One of the biggest, current issues regarding property tax appeals is how cities are using sales from foreclosed properties. He described that normally the cities are able to throw comps from distressed seller’s right out the “window” as they violate the “fair market value without undue influence” rule. This language creates a rather large loop hole for the cities as they get to cherry pick comps.  

However, he pointed out that now approximately 60% of all sales are from foreclosed properties (we are in Michigan).  And that cities can be pushed into using these “distressed” comps now, as it would be ridiculous for the cities to ignore 60% of the market.  So owners should look really hard at these comps as they can by very powerful in presenting their appeal. 

Another point he made regarding property tax reduction and this issue was that owners need to be very careful with the foreclosed property comps that they present. He went on to say (I don’t have permission to reveal his name) “If you compare a property that has been vacant for 18 months and all of the plumbing and electric has been ripped out, they will throw this comp out, and you will hurt your case.” Even if in all other respects it is comparable to your property. “What you want is 3 or 4 comps of foreclosed sales where the properties were in similar condition as yours and that they just show a much lower sales price than your current assessed value.”