Copy for Real Estate Guide Column for 4-23-10
REAL ESTATE PATTERNS
By Ken DuVall

OVERTAXED HOMEOWNERS FIGHT BACK

Now that the housing bubble has burst, up to 60% of the nation's taxable property may be over assessed, meaning owners are paying thousands of dollars more in property taxes than they need to. That is leading to a flood of appeals in many markets from homeowners eager to cut their taxes and speed the process of aligning tax valuations with reality.

On average, home prices have fallen by 30% since their 2007 peak. Many counties only reassess every 3 to 5 years and we all know they have little incentive to move faster, considering how important property taxes are to funding our local government operations.

So homeowners are increasingly appealing the valuations, although the number is still a tiny fraction of the total. The National Taxpayers Union (NTU) says everyone should have appealed more than once in the last 5 years or you may be paying too much. And I see many current listing home price decreases in our Chico MLS every day now to spur offers.

Those who appeal are getting mixed results. Only 20% to 40% of those who challenge their assessment walk away with a victory. “Appeals have become more difficult in the last 2 years now that municipalities are fighting tooth and nail for everything,” said Anthony Sarro, president of eTaxReductions.com, a company that represents people on property tax appeals.

Stuart Sendell, a retired mortgage banker living in Morristown, N.J. was ultimately successful but the process took 14 months. After reading a report that found the average assessed value of real estate there had increased by 5%, Sendell paid a visit to his local assessor’s office to examine the calculations.

“Everyone knew housing values were dropping. The report couldn't be right", said Sendell. He found that the local government included in its calculation a sample of lower-priced homes that dropped in price less severely than his, which the office estimated was worth $1.6 million. He decided to appeal after obtaining an appraisal showing his home was only worth $970,000.

Two months before his court date the lawyer for the county asked to strike a deal. Since New Jersey law gives assessors a 15% margin of error for assessments, Sendell accepted a 25% reduction. He was awarded a $5,400 tax refund.

Sendell's experience isn't unique. “There has been a ramp-up in requests that began well over a year ago,” said Peter Sepp, vice president of the NTU. “People are getting sticker shock over assessments that have yet to be adjusted to the realities of the currently depressed real estate market.”

Not surprisingly, a new industry has cropped up around the process with companies filing appeals on behalf of residents in exchange for a cut of the winnings. Most firms work on a contingency basis, taking about 50% of the savings for the first year. However, magistrates in a county will tend to be more lenient and understanding of a lay person than an attorney.

If you feel your property is overvalued by our county tax assessor, file an appeal. But if you bought it many years ago, you better not disturb the status quo. The county may come up with a higher value than you now have. Fair is fair. “In many cases, jurisdictions will have to raise taxes somewhere else,” said Sepp of NTU. “You may have to pay higher sales taxes.”

Property taxes on average account for about 45 cents of every general-revenue dollar collected by local governments, and if people pay less, municipalities have to make up the difference. As always, there’s no free lunch, folks. The money’s got to come from somewhere. How’s about blood from a turnip?

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 4-9-10

REAL ESTATE PATTERNS
By Ken DuVall

“WHISKEY’S FOR DRINKIN’, WATER’S FOR FIGHTIN.”

After spending the last century building one of the most elaborate water delivery systems on the planet, replete with giant pumps and thousands of miles of pipes and canals, California has become a water casualty. Revisit the 1974 movie “Chinatown” for the whole story.

The reasons are multiple and complex, but the bottom line is that our state’s world renowned plumbing is now perilously stressed. A 3-year drought has drained our reservoirs to the lowest levels in 20 years, forcing mandatory restrictions for many. The all-important snowpack in the Sierra Nevada, the largest storehouse of water in California, is shrinking.

The biggest and weakest link in the system is the Sacramento-San Joaquin Delta, a former 700,000 acre marsh that has been drained, diked into islands, and farmed for over 100 years. Much of this land has subsided and now sits some 20 feet below sea level.

Water flows in through the Sacramento and San Joaquin Rivers. It is then pumped south through two massive, manmade “rivers”: the Central Valley Project and the California Aqueduct. And therein lies a potential problem. Rising sea levels, severe storms, or a major earthquake could topple the weaker levees, inundating the lowest farmland and poisoning the big delta pumps with salt water from San Francisco Bay, slashing water supplies for 2/3 of Californians. Experts say it could take years to put our Humpty Dumpty hydraulics back together again if any of those events occurred.

Delta water exports to protect the salmon and smelt have left our Central Valley farmers high and dry and created rampant unemployment. The way the system now works is a disaster. The majority of water for the state’s economy is coming out of critical habitat for endangered species. There’s politics going on there too.

The Feather River watershed feeds our own Lake Oroville, California’s second largest (after Lake Shasta) which came to us with the State Water Project in the 1960’s. It flows into the 444 mile long California Aqueduct serving 23 million Californians. Drought and a small fish have combined to bring the State to its knees.

The newly formed State governing board charged with “fixing” the Delta is off to a rocky start with the appointment by then Assembly Speaker Karen Bass’ last day in office of Gloria Gray of Inglewood, who also is “coincidentally” a Metropolitan Water District of Southern California Board Member. The MWD and all Southern Californians depend largely on the Delta for its water supply. We’ll vote on an $11 billion water bond issue come November.

The Delta has become a huge bottleneck. A suite of new laws mandate water conservation and attempts to restore the Delta ecosystem and secure reliable water supplies for the entire state. It also resurrects a controversial proposal around for 30 years, the giant $10 billion ditch known as the Peripheral Canal that would bypass the Delta altogether. We Northern Californians have always seen that mammoth project as just one more water grab by Southern Californians as the key to their continued prosperity and survival.

If built, the Peripheral Canal would be the latest link in our ‘Rube Goldberg’ system of pumps, dams, tunnels and canals constructed over the past century that now feeds water to two-thirds of Californians and 8 million acres of our crop lands. It’s probably no coincidence that Goldberg, a cartoonist famous years ago for drawing his absurdly complex machines, began his career as a water and sewer engineer for the City of San Francisco!

The Sacramento-San Joaquin Delta sits just east of the Hayward Fault, one of America’s most dangerous earthquake faults. Let us pray these smart people fix all this before the next big one, which is forecast to have a two-out-of-three chance of hitting in the next 30 years. Whatever became of the El Nino forecast for this season? I remember in the 1995 El Nino year, Chico got 7” of rain in 5 days.

And we thought all we had to worry about was politicians and corruption!! Never forget how precious and dear our water is. Waste not, want not.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.