When a property owner and municipality each have their own expert appraiser, the New Jersey Tax Court has the daunting task of determining (1) whether the property owner has overcome the presumption of correctness, and (2) assuming the presumption is overcome, which appraiser is the more credible expert.  Recently, in a decision involving property located in Franklin Lakes, New Jersey, the New Jersey Tax Court performed a thorough analysis of two appraisers’ selection and adjustments to comparable sales in a residential tax appeal.  See Elrabi v. Borough of Franklin Lakes, New Jersey Tax Court, July 11, 2008. The property owner’s appraiser believed the property was worth $1.8 million, and the municipality’s appraiser believed the property was worth $2.6 million.  In the end, the court determined a value of $2.6 million. The case provides an overview of the law governing the presumption of correctness and provides a good analysis of how to analyze an appraisal of residential property.

In terms of the comparable sales selected by the two appraisers, the two appraisers used different approaches.  The property owner’s expert focused primarily on finding homes of a similar age to the subject with standard finishes, regardless of the size of the homes.  The property owners’ appraiser justified this approach because of the condition of the property under appeal was allegedly out dated and not comparable to other high end homes in the area.  The appraiser then adjusted the properties for size. The municipality’s appraiser focused on homes of similar size, even if they were newer and had higher quality amenities.  The appraiser then adjusted the values for the quality of the amenities  (ie, quality of the kitchen, landscaping, finishes in the bathroom, etc.).  The adjustments are described in detail in the court’s opinion and beyond the scope of this blog, but essential reading for those seeking to litigate a tax appeal.

The Franklin Lakes case provides a good road map for a property owner deciding whether or not to file a tax appeal.  After overcoming the initial hurdle of the presumption of correctness, the property owner must still have solid proof to demonstrate the true value of the property. When it comes to the battle of the experts, it is very important to retain an appraiser with experience in the New Jersey Tax Courts.  The Tax Court Judges are experts in this area and often times will ask their own questions of the competing experts.