The opinion
IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
NIKKI ROUDA and JENNIFER ROUDA, )
)
Plaintiffs, ) TC-MD 160206N
)
v. )
)
CLATSOP COUNTY ASSESSOR, )
)
Defendant. ) FINAL DECISION1
Plaintiffs appeal the real market value of property identified as Account 22265 (subject
property) for the 2015-16 tax year. A telephone trial was held on December 6, 2016. Alex
Robinson, Attorney-At-Law, appeared on behalf of Plaintiffs. James Dowley (Dowley), certified
residential real estate appraiser, testified on behalf of Plaintiffs. L. Catherine Harper, Senior
Appraiser, and Steven S. Gibson (Gibson), registered appraiser, appeared on behalf of
Defendant. Gibson testified on behalf of Defendant. Plaintiffs’ Exhibits 1 to 4 and Defendant’s
Exhibit B were received without objection. Defendant’s Exhibit A was received over Plaintiffs’
objection to the cost approach analysis. Plaintiffs’ objection will be considered in weighing the
cost approach analysis.
I. STATEMENT OF FACTS
A. Subject Property Description
The subject property is a large, single-family residence in Astoria. (See Ptfs’ Ex 1 at 1.)
Gibson testified that, based on blueprints and actual measurements, he calculated the subject
property to include 15,843 square feet, comprised of 4,797 on the first floor; 2,864 on the second
1
This Final Decision incorporates without change the court’s Decision, entered April 10, 2017. The court
did not receive a statement of costs and disbursements within 14 days after its Decision was entered. See Tax Court
Rule–Magistrate Division (TCR–MD) 16 C(1).
FINAL DECISION TC-MD 160206N 1
floor; 1,100 on the third floor; 2,180 of living space in the basement; and 4,902 of unfinished
space in the basement. (See Def’s Ex B.) In addition, he calculated that the subject property
includes 1,191 square feet of finished space in the garage and 1,881 square feet of unfinished
space in the garage. (See id.) The subject property’s above-grade living area contains 12 rooms,
including 4 bedrooms and 3.1 bathrooms. (Ptfs’ Ex 1 at 2.) The subject property has three
fireplaces, a patio, a covered porch, and an elevator. (Id. at 1.) Dowley testified that it also has
an indoor swimming pool and a “mother in law” unit, although those parts of the subject
property were not finished as of January 1, 2015. He testified that the subject property is a high-
end construction and was built as a “trophy home,” with many features and amenities. (See id. at
3.) Dowley wrote that the subject property “is an over improvement * * * due to its overall size,
and certainly its level of quality [, which] is at the very high end of home construction in
Astoria.” (Id.) Gibson concurred that the subject property was “overbuilt” for its area.
Dowley described the subject property as built in 2004 with an effective age of four
years. (Ptfs’ Ex 1 at 1.) He testified that the subject property construction began in 2004 and
continued through 2009, at which point it was still not complete, but had received a certificate of
occupancy. (See id. at 3.) Gibson listed the subject property’s “effective year” as 2013 and
determined it was 94 percent complete as of January 1, 2015. (Def’s Ex B.)
The subject property’s improvements are situated on a 22,216-square foot, or 0.51-acre,
site. (Ptfs’ Ex 1 at 2; Def’s Ex B.) The site is “located at the end of a cul de sac” and “offers
panoramic views of the city, river, and coastline[.]” (Ptfs’ Ex 1 at 3.)
B. Sale of the Subject Property
Columbia State Bank (the bank) foreclosed on the subject property in February 2013 and
listed it for sale in May 2013 for $2.4 million. (See Def’s Ex A at 6.) The bank reduced the
FINAL DECISION TC-MD 160206N 2
listing price to $1.9 million in April 2014, to $1.75 million in June 2014, and to $1.35 million in
October 2014. (Id.) The subject property went under contract in March 2015 and closed in May
or June 2015 for $1,185,000.2 (See id.; see also Ptfs’ Ex 2 (seller’s counteroffer).) Dowley
testified that he considered the sale to be a typical bank-owned sale; the bank was trying to
recoup its costs. He testified that the sale did not influence his real market value conclusion.
