Tuesday, February 22, 2011

Property Tax Appeal… Questions to Ask Your Expert, or Yourself

Every tax appeals season, owners are inundated by mailings and postings from professionals offering their “expertise.” The mailings are loaded with seriously personal data--your name, your address, how much your house is worth in the eyes of the tax authorities, how much it SHOULD be worth, and how much in taxes you could be saving. The companies sending them vary from appraisers, to realtors and real estate lawyers who advertise their knowledge of the market and charge $500 to 30% contingency. In the mix are also software companies, who sell their specialized software for $50-100 a pop. Finally, there are other individuals who have successfully won multiple appeals who charge up to $250. Who, if anyone, should you hire?

The answer is not the same for everyone.

My first advice is to know yourself. Do you know how these form letter mailings are generated? Are you proficient in excel? If you can sort and mine through thousands of lines of data, there is a good chance you can appeal your taxes yourself. If you are familiar with your neighborhood, and know the details of some properties that might be comparable to yours, and you have good negotiation skills, you have a good shot of standing your ground at the hearing, and winning.

On the other hand, if you are a person who is not proficient in excel, or who is not a numbers person, you would benefit from using a professional to appeal your taxes. I don't mean this in a negative way. In fact, I want to encourage you to appeal your taxes. You will likely not only come up with a more robust tax appeal by using an expert, but you will also sleep more soundly for the several months your appeal will be in process. While it would tough for you to do much homework by yourself (beyond knowing what a few houses in the neighborhood sold for), you can still screen your professional by asking them a handful of questions on how they value your and comparable properties.

If you are in between, that is, you have the excel and research skills, but not much time or confidence, you can take this quiz to see if you are up for the task.

  • What is the value of your property?
  • Should your taxes be lower because your neighbor, whose house is exactly like yours, pays lower taxes?
  • Say you live in a high rise building in Apt 5C (5th floor). Apartment 10C sold for $500K. What is the value of your property based on this comparable?
  • Your upstairs condo sold last year. It is the same square footage as yours, but it has a fireplace and a deck, but your doesn’t. It is a comparable?
  • A condo across the street from yours with similar square footage and number of rooms as yours sold last year. However, the building has 50 condos, an elevator and a doorman. Your building has 5 units, no doorman or elevator. Are they comparable?
  • A condo in your building sold for $500K. However, it comes with a parking space but yours doesn’t. Will the assessor know and how will you adjust for this?
  • You live on Willow Ave. Jackson St. is less than a mile away, but you have seen a few condos there sold for significantly less. Are they good comps?
  • A comparably sized condo sold in your building for $10. Can you use that sale to bring down your valuation?
  • Your upstairs neighbor’s unit is exactly like yours. It sold last month for $750K. Is that a valid comparable for your tax appeal?
  • You appealed your taxes last year, and got a partial settlement. You think your value can be reduced by 5-10% more. Should you try again?

If you know the answers to these questions, good for you! You are ready to appeal your own taxes. If you don’t know these answers, ask these questions to the expert you are about to engage. You will get a good sense of whether he or she will be able to provide you with a strong tax appeal.

As always, don’t sign any contracts until you are sure you are satisfied with the expert. It is ok to say you need time to think things over, or even compare with another expert.

This year, I am offering my consulting services for tax appeals. I do not, and cannot, compete with professional appraisal software that costs upwards of $1200. However, I believe many tax appeals don’t need specialized software to generate an acceptable valuation, especially if the property owner is knowledgeable about his or her property. My goal here is not to make a lot of money, or start a business dedicated to doing tax appeals. It is to use my extensive experience of comparable valuation (I am a Certified Financial Analyst—CFA) to educate and empower owners to do their appeals themselves. Please feel free to write to me for more info.


Other property tax related articles:
Hoboken Property Taxes Due (Feb 2011)
Property Taxes Going Up or Down? (Oct '10)
Appeals... the Next Steps (May '10)

Sunday, February 20, 2011

Scoring a Deal on a Tempurpedic Mattress


Folks who have bought or shopped for Tempurpedic mattresses already know... while other mattresses go on sale (up to 50%) from time to time, Tempurpedic's prices are inflexible. Other than the fabled (and probably fictional) online retailers who offer price cuts (and are then chastised by the company), the most you can usually get is a free pillow or bed frame, worth $80-100.

I was determined to score a deal for my son's mattress. Tempurpedic's website had a list of approved dealers, including specialty mattress retailers such as Sleepy's and Sunrise Mattress, furniture stores such as Raymour & Flanigan, and other retailers such as Macy's and Brookstone. Raymour & Flanigan and Macy's did not allow an online purchase.

