It has already started happening in Florida, one of the worst hit states, and is expected to be adopted by other states in the coming months.
It is a sign of how the real estate market has imploded, according to property appraisers who say that State Department of Revenue rules that advise county property appraisers to ignore foreclosures and other types of 'distressed' sales must now be ignored.
'The belief is that such open market sales are truer indicators of home values. But that's the case only when foreclosure sales are relatively rare, not rampant as they are now. The number of foreclosure sales we are dealing with now is so much greater than I have ever seen that I believe they have become part of the market,' said Pam Dubov, Pinellas County's property appraiser-elect.
Warren Weathers, Hillsborough County's chief deputy appraiser, said that his office is looking at how to gauge the effect of foreclosure sales on values. In Pasco County, Appraiser Mike Wells said his office is already taking foreclosures into account. 'Some of the Department of Revenue rules are for a normal market. This is not a normal market,' he declared.
The likely result is that homeowners in areas with lots of foreclosure sales whose homes are assessed near market value will see their property tax bills drop next year, assuming the governments doesn't raise tax rates.
Wells said that he told his staff to consider foreclosure sales when developing the current tax roll. 'I believe it allowed me to come up with a fairer picture of the market, and what is going on out there,' he said.
Jim Overton, Duval County property appraiser and president of the Florida Association of Property Appraisers, said he isn't surprised by the decision and the organisation is to take the issue up at a wider level.