Gibson testified that he discussed the subject property sale with Bob Nelson (Nelson),
“SVP of Special Credits” for the bank. (See Def’s Ex A at 6.) The bank assigned the subject
property to Nelson in the spring of 2014. (Id.) He “obtained two appraisals: Market Value
Appraisal of $1,750,000 for a 12-18 month timeline[; and] Disposition Value Appraisal of
$1,250,000 for a ‘Quick Sale’ of 3 to 6 months.” (Id.) Gibson testified that, according to
Nelson, the bank ultimately decided to sell the subject property to Plaintiffs due to the carrying
costs. (See id.) He testified that the sale was a distressed sale that involved compulsion; the
bank did not want to pay the carrying costs any longer. (See id.) Gibson testified that he was not
aware of any deadline by which the bank had to sell the subject property, nor was he aware of
any offers better than the $1,185,000 offered by Plaintiffs.
C. Plaintiffs’ Appraisal
Dowley’s appraisal report was prepared on May 1, 2015, with an effective date of
April 21, 2015. (Ptfs’ Ex 1 at 6.) Dowley testified that he did not consider the income approach
to be appropriate in this case, so he developed only the cost and sales comparison approaches.
(See Ptfs’ Ex 1 at 2-3.) He testified that he placed no weight on his conclusion under the cost
approach, which was $2,720,190. (Id.) Dowley concluded a real market value of $1,285,000
under the sales comparison approach, which was also his reconciled value opinion. (Id. at 2.)
2
MLS reported closing on June 4, 2015, but Gibson testified it was May 29, 2014. (See Def’s Ex A at 6.)
FINAL DECISION TC-MD 160206N 3
1. Plaintiffs’ sales comparison approach – comparable sales
Dowley first researched sales in Astoria and then expanded his search to include Clatsop
and Tillamook counties. (See Ptfs’ Ex 1 at 8.) He testified that there are limited homes in the
subject property’s price and size range in Astoria. Dowley testified that he did not include
beachfront or oceanfront properties because he considered those properties to be in a distinct
market for secondary vacation homes, whereas the subject property is a primary residence. He
identified four comparable sales and two comparable listings. (See id. at 2, 7-8.)
Dowley’s sale 1, for $1,100,000 in August 2014, was located 0.06 miles from the subject
property. (Ptfs’ Ex 1 at 2.) He described it as 3,354 square feet of gross living area on an
11,761-square foot lot. (Id.) Dowley made upward adjustments for the gross living area, for the
basement and finished rooms below grade, for the garage, and for the lack of an additional
amenity such as a swimming pool. (Id.) His gross adjustments were 35.1 percent of the sale
price. (Id.) Dowley concluded an indicated real market value of $1,285,600. (Id.)
Dowley’s sale 2, for $1,423,000 in March 2014, was located 21.66 miles away from the
subject property in Cannon Beach. (Ptfs’ Ex 1 at 2.) He described it as 4,591 square feet of
gross living area on a 2.01-acre lot. (Id.) Dowley made a downward adjustment for the lot and
upward adjustments for the basement and finished rooms below grade and for the garage. (Id.)
His gross adjustments were 14.8 percent of the sale price. (Id.) Dowley concluded an indicated
real market value of $1,333,000. (Id.)
Dowley’s sale 3, for $1,185,000 in July 2014, was located 9.94 miles away from the
subject property in Gearhart. (Ptfs’ Ex 1 at 2.) He described it as 4,148 square feet of gross
living area on a 1.01-acre lot. (Id.) Dowley made upward adjustments for the gross living area,
for the basement and finished rooms below grade, for the garage, and for the lack of an
FINAL DECISION TC-MD 160206N 4
additional amenity. (Id.) His gross adjustments were 21.0 percent of the sale price. (Id.)
Dowley concluded an indicated real market value of $1,234,200. (Id.)
