- School districts may dispute estimated values as being too low each year based on sales prices
- Many appeals to the county assessment board this fall deal with properties that have sold for more than estimated value due to the housing market impacted by the pandemic
- Board for autumn hearings
Brian Agresti is engaged in the same topic that he discusses with his customers.
Agresti, president of Erie-based Agresti Real Estate, bought a home this year and is likely to raise his property taxes in connection with the Erie area’s pandemic and hot real estate market.
Like many other homebuyers in Erie, Agresti wanted to be sure he could fend off other applicants and buy his dream home.
In the case of Agresti and his wife, it is a 1,992-square-foot residence on Bayfront Avenue near the Frontier Park neighborhood in northwest Erie. Built in 1951, the house sits across from an undeveloped cliff and overlooks Presque Isle Bay.
To complete the sale, Agresti and his wife paid $ 399,999, or $ 186,389 over the property’s appraisal of $ 213,610, according to Erie County’s real estate records. The deed was recorded on June 23rd.
The value of a property determined by the municipality is used by the tax authorities to determine the property tax. Thus, the huge difference between the estimated value of the Bayview Drive home and its new market value of $ 1 under $ 400,000 caught the attention of the Erie School District.
The county appealed to the Erie County Board of Tax Assessment Appeals asking the board to increase the estimated value so that it is more in line with market value or purchase price. The board is expected to hear the case in October, but the decision will almost certainly focus not on whether the estimated value of Agresti’s house will increase, but by how much.
“I had a feeling that was going to happen,” said Agresti of the school district’s appeal.
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He advises his real estate clients to be aware: if the purchase price of your home is much higher than the appraised value, there is a risk that property taxes could rise sharply.
“We’re definitely making people aware of this,” said Agresti.
Total property taxes on Agresti’s home are now $ 7,516 per year, based on an estimated value of $ 213,619, according to district tax records. If the assessment board increases the estimated value to $ 399,000, taxes would hit $ 14,376 – a 91% increase.
Choice of properties
Another 149 property owners in Erie County are in the same position as Agresti. Due to the new purchase prices, their school districts are also requesting the estimated values of their residential or commercial properties as being too low, which leads to appeals before the evaluation committee.
The Erie School District has filed 54 such appeals; the Millcreek Township School District, 74; and the Fairview School District, 22, according to the Erie County Assessment Bureau. The office determines the initial values assessed and processes the appeals, which are submitted to the three-person evaluation committee, which is composed of representatives of the district council.
The property tax bills are made up of school, community and municipal taxes. Although school districts are appealing, any increase in the appraisal would also increase the county and council taxes.
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Erie, Millcreek and Fairview school districts – the only Erie County’s school districts to appeal for assessment in 2021 – use the same criteria in their challenges, officials from the three districts said. Each district will only appeal if an increase in the appraisal based on the new purchase price would generate at least 1,000 additional tax revenue for the district for the property.
The deadline for filing appeals was August 1, with hearings scheduled until autumn. Some examples of other appeals based on evaluation protocols:
- A home on Ruhl Road in Fairview was priced at $ 266,320 and sold for $ 455,000.
- A home on Walnut Creek Drive in Fairview was priced at $ 201,300 and sold for $ 450,000.
- A home on Wolf Road in Millcreek was $ 357,000 and sold for $ 550,000.
- A home on Brooksboro Drive in Millcreek was priced at $ 189,300 and sold for $ 316,600.
- A home on Homeland Boulevard in Erie was priced at $ 135,000 and sold for $ 359,000.
- A house on Mohawk Drive in Erie was priced at $ 149,660 and sold for $ 280,000.
- A home on Eliot Road in Erie was priced at $ 168,710 and sold for $ 250,000.
Waiting for reassessment
Erie County, which underwent a district re-evaluation of its properties in 2003 and 2013, is experiencing regular challenges from school districts to the scores.
Another statewide reassessment was planned for 2023, which would result in a review of the estimated values of all more than 122,570 lots in Erie County. But the pandemic has halted the Erie County’s government plans.
