Atlanta property taxes:
Values fall faster than tax bills
AJC special investigation: Property tax meltdown
By David Wickert and John Perry
The Atlanta Journal-Constitution
7:00 a.m. Sunday, December 19, 2010
In 2009, an exclusive, in-depth investigation by the AJC found that amid
the historic real estate collapse, many of us paid more in property
taxes than we should have. Today marks the beginning of an eight-part
series revealing continued flaws in the property tax systems in Clayton,
Cobb, DeKalb, Fulton, and Gwinnett counties. We found you still may be
paying too much in taxes.
Tax appraisers in five metro Atlanta counties cut home valuations by
$17.8 billion this year as they tried to catch up with the tumbling real
estate market and respond to pressure from taxpayers and lawmakers.
In many cases, it wasn’t enough.
For the second consecutive year, The Atlanta Journal-Constitution has
compared hundreds of thousands of tax records to tens of thousands of
home sales to determine whether county appraisals are in line with what
property is actually worth. The newspaper found that the greatest
disparity occurred in DeKalb County, where the typical appraisal
exceeded market value by more than 25 percent. The reason: DeKalb failed
to fully account for the kind of distressed sales that have become a
huge part of the slumping real estate market. The analysis also found
● Clayton County cut residential tax valuations by 22 percent in 2010.
But the county’s typical residential appraisal remained more than 7
percent above market value.
● Gwinnett cut residential appraisals by nearly 10 percent this year.
But its typical appraisal was 2.5 percent too high.
● Typical appraisals in Cobb and Fulton were under market value. But
even in these counties many homes were appraised too high.
The AJC’s findings on DeKalb didn’t surprise Patricia Benedict. The
foreclosed house she bought in Tucker in May for $85,000 was valued by
the county this year at $193,500. If the county appraised Benedict’s
house at anywhere near what she paid for it, she would save hundreds of
dollars on her $3,456 tax bill.
“I think the county is consciously not doing what they’re supposed to
do, because if they did they’d be in a worse budget crisis,” Benedict
said. “The county is turning their heads.”
The continuing slide of property values has implications beyond your tax
bill: Faced with another year of declining property values, several
metro counties are talking about cutting services again in 2011. In
DeKalb, the County Commission last week began deliberating a budget that
calls for a property tax increase. Gwinnett’s budget envisions service
cuts and still has an $18 million deficit that officials will have to
try to cover during the year to come.
$233,100 vs. $178,000
Most county tax appraisers have heard complaints such as Benedict’s —
that they are artificially inflating tax valuations to keep money
flowing to the county. DeKalb Chief Appraiser Calvin Hicks denies that.
“I can assure you I go to no meetings where we appraisers sit around and
say, ‘How can we protect our county?’” Hicks said.
DeKalb did a better job of appraising properties that weren’t bank sales
or other distressed transactions. On those nondistressed sales, county
appraisals were about 3 percent over fair-market value. For distressed
sales — roughly a third of sales — the county’s appraisals were 102
percent over market value.
Hicks admitted that DeKalb’s overall appraisals look too high.
“Clearly, looking at the [AJC] numbers, we have more work to do for
2011,” Hicks said.
The AJC’s analysis in 2009 showed widespread disparities across metro
Atlanta’s core counties. But most of them clearly made progress this
year toward matching up tax valuations with market value.
Except for DeKalb, the counties appear
to have met a state standard that requires their typical appraisals to
be within 10 percent above or below fair market value.
But that’s little consolation for thousands of homeowners who are paying
too much in property taxes because their tax bills are based on county
appraisals that are too high.
Since 2006, Gwinnett County has valued Michael Hill’s three-bedroom home
near Lawrenceville at $233,100. A private appraiser recently told Hill
his home is worth just $178,000 — almost a quarter less than the county
appraised it for.
Gwinnett Chief Appraiser Steve Pruitt acknowledged Hill’s property is
overvalued and pledged to lower it in 2011. Hill could save $750 on his
tax bill if the county appraises his property at what the private
appraiser says it’s worth.
“That’s a big difference,” Hill said. He plans to challenge his county
value next year.
Residents across the metro area have had similar experiences. And
they’re taking action.
Residential appeals in the region’s five largest counties are up 80
percent from two years ago, and many homeowners are winning those
For example, Gwinnett has finalized 6,742 appeals this year. It reduced
the valuations of all of those properties. The average reduction:
Appraisers expect even more appeals next year as changes in state law
make it easier for homeowners to challenge county appraisals.
In its analysis, the AJC compared appraisals and home sales within ZIP
codes to get a better sense of what’s going on within counties.
And while county appraisers are trying to catch up with a declining
market, they’ve been more successful in some areas than in others.
For example, though the typical Fulton County residential appraisal is
2.6 percent below market value, typical appraisals in some ZIP codes are
still as much as 14.5 percent over market value, as determined by sale
prices. In other ZIP codes, they’re as much as 28 percent under market
So how can some county appraisals be so far off?
County appraisers and other experts say Georgia’s system of “mass
appraisals” can’t take the strain caused by the bursting of the real
Each year county appraisers must determine the value of all residential,
commercial and other taxable property. The information helps elected
officials set tax rates and helps determine your property tax bill.
Generally, the more your property is worth, the more you pay.
But government appraisals don’t work like appraisals done by private
A private “fee appraiser” may spend several hours inspecting your house
to determine its condition; he or she will also examine what buyers
recently paid for comparable properties nearby.
County appraisers don’t have the luxury of carefully evaluating
individual properties. The sheer number of parcels they must value —
Fulton County, for example, must set values on about 330,000 pieces of
property annually — demands a different approach: “mass appraisal.”