I went with Brookstone. While Macy's and Sleepy's offered to throw in the pillows (I already had enough pillows), Brookstone was giving a free $200 gift card for purchasing a set. I was looking for a cash deal, and this was the closest I could get to cash.

Brookstone was also one of the few retailers that allowed a cash-back through Ebates (5%), Citi Thank You (6%), Chase Rewards Mall (6%) etc. However, Citi and Chase excluded Tempur-pedic purchases, but Ebates did not have any such restrictions. So I took the plunge. 

$275 in savings on a Tempur-pedic mattress set isn't bad!

Wednesday, February 16, 2011

Truth in Numbers: Viridian Energy


In July 2010, I had written a blog “How Can I Lower my Electricity Bill.” 

One of the steps that I had taken to lower my bill was switching from the default utility company (PSE&G) to a third party provider. I had chosen Viridian, partly because they have a flexible plan with no commitments, very low customer complaints, and a floating rate that was lower than PSE&G despite being greener (20% wind energy derived). They were also donating a small amount to a charity I am affiliated with.

I estimated, based on my consumption patterns, that I would save $75 annually, although only about $25 in savings would be coming in the winter months. As noted in the blog, savings in my first bill, received in October (without the 10% off promotion) were about $5. The rate difference, $0.0125, or over 10%, was as advertised three months prior.

However, in the past few months, the Viridian rate has been only 1% lower than PSE&G. My cumulative savings are only $8. Is this a market driven phenomenon, or was I falling for a bait-and-switch?

There is good news and bad news. Good news is, Viridian's rate differences are not just lesser for me, they are lesser in general. In fact, the company's website now has historical rate comparisons for many states and state utilities, including NJ, MD, CT and PA (they recently entered the NY market.) The charts look very similar to mine—a huge difference through fall 2010, followed by a convergence in rates. So the company itself is reputable and treating me fairly.

The above links are from Viridian's website. You can continue to use them to monitor how the company is performing versus PSE&G and other utilities.

The Department of Energy does not provide recent data for retail electricity prices (latest data is through November), but the trend sure is higher. My guess is, since coal and natural gas (from which over 70% of electricity is derived) prices are trending up, electricity market prices are up as well. This increases the cost of companies like Viridian. However, utilities like PSE&G, which are a 3-year smoothed average, are still climbing down their price charts. So, market forces are at work here. Which is the bad news.

Am I slightly disappointed with my meager savings? Sure. However, I am glad on two fronts: firstly, I am still saving a few cents each month. Secondly, the electricity I consume is a 20% green, renewable product, and that does put my mind a little more at ease. I have so far never had to speak to a Viridian rep, which is a great thing because I have not noticed any change in the electricity I get in my home. My bill is also the same one I get from PSE&G. Even my auto-debit is unchanged.

Bottomline: If someone asked me today if I would recommend Viridian, I would say if savings is all you care about, then they may be too minor, so don't bother. However, if you are keen on using a greener electricity product, and save a little green along the way, then switching is the way to go.


Friday, February 4, 2011

Hoboken Property Taxes Due

Don't forget your Hoboken property taxes are due on Feb 10. You will not receive a new bill for this or the May taxes. Just use the voucher from your November bill.

For those who successfully appealed their taxes in 2010, you will see a credit on your voucher and a lower amount due. Enjoy!

For those lucky few who reduced their taxes by more than 25%, you had a credit balance in the 4Q bill. Please note that this amount will be mailed as a refund check at the end of February (yup, City Hall is finally getting to it). You will need to pay what it says on your voucher.

Finally, the property tax appeal season has started. If you haven't appealed your property taxes in the past few years since the real estate bubble burst, I highly recommend it. Especially since the taxes are further going up! The deadline for receipt of your appeal is April 1. If you are excel savvy, you can do the appeal yourself (perhaps with some help). The form you need is online.

You will need 5 comparable sales that help you determine the market value of your property. Here is what the Hudson County tax board says, "In order to determine the taxable value of your property, you must demonstrate what the market value of your property was as of October 1 of the preceding (pretax) year."

To read more about the appeals process, visit the Hudson County Tax board website. My earlier blogs also discuss the process and its outcomes.

May 2010 Blog: Property Tax Appeal--The Next Steps
October 2010: Is My Property Tax Going Up or Down?
March 2010 Blog: Beyond Penny Pinching

Good luck!


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