Dowley’s sale 4, for $1,000,000 in August 2014, was located 12.22 miles away from the
subject property in Gearhart. (Ptfs’ Ex 1 at 7.) He described it as 4,264 square feet of gross
living area on a 1.51-acre lot. (Id.) Dowley made a downward adjustment for location and
upwards adjustment for the view, for the construction quality, for the condition, for the gross
living area, for the basement and finished rooms below grade, for the garage, and for the lack of
an additional amenity. (Id.) His gross adjustments were 43.7 percent of the sale price. (Id.)
Dowley concluded an indicated real market value of $1,286,700. (Id.)
Dowley’s two listings were each located approximately 20 miles from the subject
property in Cannon Beach and Seaside, respectively. (Ptfs’ Ex 1 at 7.) Listing 5, for $1,235,000,
included 4,614 square feet of gross living area on a 7.12-acre lot. (Id.) Listing 6, for $1,299,999,
included 6,376 square feet of gross living area on a 12.00-acre lot. (Id.)
2. Plaintiffs’ sales comparison approach – adjustments and reconciliation
Dowley “had to use sales that [were] over six months old,” but found no time adjustment
was necessary due to stable market conditions. (Ptfs’ Ex 1 at 8.) He wrote that the subject
property “is a much larger than typical home[,]” but he found that a market existed for larger
homes, as indicated by the comparable sales. (Id.) Dowley found “no impact on marketability”
for gross living area that exceeded 4,500 square feet so he “adjusted [gross living area] at $100
per square foot up to 4,500 [square feet] and areas above that [were] given no value.” (Id.) He
made “an across the board adjustment” of $50,000 for the subject property’s finished basement.
(See id. at 2, 7, 8.) Dowley treated “the mother in law space, the unfinished basement[,] and the
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FINAL DECISION TC-MD 160206N 5
pool space as a separate line item.” (Id. at 8.) He made “a flat $100,000 adjustment” downward
due to the fact that the subject property was not complete. (See id. at 2, 8.)
Dowley testified that sale 1 was probably his best comparable sale given its location near
the subject property. (See Ptfs’ Ex 1 at 2.) He testified that sale 2 was another good quality
house with good views similar to the subject property. (See id.) Dowley testified that sale 3 was
located in the gated Pinehurst community and located 10 minutes walking to the beach. (See id.)
He thought it had a similar overall appeal as the subject property and was a viable comparable.
Dowley testified that sale 4 was a bayfront property in Gearhart. (See id. at 7.) He testified that
it was lower cost construction than the subject property and of an inferior condition. (See id.)
In reconciling his comparable sales, Dowley assigned the most weight – 35 percent – to
sales 2 and 3, which required “the least adjustments[.]” (Ptfs’ Ex 1 at 2.) He assigned 20 percent
weight to sale one, which required “larger adjustments[.]” (Id.) Dowley gave “a contributory
value” of 10 percent to sale 4 due to its “very large adjustments[.]” (Id.) He gave no weight to
the listings. (Id.) Dowley concluded a real market value of $1,285,000. (Id.)
Gibson testified that he agreed with Dowley that not many properties in Astoria exceed
4,500 square feet, but he disagreed that it was a “magic number” beyond which the market does
not assign value. He testified that Dowley failed to account for the subject property’s unfinished
basement space and other amenities, such as the elevator.
D. Defendant’s Appraisal
Gibson testified that he agreed with Dowley that the income approach was not relevant to
the valuation of the subject property. Gibson testified that he performed the cost approach,
starting with the 2005 cost factors provided by the Department of Revenue and applying local
cost modifiers. (See Def’s Ex A at 28.) His report did not identify the cost factors or modifiers
FINAL DECISION TC-MD 160206N 6
that he used.3 (See id.) After applying adjustments for several forms of depreciation, Gibson
concluded a real market value of $1,563,260 under the cost approach. (See id.) Gibson also
performed a sales comparison approach, yielding a real market value range of $1,519,085 to
$1,731,679. (Id. at 29.) That analysis is discussed in more detail below.
