Knox property increases average 40%

Sandra ClarkLet's Talk

Your biggest investment suddenly doubles in value. You:

  1. Break out the champagne
  2. Rush down to appeal the appraisal
  3. Declare war on all conniving politicians who are trying to raise your taxes.

Bright yellow notices of appraisal went out last week, reflecting the market reality that real estate values have never been higher. This isn’t a new thing. It happens every 4-6 years. Knox County Commission is required by law to adjust the tax rate to make the new appraisals revenue neutral.

To be clear on how that works, we contacted Property Assessor John Whitehead.

“Knox County cannot make money (on the new appraisals),” he said. “And remember, the new appraisal reflects growth in value over the past five years.” (Knox has been on a five-year cycle, but is returning to a four-year cycle. The previous reappraisal was in 2017 and the next will be 2026.)

But that doesn’t mean individual property taxes won’t change. Whitehead said the magic number is 38-40 percent.

If your increase is less than 30 percent, odds are your actual taxes will go down. If your increase is greater than 50 percent, your taxes likely will go up. Whitehead said a few properties went up 70 percent, but countywide the increase was 40 percent.

A typical homeowner in Powell, whose previous appraisal was 234,500, got a new appraisal of 281,600 – an increase of $47,100 or roughly 20 percent. Taxes going down.

What’s ahead

John Whitehead knows a lot. He has achieved the highest designations offered by the International Association of Assessing Officers. And he talks with others in the industry.

He says “as long as the housing shortage is there,” real estate values will continue to soar. And he says China is a player. Say a company named Red, White & Blue Realty offers cash 15 percent over asking price the day your house comes on the market. That means no inspections, no pesky repairs, no delay in closing and no risk the bank won’t qualify your buyer. Why not take that deal?

What if Red, White & Blue is a front for Chinese money, buying homes to rent in targeted areas?

“Then we lose the American Dream,” says Whitehead. So-called starter homes disappear as young couples are priced out of the market. We become a nation of renters rather than homeowners. “The only way middle-class people can afford a house is to inherit it.”

Whitehead had another interesting theory about using comparable sales to set values (a practice required by state auditors).

“I figure a house sells for about 10 percent more than neighboring houses are worth,” he says. If true, that drives up real estate values. But it’s common sense. Homeowners spruce up and sometimes make major repairs/upgrades to homes before putting them on the market because they want to sell for the best price. Meanwhile, the neighbors are “making do.”

Finally, Whitehead and his staff stand ready to talk with property owners about their appraisals. “Help us,” he says. “Don’t come in here and say ‘it went up.’ We already know that. We put the numbers on it.”

People appealing their appraisal should come armed with facts – photos, prices in the neighborhood, etc. Whitehead will schedule informal hearings via appointment, phone or internet. The process is outlined here.

Sandra Clark is editor/CEO of Knox TN Today.

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