Would love to hear more from you! Can you point out which graph in particular is inaccurate and what the deficiency is? Also it’s cool that you have so much experience as an assessor - can you tell me which office you worked in?
I worked in an Assessor’s Office in Utah. I know this sounds funny, but we working with Assessor’s in Oklahoma when I was in the Assessor’s Office. So, is not as different in the United States as people might think.
Just a few things:
Where I live, Sales Chasing is illegal. There are two different types of states. “Full Disclosure” and “Non Disclosure.” There are several “Non-disclosure” states where the Assessor is not allowed to see the amount the home was purchased for.
If the Assessor does find out the sales price, and values the home at that price w/o valuing all the other homes in the area, the assessor can be in hot water for Sales Chasing.
It sounds like Iowa is “Full Disclosure” and Sales Chasing is alive and well.
One reason for a discrepency in the price of homes that are very similar is that not all homes are valued as of January 1st. Some states value properties as of June 1st. Not all Assessor’s are County Offices some Assessor’s are City Offices.
Often A Plat (Plot Map) is handled by one Assessor in the Office and the next Plot Map is handled by another Assessor. So I would expect there to be some some variation in the way the homes are valued.
Another possible reason for the discrepency is homes must be appraised at least once every 5 years. So, an Assessor has the homes on a time to be valued. One year the Assessor might have their office all the homes built from 1970 - 1999.
~So if the home next door to the 1999 was built in 2000, it’s value could stay very close to what it currently is. And it’s assessed value may not change until the next year.
If you’re curious about appeals, I’ve been in thousands of appeals and I know what works the best.
Mass appraisal can be in the form of an AVM, Cost Approach, Sales Comparison Approach, Income Approach, etc. It depends on the size of the Assessor’s office and the number of parcels being appraised.
But I’ve learned that most people are afraid of the process because they fear what they don’t understand.
My goal now is to help people learn to minimize their property taxes, then help them know which improvments will given their homes give them the most bang for their buck.
This is just a microscopic look into the Assessor’s world. Let me know if I have bored you to death.
Thank you for taking the time to share your insights and experience—it’s always a treat to connect with someone who’s been in the thick of it for so long. I genuinely appreciate your feedback and am eager to learn from your perspective.
It’s great to hear you’ve worked in Utah. I know Utah's a big place, but any chance you know Jake Parkinson who used to work at the Tooele County Assessor’s Office? I've learned a lot from him.
Let’s go through your points one by one:
Sales Chasing & Non-Disclosure:
I completely agree that the distinction between “Full Disclosure” and “Non Disclosure” states is crucial. In Texas (my home state), we face similar challenges, and I’ve found the Utah offices I've worked with to be particularly resourceful in navigating non-disclosure issues. I discuss this topic in more detail in this section (ttps://progressandpoverty.substack.com/i/158598256/data-scarcity). If there’s anything you feel could be clearer, I’d be happy to hear your thoughts.
If any section seemed ambiguous, please let me know where I might clarify further.
Assessor Offices’ Structures:
You’re absolutely right that not all assessor offices operate at the county level; some are indeed city offices or even independent entities. I’ve illustrated this point with examples of “appraisal districts” that function under the authority of neither the city or the county (https://progressandpoverty.substack.com/i/158598256/actual-bad-behavior). I appreciate you highlighting this nuance.
Mass Appraisal Methods:
Thank you for pointing out the broader scope of mass appraisal techniques. My article implicitly focused on the sales comparison approach, which admittedly means I glossed over alternative methods like the AVM, Cost Approach, or Income Approach. I’ve covered these in previous articles, and I appreciate the reminder to ensure readers understand the full context.
Finally, regarding your comment that “your graph is not accurate” — could you please indicate which graph you’re referring to and what specific issue you noticed? The illustrations are meant to be simplified examples that get one concept across at a time rather than claiming to explain everything at once. I’m more than willing to address any specific concerns if you could point me in the right direction.
Thanks again for your thoughtful feedback. I value the opportunity to engage in this discussion and am always open to learning from the experts. Wishing you a fantastic day ahead!
I actually think the illustrations are really good for explaining what happens and generally how things work. I think you've done a tremendous job.
I'm new to this forum so I apologize for the criticism.
I would just like to add a quick word a caution about your illustrations (graph). While I do believe they are great as a general rule of thumb to get your point across; Zillow, Redfin, or a Real Estate Agent may be reporting the sq ft of the homes in the wrong manner.