1. Defendant’s sales comparison approach – comparable sales
Gibson provided four comparable sales for the subject property. (Def’s Ex B.) His sales
1 and 2 were the same as Dowley’s sales 1 and 2. Gibson’s description of sale 1 was similar to
Dowley’s, although he made different adjustments, arriving at an adjusted real market value of
$1,581,205. (Id.) Gibson described sale 2 as having 6,028 square feet, which is more than
Dowley reported.4 (See id.) Gibson’s square footage total includes 2,129 on the first floor;
1,712 on the second floor; and 2,187 of finished space above the garage. (See id.) He concluded
an adjusted sale price of $1,561,129 for sale 2. (See id.)
Gibson’s sale 3, for $1,712,500 in January 2013, was located in Gearhart. (Def’s Ex B.)
He described it as a 5,064-square foot house on a 0.26-acre lot. (Id.) It was built in 1912 with an
effective year of 1970. (Id.) Gibson testified that sale 3 had been redone and its condition was
“excellent.” (Id.) He testified that sale 3 was oceanfront. (See Def’s Ex A at 36-37.) Gibson
made adjustments and concluded an adjusted sale price of $1,519,085 for sale 3. (Def’s Ex B.)
Gibson’s sale 4, for $3,750,000 in June 2012, was located in Cannon Beach. (Def’s Ex
B.) He described it as a 5,281-square foot house on a 1.37-acre lot. (Id.) It was built in 2005.
(Id.) Gibson described its condition as “average.” (Id.) He testified that sale 4 was also
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3
However, Gibson testified that he emailed “CAAP” (the “computer assisted appraisal program”) to
Plaintiffs prior to trial. (See Def’s Ex A at 28.)
4
Dowley described sale 2 as having 4,591 square feet of gross living area. (Ptfs’ Ex 1 at 2.)
FINAL DECISION TC-MD 160206N 7
oceanfront. (See Def’s Ex A at 36-37.) Gibson described its view as “excellent.” (Def’s Ex B.)
He made adjustments and concluded an adjusted sale price of $1,731,679 for sale 4. (Id.)
2. Defendant’s sales comparison approach – adjustments
Gibson testified that he made adjustments to his sales using depreciated costs from the
2005 cost factor book. He testified that technique was supported by The Appraisal of Real
Estate. (See Def’s Ex A at 29.) Gibson testified that, first, he subtracted personal property from
each sale; next, he made market based adjustments for time; and, finally, he made adjustments
for location, land size, view, and other physical characteristics of the properties. Gibson made
downward adjustments in excess of $100,000 to each of his of his sales due to the fact that the
subject property was 94 percent complete. (Def’s Ex B.) He made a downward “local market
adjustment” ranging from $138,283 to $690,434 to his sales 2, 3, and 4. (Id.) Gibson testified
that the adjustment was, essentially, a location adjustment recognizing that oceanfront locations
are more popular than Astoria. He made an additional downward “economic adjustment”
ranging from $175,689 to $269,124 to each sale. (Id.) Gibson testified that adjustment was
because the subject property suffers from economic obsolescence, noting that its basement is
larger than any of the comparable sales. He made downward adjustments of $826,294 and
$1,260,157, respectively, to sales 3 and 4 because each was oceanfront. (Id.)
Gibson’s net adjustments to his comparable sales – not including the “local market
adjustment,” the percentage complete adjustment, and the economic adjustment – ranged from
7.3 for sale 3 to 70.7 percent for sale 1, as a percentage of sale price. (See Def’s Ex B.) His
gross adjustments ranged from 53.0 percent for sale 4 to 105.3 percent for sale 3. (See id.)
Gibson testified that sale 1, with an adjusted price of $1,581,205, was his best value
indication under the sales comparison approach. (Def’s Ex A at 40.) He testified that it was
FINAL DECISION TC-MD 160206N 8
built around the same time as the subject property, had a similar location and view as the subject
property, and sold within four months of the valuation date. (See id.) Gibson concluded a real
market value of $1,581,205 under the sales comparison approach. (Id.)
