BAY MINETTE – The Baldwin County Revenue Commissioner's Office uses a process called “mass appraisal” to determine the fair market values of homes and properties for the purpose of property tax assessments. 

One hundred and thirty-five thousand parcels – residences and / or properties – must be appraised annually as of 2006, according to state guidelines handed down to county appraisers, and Revenue Commissioner Phil Nix said that has accelerated the speed of the county’s appraisal process. 

He said the state revenue department previously offered guidelines stating that county appraisers had at least 2 years to make a determination, but now his department has roughly 6 months, according to an interview held August 8. 

Due to the shortening of time from quadrennial to annual appraisals, Nix said that counties throughout the state are implementing a process known as mass appraisal, which determines the values of parcels via computer software by grouping neighborhoods of comparable likeness together and applying a multiplier to last year’s appraised value in order to trend those grouped parcels upward or downward to what is deemed fair market value. 

Fair market value or appraised value is determined by comparing residential and commercial sales from Oct 1. 2005 to Sept 30, 2006: near, around or within the comparable neighborhoods. 

This process is called “factoring” by the county revenue department or applying a “trending factor” by state officials.

Nix said factoring is essentially the application of an across the board multiplier from say 30 percent to 285 percent to last year’s appraised value within a particular neighborhood or neighborhoods of comparable likeness, such as adjacent subdivisions, Nix said. 

By applying that factor to a neighborhood, Nix said it trends the appraised value to what sales data is indicating for that area. 

“Based on the neighborhood, what we call a geo-neighborhood…if we see that we need to raise it up 30 percent then we would apply 30 percent (factor) to that neighborhood and it affects everybody in that neighborhood at one time,” he said, adding that the process is “the nature of the way the state has set us out for us to do it” for annual appraisals. 

“We might see a subdivision, it might be sitting out in the middle of a field somewhere, and you don’t have any other neighboring subdivisions around it so basically you have to take that as its own neighborhood,” Nix said. 

But, if for example, a Mitchell homes tract of subdivisions and comparables ones are near one another, the residences would be pulled into a “neighborhood” where a singular factor – 30 or 40 percent – would be applied. 

If sales prices did not change in a particular area, a factor would not be applied

“It could be a subdivision, and in some cases it might be multiple subdivisions if they’re similar,” he said, noting that “you’re applying the same factor…but you might overvalue some folks and that is the one you’re going to have to go in and specifically adjust” as in the case of appeals.  

“So what happens is the factor could in fact over-inflate or overvalue property and then again it might not touch it at all,” Nix said

In this mass appraisal process, the county is divided into 20 “geo-neighborhoods,” which establishes a geographic area for baseline sales data: a little over 6,000 sales from last year were demarcated – excluding familial transactions, among others - by the revenue office and calculated into their appropriate geo-neighborhood. 

Orange Beach, for example, is considered a distinct geo-neighborhood as is Foley and unincorporated areas such as Lillian and Fort Morgan. 

Within each geo-neighborhood, the county revenue department examines sales compared to last year’s appraisal, determining how much property needs to be trended or factored up or down in order to meet fair market value.

Nix cited statistics showing that when his office applied the trending factor for this year’s appraisals, the department was at or near equalization, in all 20 geo-neighborhoods.  

The trending factor, however, is not applied to an entire geo-neighborhood; each one is divided into smaller neighborhoods, defined as sub-groups, varying in radius and number of properties included, based on the characteristics of surrounding properties.

“If they look like they ought to be combined, we know to apply it to everybody based on the sales data,” Nix said.  

In all, the department defined 4,535 neighborhoods and applied a scalable trending factor, depending on sales, to each one.  Some neighborhoods, Nix said, may have not warranted an increase so therefore a factor was not applied. 

Case Studies

In case studies presented to the Onlooker, the trending factor was applied nearly exclusively to land appraisals, comparing last year to this year, while the buildings – a house and any improvements including garages and pools - appraised value remained fairly static.   

A one-acre lot in Twin Bridge Estates, off County Road 20 near Foley, jumped in value from $27,000 to $81,000.  The residence only increased $2,600. 

Glen Lakes, a golf resort community across the street from Twin Bridge Estates, also saw a similar spike in land value from $73,000 to $261,000, but the residence increased $5,000, according to documents provided by property owners to the Onlooker. 

And a 1.2 acre Wolf Bay waterfront property owner in Bay Forest Estates saw his land value spike to $694,100 from $231,400 last year with the building appraisal not changing.

A Gulf Shores property owner – not waterfront – also witnessed a similar surge on a 3/4 acre lot, a $188,000 increase from last year.  The building appraisal remained unchanged.   

Nix said that the appraised value on the valuation notice received by residents August 1 is the final statistic of a particular parcel’s fair market value. 

Ultimately, he said, most cases called for applying the trending factor to land rather than buildings since improvements generally raise building values minimally while land values far outpace improvements. 

He said: “We felt like the value needed to be added into the land.  No matter where we applied it land or improvement, (what) the whole thing comes down to is the final total value, and that’s what we” compare to the sales. 

He added: “We choose to do it on the land because more than likely our land value was the culprit or what was off as far as the (appraised) value goes.”

Also, the sales data the county derives from revenue and probate records and the multiple listing service, an agency that tracks real estate sales, cites final sales numbers and not land value breakdowns. 

“We got to increase the (appraised) value…to get it up to what the sales are showing us” regardless of what area, land or improvement, the factor is applied, Nix said. 

“It’s not an individual land entry or an improvement entry, it’s usually one value, because that’s all we really get when it comes to sales,” he noted. 

Overall, Nix is not entirely pleased with the mass appraisal process, but he said his department is following state guidelines. 

“It’s not a perfect system.  We don’t have the luxury of being a fee-appraiser” who can check 3 to 4 comparable sales for individual properties, he said, adding that it’s difficult to attain comparable sales in all cases since none may exist.   

He noted that his appraisers have achieved 98 percent equalization, a statistic which shows that the county revenue department has nearly matched its sales data from last year to this year’s appraisals - equaling, in other words, fair market value. 

But, he expects appeals: “…some areas I already know, just from things that we’ve seen come in, because we applied that factor to it, we know we’re going to have to go specifically now into that area and probably lower that factor or remove the factor altogether to bring their value down.”