Opinion
Docket No. 019510-2012
06-10-2015
Re: Alexander Les v. Township of Wyckoff
NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS Alexander Les and Christina Les
254 Wilson Avenue
Paramus, NJ 07652
Anthony Marchese, Esq.
Nowell, Amoroso, Klein & Bierman, P.C.
155 Polifly Road
Hackensack, NJ 07661
Messrs. Les and Marchese:
This letter constitutes the court's opinion after trial in the above-referenced matter challenging the 2012 tax year assessment on plaintiff's single-family residence. For the reasons stated more fully below, the judgment entered by the Bergen County Board of Taxation is affirmed.
I. Procedural History and Factual Findings
The court makes the following findings of fact based on the evidence and testimony offered at trial in this matter. Alexander and Christina Les ("plaintiff") are the owners of the single-family home located at 540 Helena Avenue, Township of Wyckoff, County of Bergen and State of New Jersey. The property is identified on the tax map of the Township of Wyckoff as Block 314, Lot 72 (the "subject property"). For the 2012 tax year, the subject property was assessed as follows:
| Land: | 519,000 |
| Improvements: | 68,700 |
| Total | 587,700 |
The average ratio of assessed to true value, commonly referred to as the Chapter 123 ratio, for the Township of Wyckoff ("defendant") for the 2012 tax year is 107.26% making the implied equalized value of the subject property $547,921. Plaintiff filed a petition of appeal with the Bergen County Board of Taxation challenging the assessment on the subject property. The Board entered a Memorandum of Judgment reducing the assessment on the subject property to $559,000.
Plaintiff timely filed a Complaint in Tax Court contesting the Board's Judgment. The matter was tried to conclusion on May 18, 2015. Each party offered the testimony of a State of New Jersey certified general real estate appraiser who was accepted without objection as an expert in the field of real estate valuation (the "plaintiff's expert" and the "township's expert" respectively). Both experts prepared an appraisal report, which were admitted into evidence, without objection. Plaintiff, Alexander Les, also offered testimony.
The subject property is a two-story Cape Cod style single-family home, containing six rooms, including three bedrooms and one full bathroom, and an unfinished basement containing 880 square feet. It has a driveway but no garage. It was built around 1947, is in average condition, and is situated on a lot containing approximately .91 acres. Total gross living area is 1,264 square feet. The subject is located in the desirable Hartung neighborhood of the Township within 900 feet of New Jersey Route 208. The testimony revealed that at the time of purchase, the property was subject to a lease and had never been occupied by plaintiff. The subject is located in zone RA-25, requiring a minimum lot size of 25,000 square feet, with 125 feet of frontage and 150 feet in depth. While the subject property has more than adequate overall size, with 39,742 square feet, it has only 120 feet of frontage and is thus non-conforming. Both experts used the comparable sales approach to value the property as of October 1, 2011, the appropriate valuation date. Plaintiff's expert reached an opinion of the true market value of the subject property at $465,000 whereas the Township's expert's offered his opinion that the true market value was $590,000.
The taxpayer testified that the sounds of traffic from Route 208 impacted the value of the property, however, his expert did not make adjustments for that fact and plaintiff provided no basis for the court to determine what effect, if any, the traffic noise may have had on value.
Neither party put any information about any lease on the subject property into evidence, nor does it appear that either expert takes the lease into account in valuing the subject property or in selecting the comparable sales.
II. Valuation Evidence
Plaintiff's expert relied on the sale of three single-family homes in the Township of Wyckoff ranging from $375,000 to $575,000. In addition, plaintiff's expert referenced the subject sale to plaintiff on June 21, 2011 for $465,000. The adjusted sale prices of the expert's comparable property sales ranged from $410,000 to $473,000 and plaintiff's expert concluded that the fair market value of the subject as of October 1, 2011 was $465,000.