Currently I review appraisals for Fannie Mae correctness. Every borrower is allowed one appeal per appraisal due to a Fannie Mae regulation as of last October.
One of the biggest complaints I hear in appeals currently is that real estate agents, Zillow, and Redfin are adding the basement sq ft to the main level sq ft for marketing purposes which often makes the home look like a better deal.
Appraisers are not allowed to report the sq ft of a home this way. There is no guarantee the Assessor does not report the sq ft of a home in the same manner as the real estate agents.
In regards to Jake Parkinson, I want to say yes. I believe Jake was in a different County when I met him. There are 29 Counties in Utah with a total population of about 3.4 million. So, I do know some of the Assessors well, but they are the assessors in the more populated areas.
I don't know last names really well. First names and faces mostly.
Lars, I think you're doing a great job. Keep up the good work.
Hey nothing to apologize for! I want to keep myself sharp and nothing is better than an experienced practitioner for that.
> One of the biggest complaints I hear in appeals currently is that real estate agents, Zillow, and Redfin are adding the basement sq ft to the main level sq ft for marketing purposes which often makes the home look like a better deal.
This is a really great insight, including unfinished square footage I presume as if it were finished? I'll be sure to be on the lookout for this anytime I touch those sources.
Do they also conduct ratio studies where the assessed value is divided by the sale price _soon after_ the valuation/release date? This should be a better shield against sales chasing, right?
It varies by jurisdiction. Most assessors will run ratio studies throughout the process, but the state oversight boards will typically stick to a "standardized test" as above.
Indeed, using new sales to check the predictive power of your valuations is a good practice. The challenge is that you are always limited by the amount of sales, and sales soon after the valuation date will only affect a portion of your sales.
How would it work in a dying village that barely sees any transactions? Would you generalize pricing based on the availability of amenities in a similar location that does have transaction data?
I’m also curious how it work with a very high LVT when you couldn’t rely on sales data.
So, obviously the more extreme data challenges are more difficult and you should expect wider error bars there.
> How would it work in a dying village that barely sees any transactions? Would you generalize pricing based on the availability of amenities in a similar location that does have transaction data?
There are some who do this, but it will certainly be challenged on the basis of how comparable the two areas are, and that will be difficult to mount a counter-argument against. How do we define a "similar location?" I should note that this problem sometimes does occur *within* a jurisdiction -- and in that case the usual answer is to find some--preferably economic--anchor point, such as median income for the local area, which is widely published in US census data. The comparable location should also have similar density, same mix of property types, and not be too far away.
Another consideration is that there is more than one general approach to value and here I only spoke about the most common one, the "market approach" or "sales comparison approach." The other two approaches to value are the cost approach and the income approach.
In an area without any sales, or very sparse sales (such as is often the case with commercial, industrial, or rental property) the income approach comes into play. This would be a net present value of discounted cash flow model, the same model that real estate investors use to generate the prices they bid on properties in the first place. This assumes you have access to rental data, cap rates, etc.
A good article, thank you for writing it up. I kinda feel like it leaves out most of the important bits though; in real life, nearby houses can be quite heterogeneous, and teasing out what impact this should have on their market value seems like the primary challenge of making fair and accurate valuations.
Hey Isaac! So this is only the first of many articles to come, and if there's interest believe me we will dive deep into all the rest of these questions. This in particular is a good question, and of course in the real world nearby homes are in fact not perfectly identical. Part of the open source library I'm working on is a clustering algorithm that accounts for this -- fractally dividing a neighborhood up into clusters based on tiers of the most important physical characteristics (building type, building size, building age, building quality, building condition, etc).
We'll be more than happy to get into all the nitty gritty details when we release that, and I look forward to your feedback.
I was just already at 8,000+ words for the opener so I figure I had to end somewhere 😅
I look forward to reading the rest! I was getting curious about this recently actually; I bought a house for ~$300k and just a couple years later with no apparent change in the area it was being appraised at ~$450k, which was confusing.
I would certainly like to see the market comps they used. There *is* a pretty common phenomenon where buyers anchor on the price they paid and are shocked at how fast the market moves after they move in and check out of the housing market - but bottom line, either there’s market evidence to support your valuation or there isn’t. If you’re being compared to homes too far away or of the wrong class, you could likely mount a successful protest.
> If a property assessor overvalues a home in a wealthy neighborhood, they will be sure to hear of it come protest season. In this way, any valuation errors on the higher end tend to get swiftly corrected, while there’s less pressure coming from the low end.