Under the mass appraisal system, counties generally reappraise whole
neighborhoods using a complex statistical method. The method takes into
account sales of nearby properties with similar characteristics.
But they call it mass appraisal for a reason. One measure of the
difference between private and government appraisals: A private fee
appraisal costs $350 and up; counties may spend just a few dollars for
every parcel they appraise.
Critics say the mass appraisal system breaks down during big swings in
By law, county appraisals take sales from the previous year into
account. But when the market is rising or falling quickly, a year-old
sale can be way out of date. And in the current market, there are fewer
sales to give appraisers a sense of what’s happening in individual
In addition, county appraisals are supposed to be current as of Jan. 1
of each year. So your 2010 appraisal is what the county says your home
was worth as of Jan. 1, 2010.
But you probably didn’t receive a county notice of your value until
April, if you got one at all. And you probably didn’t get your tax bill
until last summer. So, in July 2010 you may have seen for the first time
the county’s opinion of what your home was worth on Jan. 1, 2010, which,
in turn, was based on sales between January and December 2009.
In a fast-moving market, that lag can mean sticker shock for residents
who see what homes in their neighborhood are selling for when they
finally have their tax bill in hand.
The Atlanta-area real estate market has been moving fast for a decade as
values first skyrocketed and then plummeted when the bubble burst. That
means county appraisals may have been off for years.
But there’s a key difference: Pre-bubble appraisals were probably too
low. Now many are too high.
“The nature of mass appraisal is, we are behind the curve,” said Fulton
County Chief Appraiser Burt Manning. “Nobody is too upset with us when
we’re behind the curve when values are going up.”
Complicating the task of county appraisers is the proliferation of
foreclosures, short sales and other “distressed” sales.
Traditionally, appraisers ignored these sales. They believed they didn’t
provide a true measure of the market, and they were a tiny fraction of
the sales anyway.
That’s no longer the case. Distressed sales now account for most of
what’s selling in many metro Atlanta neighborhoods.
Foreclosures, once more common in poor urban areas, have spread to the
suburbs as high unemployment lingers and families walk away from
mortgages they can no longer afford. In some cases banks are selling the
houses for 50 cents on the dollar to recover some money.
The result: Home prices have plummeted. By one measure — the S&P Case-Shiller
Index — Atlanta home prices in September fell to levels not seen in a
Facing dramatic market changes, the Georgia General Assembly in 2009
prohibited county appraisers from raising the value on any property
unless there was an addition or improvement. The prohibition remains in
effect in 2011.
Lawmakers also required appraisers to take foreclosures and other
distressed sales into account when appraising properties for tax
purposes. To date, counties have used different methods to take
distressed sales into account. But appraisers acknowledge it no longer
makes sense to ignore them.
“When the bank sales become your usual market transfer, you’ve got to
look at them,” said Pruitt, the Gwinnett chief appraiser.
Thousands of appeals
Scott McDaniel of Marietta sent in one of the 37,000 appeals that
residential property owners filed in the five largest metro counties
McDaniel challenged Cobb County’s appraisal of his 2,600-square-foot
home, which the county said was worth $166,010. It hadn’t changed that
value since 2005.
Like many people, McDaniel was trying to trim expenses. He’d already
found ways to cut his car insurance and cable television bills.
Challenging his county property appraisal made sense.
So he hired a company to appeal his appraisal. The result: A board of
equalization cut his appraisal to $136,000. He’ll save about $350 on his
tax bill. Hiring the company cost $100.
“It pays for itself, plus quite a bit in the first year,” McDaniel said.
“It would be dumb not to do it.”
New law taking effect
Appealing your appraisal is about to get a lot easier.
In the wake of last year’s AJC investigation, the General Assembly
approved Senate Bill 346. Among its provisions:
● Beginning in 2011, counties must send every taxpayer a notice of their
property’s value each year. Previously, counties sent you a notice only
if they changed your value. It’s an important change, because you can
appeal your value only if you receive a notice. If everyone gets a
notice, everyone can appeal.
● Counties must treat short sales, bank sales and other distressed sales
(except foreclosures) just like any other sale for the purposes of
determining the value of your property.
● The year after you buy your house, the county’s appraised value can’t
exceed the sale price. So if you bought your house for $200,000 in 2010,
the county’s 2011 assessed value can’t exceed $200,000. The county can
raise the value in future years.
● Taxpayers will have 45 days to appeal their appraisal, up from 30
State Senate Majority Leader Chip Rogers, who sponsored the bill, said
he wanted to simplify the appraisal and appeals processes.
“I would expect nine out of 10 people in Georgia don’t understand how
the system works,” Rogers said.
County officials say there will be consequences. Among them: higher
costs at a time when county budgets already are stretched thin.
For example, Fulton County expects to spend $120,000 more on postage
next year to mail notices to every taxpayer. County appraisers say there
will be other administrative costs as well.
Rogers is unsympathetic, saying the law should be judged “not by how it
will impact the people collecting the taxes but how it affects people
Perhaps the biggest effect of the new law: Appraisers expect another
jump in appeals next year. More appeals, combined with the continuing
real estate slump and changes to appraisal law, may mean another big cut
in residential appraisals in 2011.
That could mean property tax relief for homeowners. Or it could lead
local governments to raise taxes to balance budgets. Or it could mean
fewer public services or larger class sizes as property tax revenue
Whatever the outcome, declining values may be a mixed blessing for
homeowners who have watched gains from their biggest asset evaporate.
“On the one hand, you’re really sorry to see your property values
decline like that,” said McDaniel, the Marietta man who won his appeal.
“On the other hand, you’re glad that for tax purposes it reflects true
“It’s brutal,” he said of his decision to appeal, “but it has to be