Comparable sale one, located at 429 Louisa Avenue, Wyckoff, New Jersey, sold in July, 2011, for $575,000. This comparable is a single-family home, located approximately 2.45 miles from the subject property, outside the Hartung neighborhood area. It is situated on a .36 acre lot and contains 1,982 square feet of gross living area (GLA), making it approximately 57% larger than the subject. Plaintiff's expert made the following adjustments to the sale price of comparable sale one:
| Lot Size: | $ 24,000 ($2.00 per square foot) |
| -$ 28,800 (5% adjustment) | |
| Room Count (bathroom) | -$ 10,000 ($10,000 per additional bath) |
| Square footage: | -$ 50,300 ($70 per additional square foot) |
| Condition (above average) | -$ 28,800 (5% adjustment) |
| Basement (finished) | -$ 15,000 |
| Parking (2-car garage) | -$ 15,000 ($7,500 per garage) |
| Amenities (Porch) | -$ 10,000 |
Plaintiff's expert testified that this adjustment was made by plaintiff's expert to account for the fact that the subject lot was a non-conforming lot for zoning purposes while the comparable lot was conforming.
In all, the plaintiff's expert made net adjustments of -23.2% and gross adjustments of 31.6% to comparable sale one. The final adjusted sale price was $441,100.
Comparable sale two, located at 32 Ravine Avenue, Wyckoff, New Jersey, sold in July, 2011, for $375,000. This comparable is a single-family home, located approximately 2.5 miles from the subject property, again outside the Hartung neighborhood, and is situated on a lot of .32 acres. Comparable sale two has a GLA of 1,020 square feet, making it approximately 19% smaller than the subject property. The sale was listed by the municipal assessor as "NU #10" - an estate sale.
Plaintiff's expert made the following adjustments to the sale price of comparable sale two:
| Lot Size: | $ 25,700 ($2.00 per square foot) |
| Square footage: | $ 17,100 ($70 per additional square foot) |
| Parking (1-car garage) | -$ 7,500 ($7,500 per garage) |
In total, the expert made net adjustments of -9.4% and gross adjustments of 13.4% to comparable sale two. The final adjusted sale price was $410,300.
Comparable sale three, located at 418 Wyckoff Avenue, Wyckoff, New Jersey, sold in July, 2011 for a price of $539,000. This comparable is a single family home, located approximately .76 miles from the subject property on a "semi-main road," and is situated on .58 acres. This comparable has a GLA of 1,910 square feet, making it approximately 51% larger than the subject property. Comparable sale three is listed as "NU #26" by the assessor.
Plaintiff's expert made the following adjustments to comparable sale three:
| Lot Size: | $ 14,200 ($2.00 per square foot) |
| -$ 27,300 (5%) | |
| Location (semi main road): | $ 27,300 (5%) |
| Room Count (bathroom) | -$ 10,000 ($10,000 per additional bath) |
| Square footage: | -$ 45,200 ($70 per additional square foot) |
| Parking (2-car garage) | -$ 15,000 ($7,500 per garage) |
| Amenities (Porch) | -$ 10,000 |
Similar to comparable sale one this adjustment was made by plaintiff's expert to account for the fact that the subject lot was a non-conforming lot for zoning purposes while the comparable lot was conforming.
--------
In total, the expert made net adjustments of -12.24% and gross adjustments of 27.6% to comparable sale three. The final adjusted sale price was $473,000.
The Township's expert relied on the sale of four single-family homes in the Township of Wyckoff, all located in the Hartung neighborhood with sale prices ranging from $590,000 to $886,500. The adjusted sales ranged from $537,000 to $681,500. The Township's expert concluded that the fair market value of the subject was $590,000. He testified that the subject was located in a desirable neighborhood of premium homes, although the subject was "underutilized" at just over 1200 square feet which is the minimum required habitable floor area required for the zone.
Comparable sale one, located at 559 Helena Avenue, Wyckoff, New Jersey, sold in October, 2010, for $864,000. This comparable is a single-family 27-year old expanded Cape Cod home updated in 2005. It is located on the same block as the subject, .10 miles away, across the street where its westerly site line fronts on Route 208. Comparable sale one is situated on a .61 acre lot and contains 2,728 square feet of GLA, more than twice the size of the subject.