I'm confused by this part; you say they only protest overvaluation, which makes sense, but then conclude that *any* error will get corrected by this mechanism. Why would this apply to undervaluations too?
If that's your reading, I might have worded it awkwardly. The property tax protest mechanism mostly only catches overvaluations. To the extent it catches undervaluations, it's when someone notes that their neighbor got a lower valuation than they did. But that's marginal.
The pressure to catch undervaluations usually comes from state oversight boards. For instance, the Texas state comptroller's property value study is there to make sure that local appraisal districts are not valuing too low. (They also check if valuations are too high, but there's an actual incentive not to undervalue, because the state is on the hook to supplement funds for poor school districts, and it frowns on local governments that freeload on state funds through undervaluation)
Can you elaborate on how regression to the mean applies here? Regression to the mean is I think primarily an issue when some random-over-time process is measured as being far away from the mean; we expect it to move towards it in the future. By what mechanism would an assessment be affected?
I mean it just as a general sort of gravitational pull I tend to see, caused by any number of small factors. The most significant explicit cause is typically data bias. Forgive me if I'm misusing the term.
Sales data for average-priced properties is the most numerous. If you are missing even a few sales in high end neighborhoods, that tends to pull their valuations down. And if you are missing even a few sales in low end neighborhoods, that tends to pull their valuations up.
But then there's missing data in characteristics, because (as we'll talk about in future articles) valuations are built as models where characteristics get assigned dollar values in a complex way. When you are missing characteristic data, you fill in with assumptions -- typically whatever is average. And this has a tendency to pull the valuation for whatever you filled in towards the average value as well.
…39 minute read(!)
But I will read it.
Okay, excellent write-up. Thank you for taking so much time for this post, both for its thoroughness as well as your humility.
Thank you for this effort to inform your readers. That is a whole ton and a half of work.
Hi Lars,
After 12.5 years in the Assessor’s Office I can tell you your graph is not accurate.
To anyone that has a question on how this works let me know and I might be able to provide some insight.
Nice try though.
Would love to hear more from you! Can you point out which graph in particular is inaccurate and what the deficiency is? Also it’s cool that you have so much experience as an assessor - can you tell me which office you worked in?
Hi Lars,
I worked in an Assessor’s Office in Utah. I know this sounds funny, but we working with Assessor’s in Oklahoma when I was in the Assessor’s Office. So, is not as different in the United States as people might think.
Just a few things:
Where I live, Sales Chasing is illegal. There are two different types of states. “Full Disclosure” and “Non Disclosure.” There are several “Non-disclosure” states where the Assessor is not allowed to see the amount the home was purchased for.
If the Assessor does find out the sales price, and values the home at that price w/o valuing all the other homes in the area, the assessor can be in hot water for Sales Chasing.
It sounds like Iowa is “Full Disclosure” and Sales Chasing is alive and well.
One reason for a discrepency in the price of homes that are very similar is that not all homes are valued as of January 1st. Some states value properties as of June 1st. Not all Assessor’s are County Offices some Assessor’s are City Offices.
Often A Plat (Plot Map) is handled by one Assessor in the Office and the next Plot Map is handled by another Assessor. So I would expect there to be some some variation in the way the homes are valued.
Another possible reason for the discrepency is homes must be appraised at least once every 5 years. So, an Assessor has the homes on a time to be valued. One year the Assessor might have their office all the homes built from 1970 - 1999.
~So if the home next door to the 1999 was built in 2000, it’s value could stay very close to what it currently is. And it’s assessed value may not change until the next year.
If you’re curious about appeals, I’ve been in thousands of appeals and I know what works the best.
Mass appraisal can be in the form of an AVM, Cost Approach, Sales Comparison Approach, Income Approach, etc. It depends on the size of the Assessor’s office and the number of parcels being appraised.
But I’ve learned that most people are afraid of the process because they fear what they don’t understand.
My goal now is to help people learn to minimize their property taxes, then help them know which improvments will given their homes give them the most bang for their buck.
This is just a microscopic look into the Assessor’s world. Let me know if I have bored you to death.
Thanks Lars.
Hi there,
Thank you for taking the time to share your insights and experience—it’s always a treat to connect with someone who’s been in the thick of it for so long. I genuinely appreciate your feedback and am eager to learn from your perspective.
