Why Reconsider Your Tax Appeal Consultant or Attorney
The tax appeal opportunity

Commercial real estate (CRE) owners and asset managers of all property types typically review annually and appeal, when warranted, real estate taxes by challenging the value assessed by local governments – so CRE owners are well versed with this opportunity of lowering real estate taxes.

Historical fee arrangements

The typical fee charged by attorneys and consultants for a tax appeal is 20-25% of the tax savings in low tax (e.g., 1% tax rate) jurisdictions and 10-15% in high tax (e.g., 2%+ tax rate) jurisdictions. Fee percentages have remained at these levels for decades.

A 20% value reduction on a $100 million value with a 2% tax rate would result in a $60,000 appeal fee using a fee equal to 15% of the tax savings.

Excessively high hourly rate conundrum

Here’s how the $60,000 fee equates to $5,000 per hour. An average appeal could take twelve hours. The hours could typically be apportioned as four hours for the amortized administrative work (e.g., agent authorization paperwork, appeal form filings, data collection of owner’s financials, etc.) across a portfolio and six hours for the valuation work (e.g., evidence development, appeal case documentation, etc.) specific to one appeal. The assessor and board hearings are allocated one hour each. The sum of hours is twelve. $60,000 divided by 12 hours is $5,000 per hour.

No attorney or consultant deserves a $5,000 per hour renumeration. The lack of transparency demonstrated by tax appeal attorneys and consultants to CRE owners and asset managers regarding the excessive high fees they are earning is reason enough to switch providers.

Consultants and attorneys love a good real estate crisis

No one likes Covid-19, but, behind the scenes, the real estate tax appeal industry is hoping for a good three-year fee bubble due to the CRE distress created by Covid-19. CRE owners and asset managers have to come to grips with the fact that many tax appeal attorneys and consultants are not acting in their best interest when they continue to charge the same fee year after year.

CRE owners and asset managers can play a big role in changing forever the tax appeal fee paradigm by switching to providers who use technology to dramatically lower tax appeal fees.

Embracing technology yields the reduction of tax appeal fees

Typical attorneys and tax appeal consultants do not innovate with technology. This is another reason CRE owners and asset managers should reconsider working with those tax appeal attorneys and consultants who can’t demonstrate the ability to reduce fees and increase productivity via the application of innovative technology. Please see our article Using Technology to Reduce Tax Appeal Fees.

CREyield is leading the way
CRE owners should embrace those tax appeal companies that are driving dramatic fee compression via technology adoption – CREyield is leading the way. By doing so, CRE owners could bring appeal fees down to acceptable levels – eliminating the excess. Increasing efficiencies and reducing operating costs are what great owners and asset managers do.