One Comparable Not Enough

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A copy of the Tax Court’s unpublished opinion in Gibbons v. City of East Orange, Docket No. 019151-2010 (Tax Ct.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:

Tax Court to Municipality: Enough is Enough!

Montclair Tax Assessment: Might be Wrong, But Not In Error

Wayne Township Owner Misses the Boat on Property Tax Error

 

…More at Ailing Seller’s Eagerness to Sell Fatal to Buyer’s Tax Appeal

Similar Articles

Assessing Your Assessemen... Fair to say,  if you are living in New Jersey, you are probably paying more property taxes than you should. The National Taxpayers Union, in fact, estimates
Christie Congratulated Fo...     From NJ.Com: Christie Administration announces property tax growth in Morris County NJ.com “By any measure, Governor Christie's property tax reforms have been a resounding success
Annual New Jersey Tax Ass... Sоmе Nеw Jersey towns аrе starting tо reassess thеіr tax bases оn аn annual basis іnѕtеаd оf еvеrу fіvе оr 10 years. “You hаvе tо dо а
Property Tax Appeals On T...     Despite property tax appeal buildup, there is hope for resolution NJBIZ Still, the court and tax attorneys point to the addition of new judges as
Projected Cost For Westfi... A county-ordered revaluation оf thе properties wіthіn thе town оf Westfield’s borders wіll cost lеѕѕ thаn $800,000, thе town council learned durіng іtѕ conference meeting Tuesday night.
NJ Property Tax Reinburse... From MyCentralJersey.com: Many New Jersey senior citizens do not know about program that can bring them money every year...via  can bring cold casProperty tax freezeh to seniors
Howell Reassessment Blame... From Howell Patch: It was because of all those successful appeals that the county ordered a recently completed assessment. “The assessment further caused a significant decline in
How to Avoid Unfair Prope... By SUSANNA KIM (@skimm) March 14, 2012 The battered real estate market has another side effect that often goes overlooked, consumer finance and tax experts say: Millions
Legislation Would Advise ...   From: NJ Spotlight Letting Property Owners Know They Can Challenge Annual Tax Assessments NJ Spotlight The push to raise awareness for property tax appeals comes as
“Extraordinary̶... From Registry News: Following a public hearing, an ordinance authorizing an emergency appropriation to update revaluations of property within the township, was approved unanimously by the Township
NJ Tax Appeals: Do It On ... From Bankrate.com Home prices are falling everywhere, but homeowners hoping for lower property taxes may find themselves disappointed when the bill arrives. If you think your home’s