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Thursday, September 21, 2006

Update Zillow—Pay More Taxes?

With the crazy run-up in home prices of the last few years, homeowners (as a collective whole) have become somewhat two-faced when it comes to the value of their homes. On the one hand, they proudly tout how much value the granite countertops and other home upgrades have added to their home. They nestle all snug in their beds, while visions of Zestimates dance in their heads. Conversely, when the latest tax assessment arrives in the mail, they are shocked, shocked I tell you, that their tax bill has gone up so high. Now, thanks to Zillow, those two worlds may be on a collision course:

Zillow.com hopes that homeowners will help improve the valuations on its site by voluntarily offering details about their homes that are not found in county property records.

Some homeowners, however, expressed concerns that those facts could lead to deeper analysis by tax assessors, a fear that King County Assessor Scott Noble said is not completely unfounded.

"In today's market, most people wisely don't let the assessor inside if they come knocking," said David Ruble, 45, a principal at Olympic Consulting Group.

"Posting home-improvement information on Zillow would effectively let the assessor in your front door to discover such goodies like granite countertops, premium appliances, marble baths and other improvements."

That could lead to a higher tax bill, he said.
How delicious. The homeowner updates Zillow's information, gets a new, higher Zestimate for their home, and then later receives a higher tax bill as well. Of course, on the way down I imagine that Zestimates will fall a lot more quickly than tax assessments, but that's neither here nor there, really...

The end of the article had a bit of information that I thought was interesting:
However, Bill High — a licensed appraiser in the state — says Zillow may be crossing the line between collecting housing information and providing an appraisal.

"One of the problems facing appraisers is the position taken by the (Appraisal) Institute and the state that merely giving an opinion of value, even 'off the cuff' and to a friend, constitutes the making of an appraisal and requires compliance with the relevant state laws and Institute regulations," High said.

"Zillow, meanwhile, does the same thing, using the same tools and techniques, but takes no responsibility for the accuracy of its work nor the havoc their mistakes might create."

In his view, Zillow should be held to the same standards as appraisers who are liable for their estimates.
Is it just me, or is something is really screwed up with our laws when offering an off the cuff opinion of value legally constitutes an appraisal? Shouldn't the standard be a bit higher than that? If that's how low the requirements are for a legal appraisal, it's no wonder the cash-out re-fi train has been chugging along so fast.

(John Cook, Seattle P-I, 09.21.2006)

11 comments:

Peter Taylor said...

What? What do you mean the county won't let me pay my taxes in an interest-only adjustable rate manner? THIS IS AN OUTRAGE.

Actually, I'm surprised the county hasn't come up with "creative financing" yet. "Yeah, we doubled your property taxes, but just pay us whatever you can afford, and we'll tack the balance on to your next year's taxes. And so on, and son on!"

richard said...

Zillow doesn't have any way to authenticate the owners identity.

New prank: update people's homes in Zillow and tax them into the red!

biliruben said...

Bill High!?! ROFL.

meshugy said...

New prank: update people's homes in Zillow and tax them into the red!

Excpet that initiave 747 caps taxes at a 1% year increase.

Peter Taylor said...

Excpet that initiave 747 caps taxes at a 1% year increase.

You don't understand how i747 works, Michael. i747 caps the TOTAL amount of taxes the county may collect by 1% per year - not individuals.

ie. if the county collects $1,000,000 in taxes from all citizens in year x, it may collect $1,010,000 from all citizens in year x+1. How the county collects that is totally up to the county.

So, people who have already seen a rapid inflation in house price may pay roughly the same as the previous year while someone who's house price is currently being inflated may pay a lot more than the previous year.

richard said...

Was I-747 reinstated? Last I heard it was invalidated.

I-747 voided by court

SourMash said...

Bring em on! I made some changes last night to my entry. The Zestimate for my house went down when I added a bedroom and an additional 1/4 bath, and updated the number of rooms (which isn't in the county record). I didn't make the changes public.

I think I read a comment from a Zillow employee about this once; they said houses of a certain size with too many bedrooms are considered a negative, because the total square footage is considered to be overly divided.

Whatever. When I saw that their "validation" that I was the owner consisted of me picking my own name off a list of my neighbors, I realized this whole thing will be totally abused. It will be pulled within 3 months.

synthetik said...

What will happen to state tax revenues when values drop back to 2001 levels?

I don't really understand how prop. taxes work here - if someone can provide a link, that would be great.

In Florida in 1997 my property taxes were about $300/mo on my $229,000 home. That was after the "homestead" exemption of $25,000 knocked off the value (not too shabby when most homes were $80-120K back then).

In 1999 my taxes shot up to $500/mo. I can't remember why but I'll assume that they started to assess it at it's last sale price $229K.

I sold it in 2000 for $350K and it changed hands two more times; most recently sold for $674K in 2005. Now it's zillowing for $772K or about.

If they didn't change the tax law there, how could all those people afford to pay their taxes? We used to joke about the 'rich folk' that lived directly on Tampa Bay in $1M+ homes and were paying $30-50K in prop. taxes per year.

When I moved to San Diego in 2003 I met people with $750K homes that were only paying about $2200/year for prop. taxes.

The reason for that was obv. prop 13, http://en.wikipedia.org/wiki/California_Proposition_13_(1978).

What keeps taxes fairly low here?

Anonymous said...

Love that prank Richard. Very timely too, with Halloween just around the corner.

christiangustafson said...

Dave Ruble, I thought you were a software jock, what are you doing commenting on this? Don't get mixed up with the sordid REIC! Or did the P.I. ask your opinion at a bus stop?

Enjoyed your OOA/OOD class at my old dotcom ("Request for Goat", etc).

Don't get involved with REALTOR®s, run, run away!

Crashcadia said...

In reply to synthetik who said
“What will happen to state tax revenues when values drop back to 2001 levels?"

They will gp back to assessing your taxes every 4 years instead of every year.