Ever since 2008 I’ve been fighting to lower my property taxes every year. If I didn’t fight, the SF Property Assessor’s office would undoubtedly keep raising my assessed value all throughout the financial crisis because they need to extract as much money from homeowners as possible. Renters certainly aren’t going to volunteer to pitch in if they can simply vote to raise property taxes. Too bad everything just comes around in the form of higher rents. In other words, together we must stand united against the government.
Your main mission as a homeowner is to convince the assessor’s office your property is worth as close to $0 as possible. Anybody who is proud their assessed home value is higher is being silly because the government will take advantage of you. The same goes for people who make a lot of money telling everybody exactly how much they make. Practice the mantra of Stealth Wealth and believe your primary home is a dump in order to build your net worth further.
LOWER YOUR PROPERTY TAX WITH ONLINE DATA
The main way I’ve been able to utilize Zillow to lower my property taxes is by looking at comparable sales after punching in my address and looking at their database. You’re free to use Redfin or Trulia as well. I then gather the most bombed out listings and use their price/sqft number to come up with a fair assessed value for my house which I send over e-mail and hard copy to the assessor’s office.
The great thing about Zillow is that their data is wrong all the time! Your job is to get that erroneously huge house that sold on a highway for 70% below the median p/sqft in your neighborhood and use that comp as your own. Zillow’s data is only as good as what the owner inputs, or what the tax records show.
Rest assured the property assessor’s office uses Zillow’s erroneous data to charge you higher taxes as well. I spoke to a number of people in the property assessor’s office over the years and they have ALL admitted their main strategy is to automatically tack on an annual increase based on an index and hope homeowner’s don’t have the time or willpower to contest the property tax bill. They all say they do quick online valuation checks as well.
Unfortunately for every property assessor’s office who tries to rip off a Financial Samurai reader, they’re going to have some big backlash! There is no way we will accept getting bulldozed by a greedy and wasteful government because we are empowered with knowledge.
THE GOOD TIMES MAY FINALLY COME TO AN END
Since 2008 I’ve been able to use Zillow’s database to lower my property tax bill by $3,600 a year on average. Unfortunately, 2014 will be a year that I might finally be screwed. A building three doors down with two units recently sold in the summer of 2013. The units were nicely remodeled and priced at what I thought was at the top of the market. They sold within a week and recorded sale. Take a look at the below chart to see what happened to my home estimate.
My Zestimate has literally gone up every single week for the past 37 weeks due to this comparable sale to my dismay. I was pumped in June 2013 when Zillow pegged my home value at just slightly higher than my purchase price 8.5 years ago because I could then use this valuation as another datapoint to keep my property taxes down.
Now the property assessor’s office is going to look up my home price online and tell me I’m smoking dope for asking for a 2005 assessed value for my 2014/2015 property taxes. My one wild card is that when I used condos to try and lower my assessed value in the past, they were disavowed because I own a single family home. I’m going to use their same logic to disavow the Zillow estimate because the neighboring sale was a condo. There’s no tails you win, heads I lose you crooks!
Yes, it’s nice to see an upward move in home prices as a homeowner, but this 42% jump over nine months is absurd. Everything unravels once a neighbor on the same block sells. If property sold on a different block, you can still make an aggressive argument as to why you are in a much inferior location if you live in a big city.
The dashed line is the city’s overall price index and is therefore more indicative of property price appreciation in my neighborhood at roughly 21% since summer 2012. Now you can see why my 15% increase in property prices for my net worth in 2013 is reasonable.
YOU CAN LOWER YOUR PROPERTY TAXES IF YOU TRY
The point of this article is several fold:
1) Defend your wealth and fight back. So many people feel helpless they can’t fight the government, and it’s just not true. Yes, the government has expanded its power immensely since 2008, but if you feel you are being taken advantage of then fight back! If I failed at fighting back, my home’s appreciation chart would look much smoother and I’d have paid probably $20,000 more in property taxes over the past five years.
2) Online data is full of errors. Use Zillow’s errors to your own advantage when assembling comps to send into the assessor’s office. They will surely use errors in their favor to raise your property tax as they tried to do with me for years.
3) Be as poor as possible in the eyes of the government. There’s no use being rich to the government because the government will just tax the hell out of you. If you are celebrating the fact that your assessed value is higher and you have no plans for selling, then you are being irrational.
4) Hold on to assets for as long as possible. If you sold property in 2009, 2010, 2011, 2012 you unfortunately missed out on a huge recovery in 2013. Property is to be held for the longer term to build true wealth. Commissions are ridiculously high along with taxes. Thank goodness I pulled my house off the market in 2012 after 25 days! And thank goodness I did, because property prices have since increased by 60% as of 2016.
5) The markets will eventually become efficient. One of the biggest disappointments I have about Zillow, Trulia, Redfin and other online real estate companies is how they’ve done nothing to lower commission costs since they started. Every single other industry has seen a compression in transaction costs thanks to the internet, but not real estate due to collusion. In the meantime, it is up to consumers to keep fighting to protect our wealth until efficiency happens.
RECOMMENDATIONS TO BUILD WEALTH
* Shop Around For A Mortgage: LendingTree Mortgage offers some of the lowest refinance rates today because they have a huge network of lenders to pull from. If you’re looking to buy a new home, get a HELOC, or refinance your existing mortgage, consider using LendingTree to get multiple offer comparisons in a matter of minutes. Interest rates are back down to ALL-TIME lows due to tremendous volatility and uncertainty in the markets. When banks compete, you win.
* Invest in real estate more surgically: If you don’t want to constantly pay massive property taxes, don’t have the downpayment to buy property, or don’t want to tie up your liquidity in physical real estate, take a look at RealtyShares, one of the largest real estate crowdsourcing companies today. You can invest in higher returning deals around the country for as little as $5,000. Historical returns have ranged between 9% – 15%, much higher than the average stock market return. It’s free to explore and they’ve got the best platform around.
Updated for 2017 and beyond.