Under Assessment, Under Review

There’s a house on the market now in Verona that’s listed at $399,000. That’s a comfortable price in Verona, a price that shouldn’t surprise anyone. But here’s something that might surprise you: The house is assessed for $44,000 more, which is $443,000.

Houses can be listed for less than their assessed value for many reasons. It might be an estate sale or a short-sale, that is, a house facing foreclosure. It might also be a marketing strategy by the listing agent to help the house sell more quickly. And a listing price can also be substantially less than the price for which the house finally goes under contract, as it often was in the boom years.

Not every house now listed in Verona is priced under its assessed value; available data suggests that only about one-third are. They are scattered across all neighborhoods, and all price points. And you should know that some Verona real estate is still listed at considerably more than its assessed value, in one case $150,000 more. But the disparities have drawn the attention of official Verona: Tax assessor George Librizzi is now conducting a limited reassessment, which can cover up to 50% of the properties in town.

“One sale doesn’t make the market,” Librizzi says. “It’s an amalgam of data that, when assembled, statistically proves something different.”

Librizzi, whose services Verona shares with North Caldwell and Nutley, is reviewing data on all sales in 2009 and in 2010 through October 10,  which is the mandated cut-off date for reviews this year. All the sales that close after October 10, like those of the houses now listed, will have to wait for next year. “I’m making sure it is fair and equitable is across the board,” he says of the limited reassessment.

Limited reviews and full-blown re-dos are becoming more common now, in large part because technology makes them easier to do. North Caldwell had a full revaluation in 2008, a limited reassessment in 2009, another full reval in 2010 and it is already planning a limited look in 2011. Nutley, which had its revaluation in 2006, has followed a similar course. But frequent reassessments could stave off a problem that many municipalities are facing across the country: Rising property tax appeals.

Verona’s revaluation caused 68 appeals to be filed by May 1, which was the deadline this year. Those 68 appeals represented just 1.31% of all Verona properties, the fourth-lowest rate in Essex County. In Montclair, by contrast, 913 appeals were filed for 2010, which was 8.4% of its properties.

Now that the impact of the reval has sunk in with residents, it and the recessionary real estate market could bring more challenges to property taxes next year, something that Librizzi and Verona Town Manager Joe Martin are very cognizant of. Martin says that he and Dee Trimmer, Verona’s de facto CFO, have already been planning for more appeals. “It will be a factor in the budget,” Martin says of the expected increase. “But I don’t anticipate it causing the chaos it has in other towns. We have been anticipating this for a a year and a half.”