Plaintiff's expert made the following adjustments to the sale price of comparable sale one:
| Location (Route 208) | $ 43,000 (5%) |
| Lot Size: | $ 31,000 ($2.35 per square foot) |
| Condition ('05 update) | -$ 86,000 (10%) |
| Baths (1.5 additional) | -$ 30,000 |
| Gross Living Area: | -$102,500 ($70.00 per square foot) |
| Full Basement: | -$ 20,500 ($25 per additional square foot) |
| Finished Basement: | -$ 38,500 ($25 per square foot of finished basement) |
| HWBB/Central Air: | -$ 5,000 |
| 2-car garage: | -$ 20,000 |
| Fireplace: | -$ 5,000 |
| Deck: | -$ 5,000 |
In total, the expert made net adjustments of -27.7% and gross adjustments of 44.8% to comparable sale one. The final adjusted sale price was $625,000.
Comparable sale two, located at 414 Hartung Avenue, Wyckoff, New Jersey, sold in December, 2010, for $886,500. This comparable is a single-family Cape Cod home in similar condition to the subject. It is located .5 miles from the subject, situated on a .60 acre lot and contains 3,223 square feet of GLA, making it more than two and one half times the size of the subject.
The Township's expert made the following adjustments to the sale price of comparable sale two:
| Lot Size: | $ 32,000 ($2.35 per square foot) |
| Baths (2 additional) | -$ 40,000 |
| Gross Living Area: | -$137,000 ($70.00 per square foot) |
| Full Basement: | -$ 12,000 ($25 per additional square foot) |
| Finished Basement: | -$ 20,500 ($25 per square foot of finished basement) |
| FHA/Central Air: | -$ 5,000 |
| 2-car garage: | -$ 20,000 |
| Patio | $ 2,500 |
| Fireplace: | -$ 5,000 |
In total, the expert made net adjustments of -23.1% and gross adjustments of 30.9% to comparable sale two. The final adjusted sale price was $681,500.
Comparable sale three, located at 596 Overlook Avenue, Wyckoff, New Jersey, sold in June, 2011, for $770,000. This comparable is a single-family Cape Cod style home in similar condition to the subject, .53 miles away. Comparable sale three is situated on a .53 acre lot and contains 2,548 square feet of GLA, making it more than twice the size of the subject.
| Lot Size: | $ 39,000 ($2.35 per square foot) |
| Baths (2 additional) | -$ 40,000 |
| Gross Living Area: | -$ 90,000 ($70.00 per square foot) |
| Full Basement: | -$ 6,000 ($25 per additional square foot) |
| FHA/Central Air: | -$ 5,000 |
| 2-car garage: | -$ 20,000 |
| Fireplace: | -$ 5,000 |
| Patio: | -$ 2,500 |
In total, the expert made net adjustments of -16.8% and gross adjustments of 26.9% to comparable sale three. The final adjusted sale price was $640,500.
Comparable sale four, located at 601 Cresthaven Road, Wyckoff, New Jersey, sold in June, 2011, for $590,000. This comparable is a single-family split level style home in similar condition to the subject. Comparable sale four includes a northern site line along Franklin Avenue, a through street with a moderate to heavy traffic flow, some .61 miles from the subject. Comparable sale four is situated on a .67 acre lot and contains 1,620 square feet of GLA, making it approximately 28% larger than the subject.
| Location (Franklin) | $ 15,000 (2.5%) |
| Lot Size: | $ 25,000 ($2.35 per square foot) |
| Baths (1 additional) | -$ 20,000 |
| Gross Living Area: | -$ 25,000 ($70.00 per square foot) |
| Part Basement: | $ 6,000 ($25 per additional square foot) |
| Finished Basement: | -$ 11,500 ($25 per square foot of finished basement) |
| FHA/Central Air: | -$ 5,000 |
| 2-car garage: | -$ 20,000 |
| Enclosed Porch: | -$ 5,000 |
| Fireplace: | -$ 5,000 |
| Deck, Patio: | -$ 7,500 |
In total, the expert made net adjustments of -9.0% and gross adjustments of 24.6% to comparable sale four. The final adjusted sale price was $537,000.
III. Conclusions of Law
The court's analysis begins with the well-established principle that "[o]riginal assessments and judgments of county boards of taxation are entitled to a presumption of validity." MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998). The appealing taxpayer has the burden of proving that the assessment is erroneous." Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (1985) (citing Riverview Gardens v. North Arlington Borough, 9 N.J. 167, 174 (1952)). The evidence must be "definite, positive and certain in quality and quantity to overcome the presumption." MSGW Real Estate Fund, L.L.C. v. Borough of Mountain Lakes, supra, 18 N.J. Tax at 373. The court finds that plaintiff produced sufficient evidence to overcome the presumption of correctness attached to the assessment. If taken as true, plaintiff's expert and the facts upon which he relied created a debatable question about the correctness of the assessment. Giving the plaintiff's expert's testimony every positive inference, the court concludes that the presumption of correctness has been overcome.
