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Kansas panel hears bill to exclude auction buyer's premiums from sale price for property tax valuation
Summary
A Senate committee heard Senate Bill 332, which would amend KSA 79-14-37(d) to exclude buyer-paid auction premiums (separately stated and paid by the buyer and not received by the seller) from the sale price used on the real estate sales validation questionnaire and for property valuation.
A Kansas Senate committee on Assessment and Taxation on March 20 heard testimony on Senate Bill 332, a measure to exclude buyer-paid auction premiums from the reported sale price used to value property for tax purposes. Amelia, the legislative reviser who presented the bill, told the committee the change would amend KSA 79-14-37(d) to treat auction premiums or fees that are separately stated and paid by the buyer — and not received by the seller — as excluded from the ‘‘total sale price’’ on the real estate sales validation questionnaire and for property valuation.
The sponsor, Dr. Mark Stephan, said the change reflects how online auctions and modern auction practice have added buyer's premiums that are often a percentage of the high bid. "It can be anywhere from 0 to 10%...it could be 100%. It could be whatever they decide to make it," Stephan said, describing premiums as an add-on that can push the final paid amount above the arm's-length high bid seen at auction. Stephan told the committee he had encountered a transaction with a 10% buyer's premium and said including that premium in reported sale price would skew valuation.
Committee members questioned the scope of the exclusion and whether realtor fees or other transaction costs should be treated similarly. Amelia and the sponsor said realtor-fee treatment is more complex and suggested the Division of Property Valuation or the reviser's office provide technical guidance on how realtor commissions are handled for valuation. The bill, as described in committee, targets buyer-paid auction premiums that effectively shift seller expense and therefore may not reflect the arm's-length price between buyer and seller.
The hearing closed after questions and no opponents or neutral proponents were recorded during the session. The bill takes effect "from and after publication in the statute book," per the reviser's summary. The committee moved on to other budget matters without registering a floor vote on the bill during this meeting.
