The Newark, NJ city council is about to authorize $4mm to reassess all properties in the city. It is required by the state that each municipality go through this process every 5 years. It has been 6 years for Newark so we are one year overdue. This is better than the 42 years the city was overdue before that. Read the article from NJ.com here.
When this was done in 2003 property assessments in Newark had gotten so out of whack that property values in some instances were less than 17% of their true market value. By state law properties must be evaluated at 100% of their true market value. The 2003 assessment was a result of serious pressure from State and county government. The Sharpe James administration fought the reassessment in 1998 on the basis that is would be detrimental to the recovery that Newark was experiencing. See this article from the New York Times in 1998 Here.
When the reassessment was completed in 2003 it was rife with inequities and the city was flooded with tax appeals. Here is a link to a pamphlet distributed at the time of the 2003 reassessment. I would expect the same this time around. Bulk reassessment of an entire municipality are fraught with inaccuracies due to the sheer scope of the task being undertaken.
The most commonly used assessment methodologies are sales comparison, replacement cost, and income. Due to the scope and complexity of reassessing an entire municipality many properties are evaluated based upon a crude rule of thumb or the assessments are simply updated based upon changes in market conditions from the last reassessment.
To understand the scope of this assignment one must realize that there are almost 30,000 Type-2 or residential 1-4 family properties in Newark and 20,000 other properties from tax exempt church or community facilities to office and industrial properties. So if you were to have to evaluate 50,000 properties in one year that would mean in a 365 day year with 8,760 hours you would be evaluating one property every 10 minutes – no weekends, gov’t or religious holidays and no sleep.
As the First Vice President of Sales for Newark & Eastern Essex County I target 150 to 200 market evaluations or Opinions of Value annually. This experience shows the great disparity between the assessed values and market values. My evaluations are confirmed though the marketing of the properties and creating competitive bidding to obtain the true market value. Certified appraisals I have seen for properties typically come in even higher. This implies that for most Newarkers they are in for a rude awakening when the new reassessment is completed.
Owners should prepare for this reassessment by having a market evaluation completed on all of the properties they own. This will provide you with the basis for an appeal should your reassessed value come in high.
I am glad to provide a complimentary market assessment for all commercial, industrial, multifamily, office, and development properties. Please call me to schedule yours at 201 426 2211.