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While waiting for a nationwide re-evaluation, Erie, Millcreek and Fairview school districts are following their respective school authorities’ directions in filing appeals to the evaluation committee. The district standardization of appeals – with filings based on the possibility of an increase in tax revenue of at least $ 1,000 – is designed to eliminate appeals that might be viewed as arbitrary.
“We look at them all equally,” said Randy Pruchnicki, director of non-teaching support services for the Erie School District real estate affairs. “The $ 1,000 threshold allows us to look at all of these properties. We just don’t highlight these properties. “
“Ultimately, it is the decision of the evaluation committee how you perceive this,” said Pruchnicki.
The judgments of the evaluation committee come into force on January 1st. The judgments can be appealed to the Erie County Court of Common Pleas.
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Evaluation Committee Considerations
The assessment board will negotiate a total of 297 appointments this fall – the 150 combined appointments of the three school districts plus a further 147 appointments from property owners. The property owners claim their estimated values are too high and want to reduce them.
In 2020, the three school districts filed a total of 144 appeals – 100 from the Erie School District, 33 from the Millcreek School District, and 11 from the Fairview School District, according to the Assessment Bureau.
With the Erie County’s housing market warming so much, reflecting a nationwide trend, one would have expected the number of appeals for 2021 to exceed the number for 2020. The lower number of appeals in 2021, however, seems to reflect the limited number of homes sold in the Erie County’s market so far this year, said Don Bihler, a real estate agent who chairs the assessment board.
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The limited number of homes that have hit the market is one factor that has helped some buyers pay much more than the appraised value of a home, said Scott Maas, Erie County’s chief professor and director of the County Assessment Bureau.
Maas, who helps the board of directors present cases, said board members had discussed what general factors to consider when considering appeals aimed at increasing estimated values during the current housing market. The purchase price of a home does not automatically dictate the estimated value, said Maas.
For example, Maas said that due to competition from other prospective buyers, a buyer may have to pay much more than the estimated value – as well as the asking price – resulting in “overvalue due to pressure”. “
Maas said the panel examines real estate valuations when property owners present them in order to get an idea of a property’s market value and estimated value. But he said buyers in the current market might pay even more than its estimated value to close a deal.
“In an overheated market,” said Maas, “we will find that real estate is valued at $ 120,000 and someone pays $ 210,000.”
An ‘incredible’ market
Erie appraiser Robert Glowacki is analyzing property sales for potential appeals for the Erie and Millcreek school districts through his agency, Assessment Evaluation Inc. The Fairview School District conducts its own assessments, said district executive and chief financial officer David Niemira.
Glowacki, who has been in the valuation and valuation business in Erie since 1973, said he has never seen the local housing market generate so many high-priced home sales. He said he was stunned by the large number of potential buyers flocking to open homes, leading to a level of competition that often ends with homes selling in a matter of days or even faster.
“It’s absolutely incredible,” said Glowagi. “It’s crazy. I just hope it can sustain itself.”
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For Brian Agresti, the uniqueness of the current housing market will be an issue that he intends to address at his hearing before the evaluation committee. His goal will be to reduce the potential appreciation to the appraised value of his home.
Agresti said a number of factors, including “the shortage of inventory” of homes in the market, low interest rates on financing, and the influx of federal stimulus checks have created a situation where he and others have often had to pay more, to buy their dream houses.
Agresti said he would also have his house valued and submit it to the board of directors, a move that he also recommends to his customers.
Other information Agresti wants to present to the assessment board – and which he also recommends to its clients – is:
- A list of comparable properties with and without water views that were recently sold and are of similar size, design, location, and square footage.
- Inside and outside photos showing improvements that are needed.
- Statistics showing the value of real estate before and after COVID-19, and how COVID-19 and housing shortages caused values to rise rapidly. “Only time will tell whether the values will remain elevated,” said Agresti.
- How a significant tax hike can be harmful and reduce the value of real estate.
As Agresti’s list shows, establishing the appraisal of a newly purchased property in Erie in 2021 can be a complex task.
“We are in an unprecedented market,” said Agresti.