Peter Flatow: Assessments, Inspections And The Status Quo

Alert “06880” reader Peter Flatow writes:

Last week I read a news story about the upcoming revaluation of real estate. When I learned that appraisers would enter my home, my reaction was negative. (Not about the revaluation. I agree it needs to be done – periodically).

I told Dan I’d like to research the topic for “06880.” Here’s what I found.

First, I would like to thank the RTM members who responded to my email or spoke with me in person. Also thanks to town assessor Paul Friia for his thoughtful and prompt responses to my questions.

I learned that no one must grant access to their home. It is voluntary. So much for my concern.

Paul reports, “the 2005 revaluation resulted in interior inspections of just under 60% of the properties in Westport.” Reading the enabling legislation (which is almost unreadable) and state reports on the internet, I found what’s required: a statistical assessment every 5 years, and a physical assessment every 10.

Would an interior inspection change the assessed value of this Westport home?

Would an interior inspection change the assessed value of this Westport home?

What is unclear (at least to me) is the rationale to include a voluntary internal inspection as part of the physical inspection. Fairness is inferred: The more data, the more accurate the assessment.

As anyone who analyzes data will tell you, accuracy (and fairness) diminish when samples are not equally drawn and consistent. Assessments are to some degree subjective because no two homes are exactly alike, so adding the variable of some homes having both internal and external assessments, and some not, would in my opinion make them less alike (less fair). While this all started as a feeling of invasion of privacy, it has turned into a question about whether our elected officials question what they are being asked to approve. Are they in a “maintain the status quo” mentality?

I asked Paul if, when the reappraisal RFP went out, he asked for the cost of just an exterior reassessment.

He said he did not, “because that wasn’t part of the scope of services that we were looking for.  I have always been under the opinion that the better the data that we have, the better chance we have at being fair and accurate.” I totally agree with the last sentence.

This is not critical of Paul. He is doing what has been done, and he is expected to do. But what if we began to question the status quo? What if we ask, “does this still make sense?” What would the town save if only an external (all that is required by law) “physical inspection” were conducted?

Every corporation I have ever worked with continually looks for ways to save money (improve profits) by changing or stopping unnecessary practices. What if all levels of government did the same thing?

35 responses to “Peter Flatow: Assessments, Inspections And The Status Quo

  1. Right on, Peter.
    No interior inspections would be cheaper and result in more compatible data (although not as accurate if the interior of every house were ACCURATELY inspected).
    During the 2000? Reval, I let the inspector in my house to see what he did.
    As he left, I asked to see his results. Then I asked him to show me the fireplace he had listed (I HAD NONE). And I pointed out the comfort level of the home was due to central air (HE HAD NO A/C).
    So ITS A JOKE ! Because some if the inspectors are part time dolts hired by the Reval company. They don’t always even get the outside right, so WHY WASTE OUR TIME $$ and MONEY $$ having THE INCOMPETENT make the UNWILLING do the UNNECESSARY?
    Did I already say ITS A JOKE ? And an expensive one. And we pay and they laugh. CANCEL the interior inspection and ask for a rebid!
    Thanks Peter 🙂

    • Ellen van Dorsten

      If the town and Vision Appraisal would make available the “formula” for the appraisal process calculations according to the CT State Freedom of Information Act, that would give each homeowner the opportunity to re-evaluate what has been assessed and calculated. If the town would provide that information, the residents would then have a good number of their intial concerns answered. Of course, the disclosure of that information and level of detail might prompt more questions.

  2. As everyone in town knows, the interior inspections are a tremendous waste of time and money. Folks who have renovated their homes on the interior typically will NOT agree to the inspection. Why would they? And people who have done no renovations to the interior allow the inspectors in only to find out later that their 1968 unrenovated kitchen with basic 20 year old appliances and baths are listed as “good” and the overall interior is rated an “A”. Twice I have had either the Board of Assessment Appeals (2005) or the Property Assessor and Town Attorney (2020 reval) come out to our property and agree that Vision Appraisal grossly misrepresented the condition of the structure. In both cases, the assessed value was sharply reduced and the field card data was changed. Why are we paying Vision Appraisal (again) to do what volunteers and town employees ultimately spend time redoing?

