It may have happened to you, or someone you know. The sales listing for the house you fell in love with (and decided to buy) showed a property tax amount that seemed reasonable and you could live with. Then, you get to the closing only to learn that the property taxes, in fact, are much higher — maybe even double — what you thought they’d be.
The situation for me, as an agent representing buyers, is very frustrating. I’ve started telling clients to take the tax information on a listing with a grain of salt, and that if they’re seriously interested in a house I want to confirm the property taxes before they make an offer.
So why is property tax information on a listing often not accurate? One reason is many listings agents rely on verbal information from sellers about property taxes. When taking a listing, many just ask the seller "What are the property taxes?" and don’t ask for copies of the most recent tax bills. In New York state, each property receives 2 tax bills — a school tax bill in September and a property tax bill in January. When asked, some sellers remember only the most recent bill, not the two bills together (which is the accurate tax number.)
Another contributing factor is outdated and often inaccurate online property tax reporting systems. Many agents do check taxes with online databases such as First American’s Realquest. Now, First American is one of the largest title insurance and real estate data companies in the nation, and one would expect to be able to rely on the accuracy of their data. Not. It is often out of date. For example, First American’s property tax data is included in the Greater Hudson Valley MLS — but for some Sullivan County townships, its updated only through 2004! So an agent may be ‘verifying’ tax data that is 2 years out of date.
Its not all First American’s fault (or any other property tax data aggregator). New York lacks a comprehensive property information and tax reporting system, and the frequency (and accuracy) of data updating can vary widely between townships, depending on how they make their data available. And on some property records, First American includes both school and property taxes, and on others, only property taxes (and there’s no way to tell.)
Then there’s the issue of ‘time on market’. If a property was listed in July, 2005, the taxes listed may be accurate then — based on the Sept. 2004 school tax bill and Jan. 2005 property tax bill. But now, in July, 2006, there have been 2 more recent tax bills and a possible reassessment on the property, all of which can substantially change the property taxes. Very few agents, even if they’re conscientious about tax info at the time of listing, update a listing with each new property tax bill or reassessment. As a result, property tax information on a listing can be sorely out of date.
Some brokers have taken to not including any tax information at all in a listing, which, frankly, isn’t helpful to buyers. Property taxes are a material element in the value of a house. Others have started adding a disclaimer, "Property taxes to be verified by buyer."
Both approaches are, in my opinion, a cop-out. Property tax and assessment information in listings should be accurate, not just at the time the listing is taken, but throughout the period of the listing. The calendar for property tax bills, school tax bills and property reassessments doesn’t change from year to year. Every January, listing agents should request a copy of the latest property tax bill from owners, and the same with the school tax bill every September — and update every listing.
And the local and state Associations of Realtos should lobby for an accurate, up to date and comprehensive property tax reporting system throughout New York State. But until then, its caveat emptor — buyer beware. Don’t take any information on property taxes or assessed value for granted until you’ve verified it! If you do, you just may end up with a shock at closing.