Atlanta property taxes: How we got the story

The Atlanta Journal-Constitution

How we got the story

Local governments and schools reap billions of dollars from property taxes that depend in part on the value of real estate. For the tax burden to be distributed fairly, county appraisers must accurately appraise the value of that real estate. The Atlanta Journal-Constitution wanted to know: Are appraisers accurately valuing residential property?

For the second consecutive year, the newspaper compared official tax values to sale prices in metro Atlanta’s five largest counties: Clayton, Cobb, DeKalb, Fulton and Gwinnett. The AJC analyzed hundreds of thousands of tax records and tens of thousands of sales. Last year the AJC compared the change in appraised property values with the change in sale prices. This year, the newspaper analyzed the data using a method closely aligned to the one appraisers use to check their own work — comparing the appraised value with actual sales prices of homes that sold.

The newspaper compared the sale prices of residential properties that sold in 2009 to their 2010 county values — limiting sales, where possible, to fair-market individual-to-individual sales or bank sales of foreclosed properties. Fulton did not distinguish between foreclosures, in which the sale price may reflect the amount still owed on a mortgage, and bank sales. Cobb could not provide codes to distinguish sale type. For all counties, we eliminated outliers using standards set by the International Association of Assessing Officers.

For each property, we divided the county value by the sale price to produce a ratio. If the county valued a property at $200,000 as of Jan. 1, 2010, but it sold for $185,000 in 2009, the ratio would be about 1.08 (200,000/185,000=1.08). That means the county’s value was 8 percent over market value, as determined by the sale price. This ratio analysis is the generally accepted method for comparing county appraisals to sales. The state Department of Audits uses this method when checking the accuracy of county appraisals annually.

After calculating a ratio for property that sold in 2009, the newspaper determined the median ratio for each county. For example, in Gwinnett County, the median ratio was 1.02, indicating that the typical county appraisal was 2 percent over market value. To get a better sense of the accuracy of county appraisals in different areas, the newspaper calculated median ratios by ZIP codes within counties.

The newspaper also interviewed county appraisers, real estate professionals, tax consultants, academics, homeowners and elected officials. We reviewed county tax digests and statistics on appeals, real estate trends, foreclosures and other relevant data.