ValueAppeal: Drops Property Tax Appeals Business

ValueAppeal: Drops Property Tax Appeals Business

The minds behind ValueAppeal, a long-time friend of Seattle Bubble, have decided to get out of the property tax appeal business. From the GeekWire story:

ValueAppeal CEO Charlie Walsh made the tough decision to shut down the service earlier this year, saying the economics of helping homeowners challenge their tax bills for as little as $99 just didn’t work out.

“There is only a thin slice of homeowners that are overassessed, about 20 percent of homes,” says Walsh. “And at the same time there is only a 30 to 60 day window in which you are allowed to file an appeal, so that presented a marketing challenge.”

In order to solve that challenge, ValueAppeal turned to direct mail. “To make money at $99 a pop acquiring customers through direct mail — you have to be pretty good at direct mail,” said Walsh, adding that they started layering on all sorts of demographic data about who was most likely to respond to direct mail campaigns and from that who was most likely to file a tax appeal.

“Over the course of a few years, we got really good at predicting who would respond to our direct mail,” said Walsh, describing the data as a “crystal ball.” Late last year, Walsh started kicking around new ideas, thinking about ways they could predict which homes would be most likely to sell, refinance or foreclose in a certain geographic area.

MostLikelyWell, that’s a bummer for homeowners. ValueAppeal was a great service, but given the small niche market they served and the timing issues discussed in the article, it’s not surprising that they decided to pivot into a business with a much larger potential for growth.

Instead of trying to help homeowners figure out if their tax bills are too high, MostLikely is attempting to help real estate professionals develop leads through predictive intelligence…

Walsh admits that the “pain point” still very much exists for home owners trying to appeal property taxes, but he said the company could not afford to service those customers while going in the new direction.

That “new direction” is marketing subscription services for real estate agents, based on predictive analytics. While it’s certainly a business that sounds like an interesting and fun challenge, it’s still sad to see a valuable service for homeowners fall by the wayside.

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

17 comments:

  1. 1
    Erik says:

    How closely does assessed value correlates to sale price? A friend of mine told me that houses generally don’t sell for over 2X the assessed value. Is it fair the make assessed value a function of sale price. It seems to me that there is a pretty loose correlation between assessed value and sale price.

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  2. 2

    Challenging City Hall Property Tax Assessments Requires Much Time and/or Legal Fees

    Its easier to just pay the “computer camera stop light ticket” than use money and time in court fighting it, and possibly losing too.

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  3. 3
    boster says:

    I call bullchocolate on the claim its long and difficult. I spent 2 hours writting a note containing comp sales, my homes days on market and final sale price and got the tax assessed value down by 25%

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  4. 4
  5. 5
    ARDELL says:

    RE: Erik @ 1

    You may have to answer your own question, Erik.

    Pretend for a moment that you are buying a home. The Tax Assessed Value of that home is $425,000. Every other home in the area assessed at $425,000 has sold for about $550,000 in the last 90 days. Some less due to deferred maintenance issues or location weakness like busy road. Some more due to a complete remodel down to the studs.

    The home you are interested in buying is assessed at $425,000 and the asking price is $1.3 million. Tell me honestly that you would totally disregard the assessed value. Of course you wouldn’t. You would at least want a reasonable answer to why every other home assessed at $425,000 sold for no more than x, and more than half of what this seller is asking.

    Maybe you’ll find a good reason to ignore the assessed value and pay 2X or 3X assessed value. But if you did not at least ask the question…and not buy it until you answered that question to your own satisfaction…you would be a fool.

    A good start point for the Seattle Area is 1.3 times assessed value though recently they have been running more like 1.5ish times where demand is higher than supply. That varies from year to year and from neighborhood to neighborhood. Take the sold price of the comps. Divide that sold price by that home’s assessed value. One neighborhood will be 1.17 X assessed value and another will be 1.52 times assessed value…but there will be a general basis to go by. Then do price per square foot. Then do what the market will bear on a supply and demand basis for the area and time of year. Then look at Redfin stats for the # of potential buyers for the property in that area in recent times.

    You take 3 or 4 different valuation methods for checks and balances…and then the market will tell you if you are right…or not. You can NEVER be smarter than the market. But using AV as ONE of the methods to predict what the market MAY do, is always a valid place to start.

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  6. 6
    Erik says:

    RE: ARDELL @ 5
    Okay. Thank you. This is a new concept for me, so it may take a little longer for me to digest it. Seems like a reasonable way to do a check to see what your home could be worth.

    I like this analysis method. If you were buying a remodel, you could find a pristine comp and see what the coefficient of the assessed value is and then see what the possible coefficient could be of the house I wanted to buy is. Unfortunately, I would have to say that I am a fool in that I haven’t considered this analysis until now.

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  7. 7
    corndogs says:

    RE: softwarengineer @ 2 – “Challenging City Hall Property Tax Assessments Requires Much Time and/or Legal Fees”

    First of all it is not anything to do with city hall because property taxes are assessed by the county. Secondly, it costs nothing that I recall when I fought mine in Pierce County. If you are denied you can appeal the decision to the state tax board. That will take up to a year to get a date.