3. Defendant’s reconciliation and value conclusion
In reconciling the two approaches to value that he considered, Gibson placed more
weight on his “market related cost approach.” (See Def’s Ex A at 40.) He concluded a
reconciled real market value of $1,563,260, which was his value conclusion under the market
related cost approach. (See id.) Gibson testified that he would not have selected a real market
value under the market related cost approach if it had not been supported by the sales comparison
approach. He testified that, if the sales comparison approach had revealed that the value under
the market related cost approach was wrong, then he would have examined the problem and
reconsidered his value conclusion.
II. ANALYSIS
The issue before the court is the real market value of the subject property for the 2015-16
tax year. ORS 308.205(1) defines real market value:5
“Real market value of all property, real and personal, means the amount in cash
that could reasonably be expected to be paid by an informed buyer to an informed
seller, each acting without compulsion in an arm’s-length transaction occurring as
of the assessment date for the tax year.”
The assessment date for the 2015-16 tax year was January 1, 2015. See ORS 308.007; 308.210.
There are three approaches to value that must be considered to determine the real market
value of real property: the sales comparison approach, the cost approach, and the income
approach. See OAR 150-308.205-(A). In a particular case, all three approaches may not be
applicable; however, each approach “must be investigated for its merit.” Id. Whether any one
5
The court’s references to the Oregon Revised Statutes (ORS) are to 2013.
FINAL DECISION TC-MD 160206N 9
approach is more persuasive in a given case “is a question of fact to be determined by the court”
based on the record before it. Pacific Power & Light Co. v. Dept. of Rev., 286 Or 529, 533, 596
P2d 912 (1979). In addition to the three approaches to value, a recent sale of the subject property
“is important in determining its market value. If the sale is a recent, voluntary, arm’s[-] length
transaction between a buyer and seller, both of whom are knowledgeable and willing, then the
sales price, while certainly not conclusive, is very persuasive of the market value.” Kem v. Dept.
of Rev., 267 Or 111, 114, 514 P2d 1335 (1973).
The parties agree that 2015-16 tax roll real market value of $1,999,234 for the subject
property is in error. (See Compl at 2.) Plaintiffs request that the 2015-16 real market value be
reduced to $1,180,000, their purchase price, although their appraiser Dowley concluded a real
market value of $1,285,000. Defendant requests that the 2015-16 real market value of
$1,563,260 determined by the board of property tax appeals be sustained. (See id.)
Plaintiffs bear the burden of proving their case by a preponderance of the evidence. See
ORS 305.427. “Preponderance of the evidence means the greater weight of evidence, the more
convincing evidence.” Feves v. Dept. of Rev., 4 OTR 302, 312 (1971). To meet their burden,
Plaintiffs must “provide competent evidence of the [real market value] of their property.”
Woods v. Dept. of Rev., 16 OTR 56, 59 (2002). Competent evidence of real market value
“includes appraisal reports and sales adjusted for time, location, size, quality, and other
distinguishing differences, and testimony from licensed professionals such as appraisers, real
estate agents, and licensed brokers.” Danielson v. Multnomah County Assessor, TC-MD
110300D, WL 879285 (Or Tax M Div Mar 13, 2012).
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FINAL DECISION TC-MD 160206N 10
A. The Sale of the Subject Property
Under Kem, a recent, voluntary, arm’s-length sale of the subject property provides
persuasive evidence of its real market value. 267 Or at 114. Here, the sale of the subject
property to Plaintiffs was following foreclosure by the bank. “There are many practical reasons
why the sale of a property following foreclosure by the lender might involve an atypical market
condition rendering the transaction of little or no value as an indication of market value.” Kryl v.
Lane County Assessor, TC-MD 100192B, WL 1197444 at *2 (Or Tax M Div Mar 30, 2011).
For example, “the lender may have a policy of selling such property only for the amount of the
underlying debt, regardless of what the property may actually be worth.” Id. “This court has
been reluctant to consider ‘foreclosure’ sales as ‘arm’s[-]length transactions’ because such sales
‘may well involve an element of compulsion on the part of the seller.’” Voronaeff v. Crook
County Assessor, TC-MD 110361C, WL 1426847 at *4 (Or Tax M Div Apr 25, 2012) (citations
omitted). A foreclosure sale does not represent a voluntary transaction between a buyer and
seller. The seller of the property might be compelled to sell the property at a lower value in
order to settle the debt of the property. Therefore, a foreclosure sale is typically not considered a
voluntary, arm’s-length transaction under ORS 308.205.
