Turner Business Appraisers, Inc. 
  www.turnerbusiness.com
What's Behind Big Business Appeals? The Answer is Compelling
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Many of you face a back log
  of appeals these days from big businesses---who claim that their values are too high--on real estate and/or personal property.

I   enjoy mulling over what is at the heart of these types of perceived over-appraisal movements.   What I have recently identified is that one common thread in the current basket of big business appeals is the presence of "compulsion."

Two of the most popular property tax reduction schemes: The "Dark Box"   and "eBay" theories are both predicated on compulsion (for eBay think Harris Teeter BPP appeals).   
  • Dark box proponents rely upon "comparable sales" of defunct properties (distressed) which often also have deed restrictions.
  • The eBay theory is commonly based upon the uninstalled asking price of BPP for sale on the internet by a compelled party (the orderly liquidation "OLV" level of trade).
But I have good news for you--- the use of comparable sales transactions with the presence of compulsion conflicts with 
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NCGS 105-283 which defines market value "as the true value of property in exchange with neither party being compelled to buy or sell " (paraphrased).  
 
The bottom line is this, "at the heart of both of the aforementioned schemes is compulsion by the seller."
 
Compulsion equates to a distressed/OLV level of trade---but our Statutes are crystal clear---market value participants are not under compulsion.   Thus both of these theories are built on shaky foundations--but this must be articulated and then refuted, or as we have seen, these schemes can be effectively used before appellant boards to frivolously reduce values.
 
For more info with this topic click here or give me a call today and let's have a chat. 
Jim Turner, CPA, CVA, CMEA
President
Turner Business Appraisers, Inc.
 
Turner Business Appraisers
(704) 821-0667
Jim.Turner @turnerbusiness.com
www.turnerbusiness.com