The Glenns made a prima facie
case for reducing the subject property’s assessment both through Mr. Glenn’s
testimony that he and Ms. Glenn bought the subject property for $159,900 less
than eight months before the relevant March 1, 2011 valuation date and through
Mr. Wagoner’s appraisal report estimating the property’s market value at
$160,000 as of that valuation date. A property’s sale price is often compelling
evidence of its market value-in-use, as is an appraisal, like Mr. Wagoner’s,
that has been performed in accordance with USPAP.
The Assessor, however, sought
to impeach the subject property’s sale price on grounds that it was a “short
sale.” Unfortunately, none of the people who characterized the sale in that way
explained what they meant by the term “short sale.” In this case, the Board
assumes that the term is being used to denote a sale where the sale price was
less than existing mortgages or other liens on the property. See In re Booth,
417 B.R. 820, 824 n.3 (Bankr. M.D. Fla, 2009) (quoting In re Fabbra, 411
B.R. 407, 413 n.7 (Bankr. D. Utah 2009) (defining a “short sale” as “a sale by
a willing seller to a willing buyer for less than the total encumbrances of the
home with the consent of the underlying lien holders who agree to take less
than what they are owed.”).
There may be reasons not to
rely on a given short sale when estimating a property’s value. For example, the
seller might be under duress. But simply characterizing a transaction as a “short
sale” does not automatically invalidate the sale price as a measure of the
property’s market value-in-use. The key is what generally accepted appraisal
practices require in the context of the particular sale. And the Assessor shed scant
light on that question. Indeed, she did little to explain her position beyond broadly
testifying that the DLGF cautions assessors against using short sales in performing
the ratio studies. By contrast, Mr. Wagoner, who certified that he prepared his
appraisal in conformity with USPAP, felt that the subject property’s sale price
was relevant in light of the fact that the property had been marketed for 744 days
before the Glenns finally bought it. Under those circumstances, the subject property’s
sale price carries at least some probative weight.
The Assessor challenged Mr.
Wagoner’s appraisal on similar grounds, pointing to the fact that three of his
five comparable sales involved properties that were sold out of foreclosure.
Once again, the parties did little to explain what they meant by the term “out
of foreclosure.” The sales at issue appear to have been from lending
institutions that had gotten the properties through foreclosure actions. In any
case, the Assessor again did little to address what generally accepted appraisal
principles required in the context of the particular sales at issue. At most,
she offered MLS information showing that two of the three properties for which
Mr. Wagoner used foreclosure sales later resold for significantly higher
prices. Of course, factors other than the identity of the seller might have
contributed to the price differentials. For example, the homes could have been
remodeled or refurbished. Indeed, the MLS listing sheets for Mr. Wagoner’s
comparable 4 appears to bear that out. The first sheet, which was for the sale
that Mr. Wagoner used in his appraisal, says nothing about recent remodeling.
The MLS sheet for the later sale, however, indicates that the home had been “[n]ewly
remodeled.” Resp’t Ex. 7.
By contrast, Mr. Wagoner
explained that foreclosures drove the market in the area and that market data
showed that sales out of foreclosure were only slightly lower than what he
characterized as arm’s-length sales. The Assessor disputed that foreclosures
drove the market in the area, and Mr. Glenn’s own testimony that Lake Wawasee
properties tend to hold their value offered at least tangential support to that
notion. But that dispute is largely beside the point. Mr. Wagoner used the foreclosures
only to show the low end of what he believed to be the subject property’s value
range. He actually settled on a value that was very close to the adjusted sale prices
for his other two sales. Thus, when combined with the subject property’s sale price,
Mr. Wagoner’s appraisal is persuasive evidence that the subject property’s market
value-in-use was $160,000 as of March 1, 2011.
The Assessor also offered her
own analysis of the subject land’s value pointing to the sales of three vacant
lots in the area. But she did little to compare those lots to the subject lot
other than to show their relative proximity. And she did nothing to address how
any relevant differences affected the lots’ relative market values-in-use. See
Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 471 (Ind. Tax Ct. 2005)
(holding that taxpayers failed to offer probative evidence where they explained
neither how their house compared to other properties nor how any differences
affected the properties’ relative market values-in-use). Her comparable-sales
data therefore has little or no probative value.
http://www.in.gov/ibtr/files/Glenn_43-025-11-1-5-00068.pdf