However, concluding the presumption of validity has been overcome, does not equate to a finding by the court that the assessment is erroneous. Once the presumption is overcome, "the court must then turn to a consideration of the evidence adduced on behalf of both parties and conclude the matter based on a fair preponderance of the evidence." Ford Motor Co. v. Township of Edison, 127 N.J. 290, 312 (1992). The taxpayer continues to bear the burden of persuading the court that the "judgment under review" is erroneous. Id. at 314-315. Accordingly, the court will evaluate and weigh the evidence presented to determine if either party has met the requisite burden of persuading a change in the assessment.
a. Plaintiff's Comparable Sales
As discussed below, the court finds that the plaintiff failed to provide sufficient credible evidence to support his conclusion of fair market value. Both comparable sale two and comparable sale three were identified by the taxing district's assessor as non-usable for purposes of the Director of the Division of Taxation's annual assessment-sales ratio study. Comparable sale two was designated non-usable code "10," which applies to "[s]ales by guardians, trustees, executors and administrators." N.J.A.C. 18:12-1.1(a)(10). Such a transaction may be considered in the annual assessment-sales ratio study "if after full investigation it clearly appears that the transaction was a sale between a willing buyer, not compelled to buy, and a willing seller, not compelled to sell, and that it meets all other requisites of a usable sale." N.J.A.C. 18:12-1.1(b). See Pepperidge Tree Realty Corp. v. Kinnelon Borough, 21 N.J. Tax 57, 67 (Tax 2003). While the designation does not require that the comparable sale be eliminated as evidence of the fair market value of the subject property in this matter, the categories set forth in N.J.A.C. 18:12-1.1 are primarily designed to identify "sales that are unlikely to have involved arms-length bargaining and therefore are unlikely to have been made at fair market value." 1530 Owners Corp. v. Borough of Fort Lee, 135 N.J. 394, 403 (1993). Such a designation, therefore, provides concern to the court such that evidence supporting a conclusion that such a sale does represent fair market value should be presented.
Here, the expert testified that he was of the opinion that comparable sale two represented true market value because it was "on the market for 53 days" and was listed through a "broker." However, the expert did not interview any of the parties or conduct any research at all into the transaction. The court is unable to gauge if comparable sale two was a bona fide, arms-length transaction without evidence of the circumstances surrounding the sale of the property.
For the same reasons, the court concludes that plaintiff's expert's use of comparable sale three lacks credibility as evidence of the true market value of the subject property. Plaintiff's expert acknowledged that comparable sale three was marked "NU #26" - "Sales which for some reason other than specified in the enumerated categories [of N.J.A.C. 18:12-1.1] are not deemed to be a transaction between a willing buyer, not compelled to buy, and a willing seller, not compelled to sell." N.J.A.C. 18:12-1.1(a)(26). The only support provided by plaintiff's expert to conclude that comparable sale three was a transaction between a willing buyer and a willing seller was the "absence" of information "that supports this not being an arms-length transaction." Plaintiff's expert did not conduct any research into the transaction or interview any of the parties to the transaction. He provided no affirmative evidence that the assessor's designation was incorrect nor did he demonstrate that it was in fact a bona fide, arms-length transaction between a willing buyer and a willing seller. Thus, the court has no information before it to determine whether comparable sale three is evidence of fair market value.
The court is then left with comparable sale one as plaintiff's expert evidence of value. Plaintiff's expert made several adjustments to comparable sale one. When questioned, plaintiff's expert provided no foundation for any of the adjustments other than his "experience." He conducted no research, and reviewed no objective market data, surveys, or analyses to support his conclusions. With respect to the adjustment made for the condition of the property, the expert acknowledged that he had not been inside comparable sale one and relied on the MLS report and the interior photos of the MLS. With respect to the land adjustment, he reviewed no land sales or paired sales and performed no land residual analysis. The expert had no documentation to support the adjustment that was made for the nonconforming zoning compliance of the subject versus comparable sale one.