It’s great to hear you’ve worked in Utah. I know Utah's a big place, but any chance you know Jake Parkinson who used to work at the Tooele County Assessor’s Office? I've learned a lot from him.
Let’s go through your points one by one:
Sales Chasing & Non-Disclosure:
I completely agree that the distinction between “Full Disclosure” and “Non Disclosure” states is crucial. In Texas (my home state), we face similar challenges, and I’ve found the Utah offices I've worked with to be particularly resourceful in navigating non-disclosure issues. I discuss this topic in more detail in this section (ttps://progressandpoverty.substack.com/i/158598256/data-scarcity). If there’s anything you feel could be clearer, I’d be happy to hear your thoughts.
Valuation Dates:
You make a good point about the variety of valuation dates. I mentioned January 1st mainly because it’s the most commonly used benchmark, but I certainly appreciate that some states opt for dates like June 1st. I do touch on this nuance in this section of the essay: (https://progressandpoverty.substack.com/i/158598256/freezing-in-january) and further note the time effects on valuation drift here: (https://progressandpoverty.substack.com/i/158598256/a-note-on-time).
If any section seemed ambiguous, please let me know where I might clarify further.
Assessor Offices’ Structures:
You’re absolutely right that not all assessor offices operate at the county level; some are indeed city offices or even independent entities. I’ve illustrated this point with examples of “appraisal districts” that function under the authority of neither the city or the county (https://progressandpoverty.substack.com/i/158598256/actual-bad-behavior). I appreciate you highlighting this nuance.
Mass Appraisal Methods:
Thank you for pointing out the broader scope of mass appraisal techniques. My article implicitly focused on the sales comparison approach, which admittedly means I glossed over alternative methods like the AVM, Cost Approach, or Income Approach. I’ve covered these in previous articles, and I appreciate the reminder to ensure readers understand the full context.
Finally, regarding your comment that “your graph is not accurate” — could you please indicate which graph you’re referring to and what specific issue you noticed? The illustrations are meant to be simplified examples that get one concept across at a time rather than claiming to explain everything at once. I’m more than willing to address any specific concerns if you could point me in the right direction.
Thanks again for your thoughtful feedback. I value the opportunity to engage in this discussion and am always open to learning from the experts. Wishing you a fantastic day ahead!
Best regards,
Lars
Lars,
I actually think the illustrations are really good for explaining what happens and generally how things work. I think you've done a tremendous job.
I'm new to this forum so I apologize for the criticism.
I would just like to add a quick word a caution about your illustrations (graph). While I do believe they are great as a general rule of thumb to get your point across; Zillow, Redfin, or a Real Estate Agent may be reporting the sq ft of the homes in the wrong manner.
Currently I review appraisals for Fannie Mae correctness. Every borrower is allowed one appeal per appraisal due to a Fannie Mae regulation as of last October.
One of the biggest complaints I hear in appeals currently is that real estate agents, Zillow, and Redfin are adding the basement sq ft to the main level sq ft for marketing purposes which often makes the home look like a better deal.
Appraisers are not allowed to report the sq ft of a home this way. There is no guarantee the Assessor does not report the sq ft of a home in the same manner as the real estate agents.
In regards to Jake Parkinson, I want to say yes. I believe Jake was in a different County when I met him. There are 29 Counties in Utah with a total population of about 3.4 million. So, I do know some of the Assessors well, but they are the assessors in the more populated areas.
I don't know last names really well. First names and faces mostly.
Lars, I think you're doing a great job. Keep up the good work.
Hey nothing to apologize for! I want to keep myself sharp and nothing is better than an experienced practitioner for that.
> One of the biggest complaints I hear in appeals currently is that real estate agents, Zillow, and Redfin are adding the basement sq ft to the main level sq ft for marketing purposes which often makes the home look like a better deal.
This is a really great insight, including unfinished square footage I presume as if it were finished? I'll be sure to be on the lookout for this anytime I touch those sources.
Do they also conduct ratio studies where the assessed value is divided by the sale price _soon after_ the valuation/release date? This should be a better shield against sales chasing, right?
It varies by jurisdiction. Most assessors will run ratio studies throughout the process, but the state oversight boards will typically stick to a "standardized test" as above.
Indeed, using new sales to check the predictive power of your valuations is a good practice. The challenge is that you are always limited by the amount of sales, and sales soon after the valuation date will only affect a portion of your sales.
How would it work in a dying village that barely sees any transactions? Would you generalize pricing based on the availability of amenities in a similar location that does have transaction data?