    So, why do you comment on stuff you know nothing about? Doesn’t it feel weird when you just make sh!t up and say it? It would for me.

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  8. 8
    ARDELL says:

    Agree with Corndogs and Boster here. I have helped many people acquire the needed data for their tax appeal over the years for free. Usually senior citizens. Takes me about 15 minutes. The only time it is difficult is when they want to change it to something that can’t be support by real data, then I don’t help them at all. So zero to 15 minutes to get the data and usually no cost added to that zero cost to file the appeal.

    The AV is supposed to run at roughly 80% of value to extinguish the need for individual appeals as the market fluctuates within a normal range. The value is reset every year and is never meant to be 100% of market value, so as to keep the cost of the individual appeal process at a minimum. If the market value is 1.3 times AV, as example, then the AV will always be lower than real market value and no appeals will be needed.

    As to the business that is switching gears, only makes sense that the need for this service should not be an ongoing biz plan, given the way the AV is structured to be less than Fair Market Value in most all cases.

    The only OMG moment I had this year regarding next year’s AV value is Clyde Hill in 98004. Look up any Clyde Hill property on the King County Parcel Viewer to see what I’m talking about. Not sure what the heck is going on over there for 2014. If anyone has any insight or info…much appreciated.

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  9. 9
    boster says:

    Also keep in mind your assessed value is usually about two years behind the current value. This info I got from an assessor walking my neighborhood one day. Basically their is a lag getting the data in and agreed on followed by a lag getting the updated appraised value out to the owner. When property values are rising no one gets upset with this scenario but boy to they all scream when property values fall.

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  10. 10
    ChrisM says:

    Forget where I heard this from, but someone has a blue tarp over half their roof for the express purpose of dropping the appraisal…

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  11. 11

    I’m just disappointed that they are pivoting to an already saturated market, lead generation for real estate agents, that is aligned with 20th Century business practices, not 21st. Will the real estate industry still rely on “lead generation” for new clients 5, 10, or 20 years from now? Not if innovators like Redfin have anything to say about it. I suppose there is money to be made in the meantime, but I don’t see it as a long term play.

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  12. 12
    Marc says:

    RE: Craig Blackmon @ 11

    Actually, Redfin is already in the lead generation business: http://www.redfin.com/real-estate-agents/redfin-partner-agents.

    How else could they make any money in a market like Las Vegas with a median home price $175,000 (http://www.reviewjournal.com/business/housing/median-single-family-home-price-las-vegas-continues-rise).

    My guess is that this lead generation will become a very considerable percentage of their revenue over the next 5, 10, or 20 years. Thus, Redfin is not the innovative player they once were at least from the consumers’ perspective. I would say from the industry’s perspective they are plenty innovative as they’ve taken the better features of the traditional brokerage model and put their own twist on it.

    I think they will continue to evolve into a traditional brokerage and will drop the commission rebate entirely within 5 years and probably within 1 or 2.

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  13. 13

    RE: Marc @ 12 – Going on the record! I’ll see you back here October 18, 2018!!

    Your point is well taken. That said, Redfin is acting as a referral service, not a lead generator. A referral service is more efficient, and thus ultimately better for the consumer, than a lead generator. So even with some movement back towards the traditional model, Redfin continues to innovate.

    As for the rebate, I disagree. The Redfin model is founded on putting the internet to work to create efficiencies, which in turn allows for lower fees to the consumer. If Redfin drops the rebate entirely, it loses its soul. The rebate is here to stay.

    Or until industry-wide prices reflect the more efficient, modern system of buying and selling real estate. Will that be the case in five years? We’ll find out! ;-)

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  14. 14
    ARDELL says:

    To both Marc and Craig, Redfin started as a lead generation company with a 20% kickback before they evolved into a brokerage.

    That is why everyone was watching and not trusting Zillow when they said they wouldn’t turn into a brokerage, and one of the reasons they dropped the mls feed they originally had. Not the ONLY reason they dropped the mls feed, but one of them.

    http://raincityguide.com/2005/06/20/redfin-the-anti-google/

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  15. 15

    RE: ARDELL @ 14 – Thanks Ardell for setting the historical record straight. That said, do we know that Redfin’s original intent was to remain a lead generator? Or was that just an early phase in the company’s planned development?

    And even if the company – and it’s underlying ethic – did in fact evolve, evolve it did. So maybe it just “grew” a soul…. ;-) Regardless of its actual origins, I stand by my argument that a commission rebate is now at the heart of what Redfin does.

    But I may be eating a large crow pie less than five years from now…..

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  16. 16
    The Tim says:

    I hope Craig is right.

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  17. 17
    Jack Kennedy says:

    I wish ValuAppeal had embraced the wholesale side of the business, selling their automated services to tax and accounting professionals rather than direct to the public. If they had gone this route, had hired Regional Reps to sell and service these clients – ValuAppeal would have succeeded and thrived.

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