Samantha Masone at The HooK reports that the City of Charlottesville does not include short sales or foreclosures when determining assessed value, which means taxes:
Invalid transactions also do not include foreclosures and short sales, even though these have became a major part of the local market, are also excluded from the official assessment calculations.
Read the whole thing.
Lesson learned: when, as a buyer, seller or real estate professional, you are evaluating true market value – what a ready, willing and able buyer will pay for a property – ignore the City of Charlottesville’s localities’ real estate assessments.
The City of Charlottesville (and I think the County of Albemarle, and I’ll confirm this later) doesn’t include short sales or foreclosures … which have become about 20% of the real estate market in Charlottesville and Albemarle. By excluding distressed sales, the City is artificially keeping the assessments higher, which means that property taxes are higher.
I’d like to exclude the short sales in my market analyses, but I’d probably be deemed incompetent by my profession, my clients and the market.
I’ve argued for years that localities’ real estate assessments do not equate fair market value; Samantha’s research further proves this point.
The City of Charlottesville’s code states thusly: (bolding mine, and thanks to my friend for the legal direction)
The assessor of real estate shall manage and control the assessment of real estate for taxation in accordance with the applicable state laws. The assessor shall annually appraise for taxation, at its fair market value, all real estate in the city not exempted from taxation by the Constitution of Virginia and not assessable for taxation by the state corporation commission, which shall include all land, buildings, structures and improvements thereon and all rights thereto and interests therein. The assessor shall further perform all other duties required by law to be performed by the commissioner of revenue in respect to real estate assessments, and such other duties as may be prescribed by the city’s director of finance.
My question for the City of Charlottesville – where/how are they permitted to exclude short sales and foreclosures?
(If I read this right, they can also force landowners to answer their queries. “No person shall fail to supply pertinent information or records requested by the assessor of real estate.”
The County of Albemarle seems to have a similar practice. I asked Lee Catlin, Albemarle’s Community Relations Director, if Albemarle excludes “invalid sales” when evaluating assessed values. Bob Willingham, Albemarle’s chief assessor responded:
Generally yes. Instances such as family, related parties, partial interest would be invalid sales. Short Sales, foreclosures (to and from bank) are reviewed and may be coded invalid if there are ample arms length sales in a neighborhood.
* One note: It would be great if the City of Charlottesville offered a GIS solution for the public that would allow tracking historical assessed values, as every other locality does. Sadly, they continue to be negligent.
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