For an expert's testimony to be of any value to the trier of fact, it must have a proper foundation. See Peer v. City of Newark, 71 N.J. Super. 12, 21 (App. Div. 1961), certif. denied, 36 N.J. 300 (1962). When an expert "offers an opinion without providing specific underlying reasons ... he ceases to be an aid to the trier of fact." Jimenez v. GNOC, Corp., 286 N.J. Super. 533, 540 (App. Div. 1996). An expert witness is required to "give the why and wherefore of his expert opinion, not just a mere conclusion." Id. at 540. The weight to be afforded an expert's testimony relative to adjustments "depends upon the facts and reasoning which form the basis of the opinion. An expert's conclusion can rise no higher than the data providing the foundation (citation omitted). If the bases for the adjustments are not made evident the court cannot extrapolate value." Inmar Associates v. Edison Township, 2 N.J. Tax 59, 66 (Tax 1980). "Without explanation as to the basis, the opinion of the expert is entitled to little weight in this regard." Dworman v. Tinton Falls, 1 N.J. Tax 445, 458 (Tax 1980) (citing to Passaic v. Gera Mills, 55 N.J. Super. 73 (App. Div. 1959), certif. denied, 30 N.J. 153 (1959)).
Plaintiff's expert failed to provide the court with any substantive factual evidence to support his conclusions. Hence, the court concludes the expert's adjustments to comparable sale one are not credible.
Plaintiff's expert also referred to the subject sale, to support his conclusion of $465,000. The subject was purchased for $466,000 on June 21, 2011 in a transaction with an estate as seller and thus constituted a "non-usable" sale under N.J.A.C. 18:12-1.1(a)(10). Plaintiff's expert did no independent research in connection with the sale of the subject and conducted no interviews with the brokers, sellers, attorneys or any individual involved in the transaction other than the plaintiff who informed him that it was an arms-length transaction.
Plaintiff testified that it was an arms-length transaction because it was "exposed to the market" and he "negotiated" with the seller of the property, however he supplied no reliable information to assist the court in determining the seller's motivation for selling other than to state she had inherited the property and was "in charge of disposing of it." "[A] bona fide sale of the subject property may be indicative of the true value of the property, but such sale is not controlling in the issue of value." Almax Builders, Inc. v. Perth Amboy City, 1 N.J. Tax 31, 38 (Tax 1980). "It is for the factfinder to weigh and appraise the validity of the sale as an indication of value." Briskin v. City of Atlantic City, 6 N.J. Tax 187, 190 (Tax 1983). Unfortunately plaintiff failed to provide the court with sufficient evidence to determine the validity of the subject sale as an indication of value.
As a result, the court finds that plaintiff has failed to provide sufficient credible evidence to support his conclusion of fair market value for the year in question.
b. The Township's Comparable Sales
The court now turns to consideration of the Township's expert's testimony and report. In undertaking a sales comparison approach to value, a substantial similarity must exist between the subject property and the comparable properties. "Evidence of comparable sales is effective in determining value only where there is a substantial similarity between the properties." Venino v. Borough of Carlstadt, 1 N.J. Tax 172, 175 (Tax 1980), aff'd o.b. 4 N.J. Tax 528 (App. Div. 1981); See also Bloomfield Associates v. Bloomfield Town, 12 N.J. Tax 501 (Tax 1992); Glenpointe Assocs. v. Township of Teaneck, 241 N.J. Super. 37, 48 (App. Div. 1990), certif. denied, 122 N.J. 391 (1990). In employing a sales comparison approach, the evidence must be "sufficient[ly] similar[] in some significant respects to permit . . . the fact-finder, to draw rational probative valuation inferences from the sales cited." Ford Motor Co. v. Township of Edison, supra, 127 N.J. at 307. The evidence presented "must be based on 'sound theory and objective data', rather than on mere wishful thinking." MSGW Real Estate Fund, supra, 18 N.J. Tax at 376. Thus, the probative value of the comparable properties hinge on the similarities which can be drawn.
