Tax Court Upholds Assessment Where Plaintiff’s Appraiser Fails to Verify Comparable Sales Data

Dec 6, 2017 | Written by: Tara A. St. Angelo, Esq. | Share

The Tax Court recently held that an appraiser must verify the data associated with comparable sales used in an appraisal report in order to provide reliable evidence of fair market value of a property in a tax appeal⁽¹⁾.

The plaintiff owned certain real property in the village of Ridgefield Park, NJ, which was improved with a 2 ½ story residential building and a 1-story commercial building occupied as a restaurant.  The plaintiff appealed the tax assessments on his property for the tax years 2012, 2013, and 2014. 

At trial in the Tax Court, the plaintiff offered testimony from a certified general real estate appraiser in support of his case.  The appraiser opined as to the true market value of the subject property by providing comparable sales and making adjustments to such sale prices.  At the close of the plaintiff’s evidence, the defendant municipality moved to dismiss the plaintiff’s complaint under R. 4:37-2(b), arguing that (1) the plaintiff’s expert failed to verify the sales data used in his report; and (2) the plaintiff’s expert did not support his adjustments to the sales data.  The Tax Court denied the motion, finding that the plaintiff had submitted enough evidence to “overcome the presumption of correctness.”  However, the Court ultimately found that the plaintiff had failed to submit reliable evidence sufficient to prove the asserted fair market value of the property by a fair preponderance of evidence.

In affirming the assessments on the property, the Tax Court held that the plaintiff’s expert opinion was flawed in various respects.  First, the expert appraiser failed to verify the accuracy and reliability of the comparable sales data.  The appraiser was unable to confirm the breakdown of commercial versus residential space in each property; could not identify which units were occupied or vacant; was unable to confirm data reflected on the property record cards for comparable sales; was unaware which comparable sales were located in flood hazard areas; was unaware how long each comparable sale was exposed to the marketplace; and did not know the purchase details of the comparable sales provided.  The Tax Court found it significant that the expert admitted that he did nothing, “other than checking the deed and the property tax records,” to verify the accuracy and reliability of the sales information.  The Tax Court noted that a “crucial element” of an appraiser’s investigation is the “data verification process.”

Although the Tax Court found it sufficient to uphold the assessments based on the flaw in the comparable sales data, the Tax Court continued that the plaintiff’s appraisal report contained a second flaw.  The plaintiff’s appraiser failed to provide any analysis or explanation of the percentage adjustments made to each comparable sale.  “[C]ross-examination disclosed that the expert’s adjustments were solely based on his opinions.”

The Court found that with these two flaws in methodology, the appraiser’s report “produces an unreliable result.”  Therefore, this case points out the importance of having complete expert reports that verify the sales data and support adjustments to comparable sales with market data. 

⁽¹⁾Shaker v. Village of Ridgewood Park, Tax Court Docket No. 017896-2012 (Dec. 1, 2017)