MISSOULA — Montana is one of just 11 states where real estate sale prices are not public information, but there is a battle brewing at the 2015 Legislature to possibly change that.
Mike Kadas, a former mayor of Missoula who is now director of the Montana Department of Revenue, has been working with state Sen. Dick Barrett, a Democrat representing Missoula's Senate District 45, to introduce a bill to allow anyone to look up the final sale price of any real estate transaction.
According to Kadas, the intent is to give property owners access to more information when they are deciding whether to appeal their property appraisal value.
In July of this year, all commercial and residential property owners in Montana will be sent new property valuations, part of a six-year cycle of statewide appraisals conducted by the Revenue Department. The revisions to property value, of course, will affect how much property tax each owner pays.
“There is a fair amount of change, and we get a lot of inquiries about, ‘Well, I think you got the numbers wrong and how did you value my house?’ and things like that,” Kadas explained. “This sales information is kind of a key part, and by statute we’re not allowed to give it to the taxpayer. We believe the taxpayer should have the same information we have, and if they have that information, they would be able to do their own research and maybe they’ll bring something to the table to us that we didn’t consider.
"Or maybe they’ll see that we were not so unreasonable in what we did. But if they don’t have that information it’s hard to come to that conclusion for them. Really what we think is fair is to simplify the overall system, remove the mystery and provide a new layer of transparency.”
Kadas said that after an appraisal, owners can sign a confidentiality agreement and see the value of five recent sales in their area that the Revenue Department used as comparable sales.
"The issue is there are a whole bunch of other sales that we could have used and didn't, and they can't see those," he explained. "We think people should see ones we didn't use, which could be within half a block."
However, the Montana Association of Realtors is actively campaigning to stop sale price disclosure, including buying ads in the Missoula area the last few weeks.
“In a recent independent poll conducted by a professional polling firm in Montana, 73 percent of Montanans responded ‘NO’ to sales price disclosure,” said MAR president Ryan Swinney in a statement. “Similar results were also found in a separate poll conducted by the Montana Chamber of Commerce. The Realty Transfer Certificate already contains accurate sales price information, which the Department of Revenue can use for assessment of real property values. Because the Department of Revenue already has this information, there is no need for sales prices to be disclosed. Montanans want their privacy.”
States that prohibit disclosure are Alaska, Idaho, Kansas, Louisiana, some counties in Mississippi, Montana, North Dakota, Texas, Utah, New Mexico and Wyoming.
Barrett has sponsored similar legislation before, and it has failed in the past.
“I don’t know that I am confident necessarily that it will pass,” he said. “But I think there is an increased understanding of the value for taxpayers of doing that. Taxpayers are concerned about the value that the Department of Revenue assigns during the appraisal process. They are currently unable to see what the prices of comparable properties are trading for. The idea is to give them better information to know if they have a good case or not for appealing their valuation.
"If you actually appeal, then you can find the value of the comparable properties that the Department of Revenue used, if you sign a confidentiality statement. This information would allow people to determine whether or not they thought their property was improperly valued without having to go through the appeal process.”
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In a 2010 memo, former revenue director Dan Bucks outlined the case for and against disclosure.
“Among the reasons often cited for restricting public disclosure include the demands of individual privacy and the ability of real estate professionals to maintain proprietary information,” he wrote. “An unintended consequence of restricting public disclosure is the creation of an artificial monopoly on real estate and market information.
"Reasons often cited for public disclosure include public access to free information, reduction of reappraisal ‘sticker shock,' increased ability to understand and plan for property appreciation and depreciation, increased confidence in the property valuation system, additional transparency of the state’s property assessment practice and empowering property owners with the information to determine whether they should exercise their right to appeal DOR’s property valuation.”
Brint Wahlberg, the outgoing president of the Missoula Organization of Realtors, said that his organization is remaining neutral on the subject.
“Locally, MOR doesn’t have a stance, if you will,” he explained. “As far as how it’s going to affect the day-to-day Realtor, I don’t think it’s going to have a large effect on business. We’ve had this discussion on a local level. A lot of Realtors aren’t concerned that ‘it will put me out of a job’ or that sort of a thing. It’s not the first one we’ve gone through. A big concern is privacy. I don’t hear people viewing this as a protection of industry. It’s more of a protection of consumers.”
Wahlberg also downplayed the notion that Realtors have a “monopoly” on sale prices because they have access to the Multiple Listing Service.
“Every Realtor has access to MLS data and can provide valuation and market value,” he said. “One of the arguments I read with the proposed bill is if a homeowner wants to obtain market value, they have to obtain an expensive appraisal. But any homeowner that has a good relationship with a Realtor can obtain a market value to give them a pretty good idea of what their home is worth at no charge.
"There is this idea that it’s expensive and hard to do, but most people can make a quick phone call without having to pay any money. Realtors try to be more helpful more often.”
Mike Nugent, incoming president of the MOR, said that local Realtors are less concerned about the proposed legislation than what the radio spots paid for by the MAR would have people believe.
“The state association is coming at it really hard, but for some it’s a bigger issue than others,” he said. “Locally, there is less concern about it as a major issue. It doesn’t affect the business that much. The majority of states have real estate disclosure laws, and those states all have a real estate business that is active.
"For some, it is really a privacy issue. For some people, just the idea that a private contract between two private parties would have to be public record is kind of an odd requirement. I think there is a contingent of people that want to keep things to themselves. My opinion, though, as far as how it would impact the business of a Realtor, it wouldn’t have that much of an impact.”
Kadas, for his part, downplayed how much the proposed legislation would intrude on a property owner's privacy.
"Essentially, if you are a member of the Multiple Listing Service or ask a member, you can get this info now," he said. "You have to jump through some hoops. So it's a myth of privacy versus the ability to see the basis on which you are taxed.
"Our view, I guess, is this really isn't private info and it hasn't been for a long time so let's quit playing the game that it is. Let's create transparency and allow everyone to see the basis on which their values are created."
To read the bill online, visit leg.mt.gov/bills/2015/BillPdf/SB0054.pdf.