The gross adjustments made by the Township's expert to comparable sales one, two, and three were 44.8%, 30.9%, and 26.9%, respectively. "[Differences between a comparable property and the subject property are anticipated. They are dealt with by adjustments recognizing and explaining these differences, and then relating the two properties to each other in a meaningful way so that an estimate of the value of one can be determined from the value of the other." U.S. Life Realty Corp. v. Jackson Township, supra, 9 N.J. Tax at 72. However, the degree of gross adjustments can have a material bearing upon the comparison of the properties. "Adjustments to sales of a large magnitude 'vitiate comparability.'" Pansini Custom Design Assocs., LLC v. City of Ocean City, 407 N.J. Super. 137, 148 (App. Div. 2009) (quoting Global Terminal & Container Servs. v. City of Jersey City, 15 N.J. Tax 698, 704 (Tax 1996)). See also Congoleum Corp. v. Township of Hamilton, 7 N.J. Tax 436, 451 (Tax 1985) (concluding that adjustments must be sufficiently supported by objective data); M.I. Holdings v. City of Jersey City, 12 N.J. Tax 129, 137 (Tax 1991) (concluding that gross adjustments of 42% to 63% were incompatible to the subject property and not probative of its true value).
The court finds that the extent of the adjustments to comparable sales one at 44.8% demonstrates its lack of comparability to the subject.
Comparable sale two contained 3,223 square feet of GLA compared to the subject's 1,264 square feet. Comparable sale three contained 2,548 square feet of GLA. Both comparable sale two and three were therefore significantly larger than the subject, leading one to question their comparability. The Township's expert testified that he accounted for the difference in GLA by utilizing a paired sales analysis of two homes containing 3,415 square feet and 2,014 square feet during the sampling period and determined an adjustment per square foot of $70.00.
The use of paired sales may be helpful to determine the difference in value of a single difference when two properties are equivalent in all respects but one. "Paired data analysis should be developed with extreme care to ensure that the properties are truly comparable and that other differences do not exist . . . ." Appraisal Institute, The Appraisal of Real Estate, 398 (14th Ed. 2013). Care must be taken "when relying on pairs of adjusted prices because the difference measured may not represent the actual difference in value to the characteristic being studied." Id. at 399.
The Township's expert provided no testimony as to the comparability of the two properties which were analyzed in the paired sales. The court is unable to determine whether the adjustment made for GLA based on the referenced paired sales accurately reflects the difference in value for this characteristic alone. From the limited information provided in the expert's report (the MLS listing) there appears to be substantial differences between the two properties used in the paired sales - including a pool and a drainage easement on one of the two paired sales properties. The difference in GLA between comparable sales two and three and the subject is substantial - comparable sale two is two and one-half times bigger than the subject and comparable sale three is twice the size of the subject. The adjustments for GLA represent more than 50% of the gross adjustments of comparable sale two and 43% of the gross adjustments for comparable sale three. Due to the suspect nature of the GLA adjustment and the extent of the differences in GLA between these comparable sales and the subject, the court finds that comparable sales two and three lack sufficient comparability for purposes of determining fair market value.
Although the adjustment for GLA for comparable sale four is more moderate (17% of the overall gross adjustment), it remains a significant adjustment which was based upon the same flawed paired sales analysis. Furthermore, the Township's expert made an additional adjustment for location based on its being situated on a street with "moderate to heavy traffic flow." The expert made an adjustment of 2.5% of the purchase price for location but did not provide any foundation for that adjustment. While the court would accept the basis for the expert's other adjustments, the GLA of the comparable is 28% larger than that of the subject. Without a basis for comparison of GLA, the court does not have a sufficient basis to determine value.
For these reasons, the court concludes that the Township's expert's report and the testimony on which it was based, lack the necessary factual information, market support, and meaningful objective data to assist it in determining the true market value of the subject property.
Accordingly, as a result of the inadequacies in the appraisal reports and the testimony of the experts for both plaintiff and defendant, the record contains insufficient credible objective data and evidence for this court to make an independent determination of the true market value of the subject property by a fair preponderance of the evidence.
III. Conclusion
The court finds that neither party proved by a preponderance of the evidence that the judgment of the Bergen County Board of Taxation was incorrect. Therefore, the court will enter judgment dismissing plaintiff's Complaint.
Very truly yours,
/s/
Kathi F. Fiamingo, J.T.C.