Excerpts of the Board's Determination follow:
Mr. Krause relied mainly on the price that he paid for the property at auction and on Mr. Bohde’s two appraisals. As for the auction, a property’s sale price can be compelling evidence of its market value-in-use. See Hubler Realty Co. v. Hendricks County Assessor, 938 N.E.2d 311, 315 (Ind. Tax Ct. 2010) (finding that the Board’s determination assigning greater weight to the property’s purchase price than its appraised value was proper and supported by the evidence). But that assumes that presence of various requisites for a market sale. It also assumes that the sale price is related to the property’s value as of the relevant valuation date. In this case, Mr. Krause bought the subject property more than two years after the January 1, 2008 valuation date that applies to this appeal, and he failed to explain how the sale price related to the property’s market value-in-use as of that valuation date. Mr. Bohde’s second appraisal suffers from the same problem. In fact, the appraisal is even further removed from the relevant valuation date than the auction was. That appraisal therefore lacks probative value.
The
first appraisal, in which Mr. Bohde estimated the subject property’s value at
$26,000 as of December 31, 2008, is a different story. Granted, the appraisal’s
relationship to the relevant January 1, 2008 valuation date is still imprecise.
But the Department of Local Government Finance’s rules for annual adjustments
instructed assessors to use sales occurring between January 1, 2007, and
December 31, 2008, in performing ratio studies for the March 1, 2009 assessment
date. 50 IAC 21-3-3(a)(2009). Both Mr. Bohde’s December 31, 2008 valuation date
and the dates of all three sales in his sales-comparison analysis were within
that timeframe. The appraisal therefore bears at least some relationship to the
subject property’s value as of January 1, 2008.
As
to the appraisal’s substance, Mr. Bohde is a licensed appraiser who used a
generally accepted methodology—the sales-comparison approach—to value the
subject property. Based on that appraisal, Mr. Krause made a prima facie case
that the property’s March 1, 2009 assessment should be reduced to $26,000.
The
Assessor tried to impeach Mr. Bohde’s appraisal by claiming that Mr. Bohde
relied on invalid sales. She pointed to the fact that Mr. Bohde relied
exclusively on bank sales involving repossessed properties. According to the
Assessor, those properties tend to sell for less because of their condition.
Mr.
Bohde, however, explained that, given the subject home’s condition, most buyers
would have difficulty getting conventional financing and the property would
compete in the same market as bank repossessions. Of course, the Assessor also
challenged Mr. Bohde’s assumption that the subject home was in the same
condition on March 1, 2009, as it was when he inspected it in May 2010. But the
Assessor offered nothing to show that the home deteriorated significantly
between those two dates. Indeed, Mr. Bohde characterized the home’s condition
as fair, which matches the Assessor’s own description of the home.
The
Assessor also claimed that one of Mr. Bohde’s comparable sales involved a two
family home rather than a single-family home like the subject property. Such a
difference might affect the relative values of the two properties and therefore
merit an appraiser either adjusting the sale price or explaining why such an
adjustment was unnecessary. But the Assessor offered nothing to show how the
difference affected the properties relative values. And Mr. Bohde used two
other sales in his analysis.
In
sum, while the Assessor impeached Mr. Bohde’s valuation opinion to some degree,
the Board still finds his opinion to be generally credible.
The
Assessor also attempted to rebut Mr. Bohde’s valuation opinion by offering her
own comparative sales data. But the Assessor did little to show that the sold
properties were actually comparable to the subject property or to explain how
any relevant differences affected the properties’ relative values. Her sales
data therefore has little or no probative value. See 821 N.E.2d at 471
(finding that taxpayer’s comparative sales evidence lacked probative value
where they failed to explain how the characteristics of their property compared
to those of the purportedly comparable properties or how relevant differences
affected the properties’ relative values).
