Appraisal Matters

Key 9 – The Presentation

When it comes time to argue a case, you will often be faced with a time limit. Other tax appeals are scheduled for that day and if you run over, you may not be permitted to continue. You want to have the key points stressed and presented in an organized manner. Keep in mind that the appraiser can speak about his report, but it is up to the other members of your team (especially the attorney) to pitch the merits of the case.

Another factor to consider is that “pictures speak louder than words”. Tables, charts, graphics, pictures and other visual aids can make even a complex concept easy to understand. Usually, all participants to the case will know the general direction of the market, so limit this discussion or perhaps do not discuss it at all. Stress trends that affect rental rates, capitalization rates, land sale prices and improved sales prices as appropriate. Also, stress physical features that result in functional obsolescence, decreased rent, and increased expenses or extended marketing times.

Assessors frequently do not consider items of functional obsolescence in their valuations. When replacement cost is used in the cost approach, most forms of functional obsolescence are not factored into the reproduction cost new estimate of the building. More importantly, items of functional obsolescence help paint a picture that the property is not as valuable or desirable as the Assessor may depict it.

Example: We were involved in a tax appeal case of an office building that suffered from seven forms of function obsolescence, such as a poor air conditioning system, a low voltage electrical system that blew out computers, roof problems, insufficient elevator capacity, etc. Although the building was Class C, the appropriate comparable data was at the absolute low-end of the spectrum. The Assessor considered Class C buildings at the upper end along with some Class B buildings. After “painting a picture” of all the things that were wrong and expensive cost to retrofit the building, the board ruled in our client’s favor that its value was reflective of a shell building, not an upper-end Class C building.