Neither Dowley nor Gibson concluded that the subject property’s sale price was its real
market value; each noted that the bank was motivated to recoup its costs and each concluded a
real market value in excess of the sale price. Gibson spoke with a representative of the bank who
told him that the bank was motivated to sell because it no longer wanted to pay the carrying costs
associated with the subject property. A few aspects of the subject property sale indicate that it
might, nevertheless, represent real market value. Specifically, the subject property was exposed
to the market for approximately two years and there is no evidence that the bank received a
FINAL DECISION TC-MD 160206N 11
better offer than Plaintiffs’. However, as Gibson noted, for the first year the subject property
was listed at $2.4 million, a price in excess of any value opinion for the subject property. Thus,
although the subject property was on the market for approximately two years, the first year may
have represented an excessive listing price. As reported by Gibson, the bank’s appraiser
concluded a reasonable marketing time of 12-18 months for the subject property. Ultimately, the
court is not persuaded that the subject property’s sale price was its real market value.
B. Sales Comparison Approach
Both appraisers used the sales comparison approach to value the subject property. The
sales comparison approach “may be used to value improved properties, vacant land, or land
being considered as though vacant.” Chambers Management v. Lane County Assessor, TC-MD
060354D, WL 1068455 at *3 (Or Tax M Div Apr 3, 2007) (citations omitted). Under the sales
comparison approach, “only actual market transactions of property comparable to the subject
property, or adjusted to be comparable,” may be used and all sales “must be verified to ensure
they reflect arm’s-length market transactions.” OAR 150-308.205-(A)(2)(c). To be comparable,
properties should be “similar in size, quality, age and location” to the subject property.
Richardson v. Clackamas County Assessor, TC-MD 020869D, WL 21263620 at *3 (Or Tax M
Div Mar 26, 2003).
Dowley relied upon four comparable sales and considered two comparable listings,
although he gave no weight to the listings. Two of the comparable sales that Dowley relied upon
were also used by Gibson. None of the comparable sales identified by either appraiser was as
large as the subject property, which included 7,971 square feet of gross living area according to
Dowley. Gibson concluded that the subject property was 15,843 square feet, including 4,902
square feet of unfinished basement space. By contrast, the comparable sales and listings
FINAL DECISION TC-MD 160206N 12
identified by Dowley and Gibson ranged in size from 3,354 to 6,376 square feet. Both appraisers
characterized the subject property as an overimprovement with respect to its size and amenities.
A property that has “too many expensive amenities for its location (known as an
overimprovement) is out of balance.” Appraisal Institute, The Appraisal of Real Estate 379 (14th
ed 2014); see also Chilton v. Multnomah County Assessor, TC-MD 060604C, WL 824149 at *5
(Or Tax M Div Mar 13, 2007) (observing that the value of the taxpayer’s house was “at the high
end of the range and [was], perhaps, an overimprovement for the neighborhood”).
Overimprovements “can lead to functional obsolescence that may need to be accounted for in
sales comparison, income capitalization, and cost approach analyses, but differently in each
approach.” The Appraisal of Real Estate at 379.
Dowley sought to account for the subject property’s excessive size compared to other
properties in its market by capping his adjustment for gross living area at 4,500 square feet. In
other words, Dowley adjusted his comparable sales for differences in gross living area up to
4,500 square feet, but not beyond. Gibson also made a downward “economic adjustment” to
each of his comparable sales. His economic adjustment was a percentage of the adjusted sales
price.
