermine the foundation and wind or fire damage.  You can request an inspection by the assessor for a reduction in relation to the damage.
7. You are located directly adjacent to a property or activity that adversely affects the marketability of your property if the assessor has not already recognized the detraction.

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