  3. So many people appeal – they want their home valued HIGH when they want to sell it, and LOW for tax puposes. Imagine the cost of all the appeals?!?! This may help to decrease the number of people going through the appeal process, and ultimately save money.

  4. Peter Flatow

    Dan thanks for posting. Thanks for the supporting comments (so far – this is 06880 after all.) Change is slow but possible.

  5. Peter, I have a completely different perspective. It seems to me that doing only external inspections would significantly lessen the chance of determining the true value of individual homes. Could you imagine having a Westport real estate broker come to your home to assess it for the purpose of selling it and then telling that broker: “Sorry, I expect you to give me an accurate appraisal by only taking a look outside. You can’t come inside.”

    I would rather look to change the law and pay more if necessary to have a more equitable system of full appraisals of homes for determining property taxes. (Perhaps the tax assessment system could include bringing in the experience and expertise of local real estate brokers and/or those who do appraisals for mortgages.)

    • Peter Flatow

      Fred, you make a good point and I considered it but an appraiser for a real estate agent has a very different objective – get the highest evaluation because the higher the sale price the higher the commission. As for an appraisal for a mortgage again different objective lowest to minimize the banks risk. If fact when I refinanced the difference between Chase’s appraisal and Bank of America was over $200,000!!! Based on the overall value or price I could sell for that is a very big difference. In the case of appraisals for tax purposes the State law talks to fairness. My point is you can’t have fairness if some appraisals are outside only and some both. You can’t (my research) legislate internal appraisals across the board.

  6. Fred: They cannot enter the home unless the homeowner is present and consents. Real estate brokers are prohibited from doing anything like this. Appraisers cost way too much and would raise each [Yes, your] individual homeowners bill by over $1,000. Fugget about it. The cost and inefficiency of interior data collection WAY exceeds the benefit, which is Peter’s point…
    WHY DO IT?

    • Tom, how do you figure that appraisers “would raise each…individual homeowners by over $1,000”? A typical appraisal fee when you do an individual home loan costs far less than that–maybe $300 or $400–and with the economies of scale in a town-wide aporaisal process, one would think there is a possibility the cost could be less. The benefit of doing it right–especially when properly taxes are the foundation of what is done in town–is what is paramount to me.

  7. Inspectors going door to door to look inside homes is expensive, antiquated, and an invasion of privacy. At the last RTM meeting, I was one of only 2 representatives who voted against hiring appraisers to go inside homes. I sited 4th Amendment concerns as well as concerns about data quality. I suggested that regression analysis would be a less subjective, cheaper, and better way to evaluate.

    • Good for you !

    • Peter Flatow

      Clarissa – thank you! From my research I believe the statistical assessment in fact uses regression analysis along with other analytic tools to achieve “fairness” but this is and always will be a subjective process because (thankfully) no two houses are alike or in the same neighborhood.

  8. Nancy W Hunter

    Yearly assessments by an independent company is the norm.
    Interior assessments are only done for insurance purposes, or of course by a realtor.

    • Where are yearly assessments performed? Where are yearly assessments the norm ?

      • Nancy W Hunter

        Apologies. Yearly property tax assessments are performed by an independent provincial entity.
        Appraisals are a different animal, of course, which vary as the market changes.

      • Nancy W Hunter

        Location, location, location is a constant value.

        • Location is not a constant value. Do you think the value of real estate in SOHO has remained the same over the last 20 years? The location has remained the same, the value of the real estate has not.

          • Nancy W Hunter

            I guess SOHO is a bad location, then.
            Here, we’re addressing assessment, appraisal, inspection, realty… all entwined. Confusing.
            The inside of a lovely home is a relatively small bonus compared to lot size and location.

            • The value of a given location can change. As to SOHO; you are clueless.

              • Nancy W Hunter

                No one can predict the exact value of one’s home tomorrow, but if you’re smart you’ve bought in an area where the change in value is little, rather better.
                Hopefully, you’ve saved enough to buy said house, and smart enough to pay off the mortgage early on. Planning, planning, planning.

