Monday, November 18, 2013

Board's Warren Wilson Case: Board Weighs Competing Appraisals

Excerpts of the Board's Determination follow:


The parties met their respective burdens of production by offering USPAP certified appraisals that, at first blush, were performed in conformance with generally recognized appraisal principles and that the parties at least attempted to relate to the appropriate valuation date. After weighing the evidence, the Board finds that the subject property’s true tax value is $480,000. The Board reaches that conclusion for the following reasons:

a. First, the Petitioner offered three valuation opinions that have little or no probative value—Wykoff’s market analyses and Nicholson’s appraisal. Although Wykoff applied a generally recognized appraisal technique, she did not certify she complied with USPAP. And she offered little explanation for key judgments underlying her conclusions. For example, Wykoff made what she described as a conservative $10,000 adjustment to the sale prices for two of her three comparable properties to account for the lack of “upgrades” similar to those found in the subject home. But she did not explain what those upgrades were or how she arrived at her adjustment.

b. Nicholson’ appraisal fares no better. As highlighted by the parties, his appraisal contains various inaccuracies and contradictions that make his ultimate valuation opinion unreliable. Even if the Board were to find Wilson’s attempts to correct some of Nicholson’s errors persuasive, which it does not, those corrections would do little to shore up Nicholson’s valuation opinion. The problems that the parties identified leave the Board with little confidence in Nicholson’s judgment.

c. That leaves Waynick’s appraisal and Murdoh’s two appraisals. All three appraisals are generally credible. The fact that neither appraiser testified makes it more difficult for the Board to weigh their respective opinions. With one exception, each appraisal relies on different comparable sales. The exception— 116 Erie Church Road—is the first comparable sale in both Waynick’s appraisal and Mordoh’s second appraisal. Even then, Waynick and Mordoh made different adjustments to that property’s sale price. For example, Mordoh viewed the subject home as superior to the Erie Church Road home in terms of construction quality and therefore adjusted the sale price upward by $50,000. Waynick, by contrast, viewed the homes as being of comparable quality and made no adjustment. The record does not contain sufficient information about the Erie Church Road home for the Board to judge which appraiser better captured the relative quality of the two homes. The same is true for differences in how the two appraisers quantified their adjustments.

d. The Board, however, does find Mordoh’s treatment of age differences between the subject home and comparable homes to be more persuasive than Waynick’s treatment of those differences. Mordoh made adjustments to account for differences between the subject home’s age and the ages of his comparable homes. By contrast, Waynick did not adjust any of his comparable sale prices to account for age differences, even though two of his comparable homes were 12 and 42 years older than the subject home, respectively. Absent any explanation for that decision, the lack of age adjustments in Waynick’s appraisal makes his valuation opinion less credible than Mordoh’s opinion.

e. In addition, Mordoh’s second appraisal actually estimates the subject property’s value as of the relevant March 1, 2010 valuation date using sales that were closer to that date than were the sales from both Waynick’s appraisal and Mordoh’s first appraisal. Granted, Waynick also used one sale from 2010 in his appraisal. And Wilson and Reller used changes in gross assessed values for all properties within Marion Township to trend Waynick’s appraisal and Mordoh’s first appraisal to the appropriate valuation date. But those changes do not necessarily relate directly to changes in market. For example, they might be attributable partly to new construction within the township. Regardless, the Board finds Wilson and Reller’s trending methodology less persuasive than Mordoh’s targeted estimate, in which he used sales that were largely within less than a year of the valuation date. Thus, the Board is most persuaded by Mordoh’s second appraisal, which values the subject property at $480,000 as of March 1, 2010.