Appraiser’s Subjective Adjustments Rejected; Owner Loses Appeal
In a challenge to a residential property tax assessment for tax year 2011 the New Jersey Tax Court found that plaintiffs failed to provide sufficient competent evidence to overcome the presumption of validity.
The plaintiffs in Bogusevich v. Ocean Twp., presented factual and expert testimony to which the township did not object and which the court accepted into evidence. The plaintiff’s appraiser relied on three sales of comparable properties, including one on the same block as the subject that sold for slightly higher that what the plaintiffs had paid for the subject property only three months earlier.
The court found that the adjustments made by the plaintiff’s appraiser were not credible as the appraisal report did not contain any market data to support his adjustments for lot size, gross living area and basement. Plaintiff’s appraiser testified that the basis for his adjustments was his 30-plus years as an appraiser. The court concluded that the adjustments were subjective, and held that there must be some factual data to support an adjustment and any “inferences and conclusions” by an expert must be derived from that data.
As for the subject sale, the court found that there was insufficient evidence to support plaintiff’s assertion that the purchase was an arms-length transaction. Moreover, the plaintiff’s appraiser did not include the subject sale in his analysis.
A copy of Bogusevich v. Ocean Twp. may be found here.
While not cited in the court’s unpublished opinion in Bogusevich, attorneys and appraisers would be mindful to review Greenblatt v. Englewood, 26 N.J. Tax 41 (May 6, 2011) in which the court dismissed a residential tax appeal after finding that the appraisers for both the taxpayer and the municipality failed to provide adequate support for their respective opinion of value. The Tax Court there found that neither appraisal expert sufficiently explained the methodology and assumptions used in making adjustments to the comparable properties. As the court noted, each expert “failed in the ‘whys and wherefores’ in support of his value.” The court held that without such an explanation it could place little weight on the expert opinions.
These cases demonstrate the heavy burden that is placed on taxpayers in overcoming the presumption of correctness. A critical part of this process includes the adjustments made by appraisers. Failure to provide a detailed explanation in support of an adjustment will undercut the credibility of the appraiser’s analysis.
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