The court agrees with the two appraisers that the subject property is an overimprovement
for its market. That finding is supported by the lack of comparable sales as large as or larger
than the subject property. The largest house identified by either appraiser was Dowley’s listing
of 6,376-square foot house. As between the two appraisers’ adjustment methods, the court finds
Dowley’s approach more persuasive because it bears a direct relationship to the aspect of the
subject property that is overimproved – namely, its size. Although the court agrees with
Dowley’s insight that the market ascribes diminishing value to more gross living area beyond a
FINAL DECISION TC-MD 160206N 13
certain point, the court is not persuaded that that point is 4,500 square feet. The comparable
sales and listings identified by the appraisers demonstrate that the subject property’s market
includes properties at least up to 6,300 square feet. Dowley did not provide sufficient evidence
or analysis to support a conclusion that a 6,300-square foot property does not sell for more than a
4,500-square foot property, all other aspects being equal. As a result, the court concludes that
Dowley’s real market value conclusion is understated by approximately $180,000.6 Adding that
amount to Dowley’s conclusion of $1,285,000 yields a real market value of $1,465,000.
Gibson concluded that the subject property’s real market value was $1,563,260. He
adjusted his sales using depreciated cost factors from the Department of Revenue’s 2005 cost
factor book. As Gibson noted, that method is described by The Appraisal of Real Estate as an
acceptable technique to make quantitative adjustments. See id. at 398, 401. The court’s concern
with Gibson’s appraisal is not his method for making adjustments, but rather, the magnitude of
his adjustments. Gibson calculated his net adjustment to each sale. However, “[t]he magnitude
of net adjustments is often a less reliable indicator of accuracy” than gross adjustments. Id. at
394. “A net adjustment figure may be misleading because the appraiser cannot assume that any
inaccuracies in the positive and negative adjustments will cancel each other out.” Id. Although
Gibson’s net adjustments ranged from 7.3 to 70.7 percent, his gross adjustments ranged from 53
to 105.3 percent.7 Those adjustments are significant and call into question either the accuracy of
the adjusted sale prices or the comparability of the properties selected.
The court finds that Dowley presented a more persuasive sales comparison approach
analysis. However, his ultimate value conclusion was understated as a result of his decision not
6
That is the difference between 4,500 square feet and 6,300 square feet, 1,800 square feet, multiplied by
$100 per square foot, the adjustment that Dowley used for gross living area.
7
By contrast, Dowley’s gross adjustments to his comparable sales ranged from 14.8 to 43.7 percent.
FINAL DECISION TC-MD 160206N 14
to adjust for gross living area differences beyond 4,500 square feet. The court finds that a real
market value of $1,465,000 is supported under the sales comparison approach.
C. Other Approaches to Value
Neither appraiser used the income approach to value because the subject property is not
an income-producing property. Dowley used the cost approach, but gave his value conclusion
under that approach no weight. He wrote that the “much higher value” of $2,720,190 indicated
by the cost approach confirmed that the subject property “is an over improvement.” (Ptfs’ Ex 1
at 2-3.) Gibson also used the cost approach, finding an indicated value of $1,563,260, but he did
not identify any of the specific cost factors or adjustments that he used to reach his value
conclusion. Plaintiffs objected to Gibson’s cost approach on that basis. Absent more supporting
detail, the court is unable to give any weight to Gibson’s cost approach value conclusion.
III. CONCLUSION
After careful consideration, the court finds the sales comparison approach provided the
most persuasive evidence of the subject property’s real market value as of January 1, 2015. The
court further finds that Plaintiffs’ appraiser provided the more persuasive analysis under the sales
comparison approach. However, Plaintiffs’ appraiser did not adequately adjust for the size of the
subject property as compared with his comparable properties. The court finds that his real
market value conclusion was understated by $180,000 and finds that the subject property’s real
market value was $1,465,000 as of January 1, 2015. Now, therefore,
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FINAL DECISION TC-MD 160206N 15
IT IS THE DECISION OF THIS COURT that the 2015-16 real market value of property
identified as Account 22265 was $1,465,000.
Dated this day of April 2017.
ALLISON R. BOOMER
MAGISTRATE
If you want to appeal this Final Decision, file a complaint in the Regular
Division of the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR
97301-2563; or by hand delivery to: Fourth Floor, 1241 State Street, Salem, OR.
Your complaint must be submitted within 60 days after the date of the Final
Decision or this Final Decision cannot be changed. TCR-MD 19 B.
This document was filed and entered on April 28, 2017.
FINAL DECISION TC-MD 160206N 16