Recession wreaks havoc on property reappraisals

By Peter H. Milliken

The slump in home sales gives appraisers less data upon which to base new values.

YOUNGSTOWN — Mahoning County’s real-estate reappraisal is being complicated by recession-induced sales shortages, according to the reappraisal company.

“There are fewer transactions to work with. There’s less sales activity,” from which comparable selling prices can be derived, said Richard Barrett, an appraiser with the Niles-based Integrity Appraisal Services Inc.

The county auditor’s office hired Integrity in March to perform the once-every-six-years reappraisal of the county’s 166,000 parcels of real estate to determine their value for taxing purposes. The actual tax rates are set by voters in each community.

So far, all parcels in the county have been photographed; and appraisers have visited 24,000 of them, all in Youngstown, as the company begins its two-yearlong task.

The field work will continue through the winter, and likely into next spring in Youngstown, which contains about one-third of the county’s real estate parcels, said Doug Constance, Integrity’s treasurer.

Barrett explained how the shortage of sales data makes the appraisers’ task more difficult.

“If I went into a neighborhood and I had 50 sales, I’m more comfortable with my value than I am if I go into that same neighborhood, and, I only have 10 sales,” Barrett said.

“As the activity goes down, you’ve got less data to work with. The more data you have, the more comfortable you are with your values, but you have to use what you have available,” he added.

State law and the courts have determined that fair-market value is the gauge for setting property values, said county Auditor Michael V. Sciortino.

Fair-market value is the most-likely price a property would sell for in an open market between a willing seller and a willing buyer, neither of whom is under duress, Sciortino said.

The market value of a house should be within 10 percent of what similar homes recently sold for in the same neighborhood, Constance said. The state requires appraisals to be at or near market value, he said.

Excluded from consideration for determining fair-market value are auctions, sheriff’s sales, sales from banks after sheriff’s sales, sales to relatives and sales that are far above or below what the property should sell for, Sciortino said.

“Given the amount of those types of sales that we’ve had, it’s more difficult to analyze to find out what market value is,” Constance said.

Another limitation of the mass appraisal process is that it only occurs once every six years, Constance noted.

“Back then, we were in a growing period [in property values], and we continued through this cycle, for the first three years, to grow. The last two years have fallen off,” he observed.

“We all know what the [housing] market’s done in the last two years. It’s no secret that values have dropped, but comparatively speaking to 2005, where do we stand? That’s what we’re working on,” he added.

To determine market value in the current reappraisal, Barrett said: “We can’t go back to [sales] data from 2005 and 2006. We’ve got to look at the data primarily from 2008, 2009 and 2010 in order to value for 2011, and that happens to be, in our cycle, the recessionary part.”

Constance and Sciortino discussed the appraisal process in generalities, but they declined to make any specific projections about the results.

They noted, however, that the Mahoning Valley did not experience the high levels of growth in property values that other areas of the country did during the housing boom, and they predicted that this area won’t experience as sharp a decline in housing values as the others did in the housing bust.

Valley communities “got a less-steep increase, and they’re also not getting as dramatic a decrease,” Barrett observed.

The reappraisal here is in its preliminary phase, Barrett said.

Sciortino said he hopes Integrity will submit its complete countywide appraisal to him in mid-March 2011 to enable him to submit tentative values to the state by the March 31, 2011, target date.

After the state approves those tentative values in mid-2011, Sciortino will make them public, and he and his staff will conduct individual consultations with property owners at Southern Park Mall.

At those feedback sessions, the auditor and his staff will discuss the rationales for any changes in valuation and correct errors in the property descriptions.

The county auditor will submit final values to the state by Oct. 31, 2011, so the state can approve them by the end of the year. The new values will be reflected in 2011 tax bills, which will be paid in 2012.

Sciortino said he hopes as many corrections as possible can be made concerning errors in square footage and other property descriptions at the feedback sessions because, once the values become final, the taxpayer’s next recourse is to appeal to the county’s Board of Revision, which consists of the county auditor and treasurer and one of the three county commissioners, or a representative of the commissioners.

Taxpayers who disagree with conclusions from the reassessment may appeal to that board between Jan. 1 and March 31, 2012. Anyone dissatisfied with the ruling of the Board of Revision may appeal to the Ohio Board of Tax Appeals or county common pleas court.

The mass reappraisal is being paid for from the county’s real estate assessment fund, which comes from property-tax collections.

Sciortino said he hired Integrity for the $2,152,000 reappraisal because that company is locally based, does excellent work and is familiar with the Valley.

Integrity was the successful bidder for a 2007 appraisal of new construction, Sciortino said, adding that he hired that firm for the current mass appraisal without competitive bidding. “I wanted to be consistent going from new construction into the mass appraisal,” Sciortino said.

State law does not require competitive bidding for professional services, such as real-estate appraisal, Sciortino said.

milliken@vindy.com