Volusia County- Filings 59% Up On Last Year

Foreclosed homes open on tax rolls

By JAMES MILLER-East Volusia News Journal

In a departure from standing practice, some sales of foreclosed homes will be fair game as county property appraisers assess values for the 2009 tax rolls, a state Department of Revenue official said Monday.

As gauged by county appraisers, market values for properties in some areas almost certainly will be lower than they would have been otherwise -- though how much is unclear.

That market value depends, in part, on sales of similar properties. The affect on tax bills will depend on the tax rates set by local governments.

"Market conditions obviously have changed, and in many counties a pretty large percentage of sales involve properties that have been through some sort of foreclosure," said James McAdams, property-tax program director for the Department of Revenue.

In a notice that's expected as early as next week, the department will advise appraisers that it's OK to diligently consider some sales that involve foreclosures when doing assessments.

Only those that are as close as possible to so-called "arm's-length" sales involving willing buyers and sellers should be used, McAdams said.

Factors might include whether or not a bank or mortgage company appeared to be trying to minimize loss and maximize profit and whether there was an unusual time constraint on a sale -- for example, it had to be done immediately to stave off bankruptcy.

For 25 years, the Department of Revenue has interpreted state law to mean sales should be considered for disqualification when they involve deeds transferred to or from banks or loan or mortgage companies.

But the rule says "should"-- not "shall" or "must," McAdams said.

Local appraisers already had prepared to include some foreclosure sales.

Volusia County Property Appraiser Morgan Gilreath said his office started including them last year when developing the 2008 tax roll.

"We've never seen the market we saw last year," Gilreath said, "and we've never seen the market we're looking at this year."

At 8,370, the number of foreclosure filings in Volusia County from January through November was 59 percent higher than in the same period last year, according Clerk of Circuit Court records.

There had been 2,652 foreclosure sales in the same period.

"Anyone that doesn't consider that as valid market evidence in the real estate market that exists in 2008 is operating some kind of vacuum, they're operating in a reality vacuum," Gilreath said.

Overall, his office has fewer than 4,000 sales so far this year on which to base assessments, he said. That's down from a high of about 14,000.

In Flagler County, foreclosures from January through November increased by 110 percent, to 2,486, compared to last year. Clerk's records show 308 foreclosure sales in that period.

Speaking before Department of Revenue officials had confirmed how they would address the issue, Flagler County Property Appraiser Jay Gardner said this would be the first year his office had included foreclosure sales if it was allowed to. It had not excluded those sales while collecting data for assessments.

Still, how much they would affect values was unclear, and in Flagler County the difference might not be that significant, Gardner said. Even more unclear is what tax bills might look like next year. That will depend on what local governments do with tax rates.

"How much less do you pay? I don't know," Gardner said. "It's going to help some people more than others."

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