I’m also curious how it work with a very high LVT when you couldn’t rely on sales data.
Great article, thanks!
So, obviously the more extreme data challenges are more difficult and you should expect wider error bars there.
> How would it work in a dying village that barely sees any transactions? Would you generalize pricing based on the availability of amenities in a similar location that does have transaction data?
There are some who do this, but it will certainly be challenged on the basis of how comparable the two areas are, and that will be difficult to mount a counter-argument against. How do we define a "similar location?" I should note that this problem sometimes does occur *within* a jurisdiction -- and in that case the usual answer is to find some--preferably economic--anchor point, such as median income for the local area, which is widely published in US census data. The comparable location should also have similar density, same mix of property types, and not be too far away.
Another consideration is that there is more than one general approach to value and here I only spoke about the most common one, the "market approach" or "sales comparison approach." The other two approaches to value are the cost approach and the income approach.
In an area without any sales, or very sparse sales (such as is often the case with commercial, industrial, or rental property) the income approach comes into play. This would be a net present value of discounted cash flow model, the same model that real estate investors use to generate the prices they bid on properties in the first place. This assumes you have access to rental data, cap rates, etc.
A good article, thank you for writing it up. I kinda feel like it leaves out most of the important bits though; in real life, nearby houses can be quite heterogeneous, and teasing out what impact this should have on their market value seems like the primary challenge of making fair and accurate valuations.
Hey Isaac! So this is only the first of many articles to come, and if there's interest believe me we will dive deep into all the rest of these questions. This in particular is a good question, and of course in the real world nearby homes are in fact not perfectly identical. Part of the open source library I'm working on is a clustering algorithm that accounts for this -- fractally dividing a neighborhood up into clusters based on tiers of the most important physical characteristics (building type, building size, building age, building quality, building condition, etc).
We'll be more than happy to get into all the nitty gritty details when we release that, and I look forward to your feedback.
I was just already at 8,000+ words for the opener so I figure I had to end somewhere 😅
I look forward to reading the rest! I was getting curious about this recently actually; I bought a house for ~$300k and just a couple years later with no apparent change in the area it was being appraised at ~$450k, which was confusing.
I would certainly like to see the market comps they used. There *is* a pretty common phenomenon where buyers anchor on the price they paid and are shocked at how fast the market moves after they move in and check out of the housing market - but bottom line, either there’s market evidence to support your valuation or there isn’t. If you’re being compared to homes too far away or of the wrong class, you could likely mount a successful protest.
> If a property assessor overvalues a home in a wealthy neighborhood, they will be sure to hear of it come protest season. In this way, any valuation errors on the higher end tend to get swiftly corrected, while there’s less pressure coming from the low end.
I'm confused by this part; you say they only protest overvaluation, which makes sense, but then conclude that *any* error will get corrected by this mechanism. Why would this apply to undervaluations too?
If that's your reading, I might have worded it awkwardly. The property tax protest mechanism mostly only catches overvaluations. To the extent it catches undervaluations, it's when someone notes that their neighbor got a lower valuation than they did. But that's marginal.
The pressure to catch undervaluations usually comes from state oversight boards. For instance, the Texas state comptroller's property value study is there to make sure that local appraisal districts are not valuing too low. (They also check if valuations are too high, but there's an actual incentive not to undervalue, because the state is on the hook to supplement funds for poor school districts, and it frowns on local governments that freeload on state funds through undervaluation)
Can you elaborate on how regression to the mean applies here? Regression to the mean is I think primarily an issue when some random-over-time process is measured as being far away from the mean; we expect it to move towards it in the future. By what mechanism would an assessment be affected?
I mean it just as a general sort of gravitational pull I tend to see, caused by any number of small factors. The most significant explicit cause is typically data bias. Forgive me if I'm misusing the term.
Sales data for average-priced properties is the most numerous. If you are missing even a few sales in high end neighborhoods, that tends to pull their valuations down. And if you are missing even a few sales in low end neighborhoods, that tends to pull their valuations up.
But then there's missing data in characteristics, because (as we'll talk about in future articles) valuations are built as models where characteristics get assigned dollar values in a complex way. When you are missing characteristic data, you fill in with assumptions -- typically whatever is average. And this has a tendency to pull the valuation for whatever you filled in towards the average value as well.
Ignoring outliers for a calculation on how far away the outliers are from the mean is pretty wild.
This is why I always pay close attention to untrimmed ratio studies.