This recent case underscores the importance of not relying on the weight of a single comparable sale (in this case, the buyer’s), and why a sampling of at least three “arms-length” comparable sales is always needed.
There will always be a seller willing — for a million reasons — to sell his or her home at a deep discount, but an assessor’s question will be: is this type of sale representative of a particular market — or an anomaly?
A sale of the subject property was recently disqualified as an “arms’ length” sale, according to the Tax Court, because the seller was ill and accepted the first offer made by the buyer. The buyer filed a tax appeal to challenge the property’s assessment and offered only the sale of property to establish that the assessment was incorrect. The City of East Orange challenged the evidence as insufficient because it lacked market exposure, and the ailing seller was eager to unload the property as quickly as possible. The Tax Court agreed and affirmed the assessment.
An arms’ length transaction is one between a knowledgeable buyer and seller, neither being under any compelling obligation to act. The Tax Court found the seller was not a typical willing seller, and was instead compelled to sell the property as quickly as possible. The house had been sitting vacant and the MLS listing noted that the house needed fixing up. The seller, in a nursing home and selling the house through his daughter by power-of-attorney, accepted the buyer’s offer without negotiations. Thus, the buyer failed to prove by a fair preponderance of the evidence that the property’s assessment was incorrect.
This case stands for long accepted policy that a single sale cannot “make” a market – whether the sale is high or low – and a successful litigant in a real estate valuation dispute must provide evidence of the market as a whole instead of relying upon a single transaction.
A copy of the Tax Court’s unpublished opinion in Gibbons v. City of East Orange, Docket No. 019151-2010 (Tax Ct. January 17, 2012) can be found here.
For more discussion on New Jersey property tax appeal procedure, please see the following blog posts:
- Apples and Oranges? Another Tax Appeal Dismissed (realestatetaxappealsnj.com)
- Property market shrinks as winter approaches (confused.com)
- Mistakes Sellers Make When Listing Homes (choiceofhomes.com)
Here are some other tax appeal sites I found for you to browse. Thanks for visiting njpropertytaxappeal.net.
One Comparable Not Enough
One Comparable Not Enough
taxrite.com - Twitter
How to fight the property tax assessor - Aug. 31 2009
Wilda Diaz - Wikipedia the free encyclopedia
Briefing Completed in the DMA v
Property Tax FAQ - Westfield New Jersey