  9. Wendy Batteau

    As a member of the RTM, I was part of the committee investigating the way appraisals were conducted by Vision. At that time I was (vocally) dismayed to learn that we had no access to the proprietary list of criteria Vision used in evaluating each property and structure. I was assured that when the contract for the next (i.e. current) requisite physical appraisal was negotiated, such disclosure would be required. Without knowing what weight is given to various features and how relative quality is determined, appraisals of the exterior as well as interior of homes (and properties, for that matter) is impossible to evaluate. After the economic dip of the last decade, interior home features and condition might be relevant, but certainly not if we don’t know how they are decided.

    • Peter Flatow

      Wendy I see you are still an RTM member so I am curious were you the other no vote? A point that is getting lost is our government continues to do what has been done in the past and not what should be done either because things have changed or because there is a better way. There seems to be a consensus that what we are paying for doesn’t make sense but all but two voted the budget to do it the old way! Who is responsible for saying no, let’s rethink things?

      • Thank you, Peter. I agree completely. At the meeting an RTM member argued that “every other town in CT is doing it this way.” I responded in the public record that we should try to find the best solution, not just do what everyone else does. Yet another RTM member came up to me after the meeting and said that my vote had been wrong because “this is the way we have been doing it for 100 years.” I told him that a lot has changed in 100 years, for example computer capability, and that government should strive to improve, not just maintain status quo.

        • Peter Flatow

          Good for you and thank you. It would be great to know who that “other RTM member” was so we the people could find a replacement. 🙂

          • Well, Peter, I don’t know what to tell you. Given that the vote was not even close, only Sylina Levy & I voted against and 1 abstained. And given that so many RTM members are very vocal people, I had expected several would chime in to explain the rationale of supporting the process & associated expense. Several RTM members expressed concerns, then voted in favor. I guess it’s hard to say, “No, let’s rethink things.” However, to be fair, my colleagues on the RTM freely volunteer their time and energy to improving the beautiful Westport. I wish your article had appeared sooner so that some of these viewpoints expressed could have been heard by the RTM before the vote. Thank you for writing it & Dan for posting.

  10. Michael Calise

    I am not comfortable with interior inspections either, especially since not all participate. Since verification of number of bathrooms and fireplaces are an important component of value its a tough call. Since in most instances land value is the major contributor to total value another approach to building value determination may be appropriate. I believe in some jurisdictions (not Connecticut) only land is valued for tax purposes.

    • But Michael, valuing only the land would lead to an exceptionally distorted tax system, especially because, in reality, the land is only a small component of the fair market value of a property in many cases.

      Evidence of this can be found in what happens with those properties developers look to buy for teardowns. The basic formula is that they buy a property for X in the open market and then end up selling a new home for roughly 3X or, in other words, roughly three times the amount they paid for the property. So, in essence, the new house has tripled the value of the property.

      In the instances where teardowns are not involved, the interior condition (including such factors as renovated kitchens & bathrooms) does have a real impact on selling price and, thus, on the fair market value of a property to prospective home buyers. So it would seem very relevant to assess that as part of the tax appraisal process.

      I’m just curious: are there any local real estate brokers who read 06880 and are willing to offer their perspective on this? I, for one, would love to hear their take on this. Thanks.

  11. Michael Calise

    I did not suggest a land only approach. I merely pointed out that I have read that it is practiced in some jurisdictions. I did suggest a closer look at how we value buildings as there are many components of value which are finite and easily determined through exterior inspection and assessors records. All the assessor attempts to do is achieve a fair comparison of value between respective property owners so that ultimately taxes are fairly assessed.

  12. @ Ellen
    I tried to get the formula back some 10 years ago, but they stonewalled me…”proprietary” “highly confidential.”
    It’s the dirty little secret of how they value neighborhoods that they dream up on computers.
    Keep trying.
    If you had their “formula,” you might have cause to ask a question…and they don’t have answers…only guesstimates.

  13. Nancy W Hunter

    Maybe one should read David Chilton’s “The Wealthy Barber Returns” in order to put one’s mind at rest (and laugh a bit, too), as I’m beginning to think that the real crux of this post comes down to personal finance.