8 Ways Artificial Intelligence (AI) Can Overvalue Commercial Real Estate, Leading To Property Tax Overpayment

Commercial Real Estate Tax Thought Leader, Carlo Batts outlines several factors where AI can overvalue properties causing commercial property tax overpayment.

PHILADELPHIA, PA, UNITED STATES, April 2, 2026 /EINPresswire.com/ -- Artificial intelligence (AI) is the hot, new technology that is transforming virtually every industry, including commercial real estate and property taxes. AI is purported to improve the accuracy of tax assessments, analyze large data sets to identify patterns, streamline processes and reduce administrative costs.

However, in recent years, valuations in commercial real estate are at odds with governments’ voracious appetites for collecting more tax revenue. Rapid changes in economic volatility, property management standards and changes in market demand, as well as rising interest rates and increased costs of capital, have contributed to a loss of value in commercial real estate. Although market trends and valuations have been upended, assessments have not. Potentially, AI’s growing influence may only serve to exacerbate this incongruence, potentially causing owners to overpay property taxes.

According to Carlo Batts, MAI, property tax thought leader and President & Founder of the Reduxx Group, a national property tax advocacy organization, said:, "Artificial intelligence learns from a body of available knowledge. In a perfect world, the tax management process would seem to be a simple one since AI would merely need to analyze the data and identify the trends. However, in the real world, foundational learning becomes challenged because of privacy limits, look-back relevance, market demand, market environment, legislative changes and complexity in analyzing exceptions while overemphasizing trends.”

Batts outlines several specific factors where AI can overvalue properties causing overpayment of commercial property taxes. They include:

1) Artificial intelligence may not accurately reflect the unique characteristics of properties or markets.
Identifying unique features of properties, locations, demand and more often have a significant influence on value. As well, in states’ and local governments’ zeal to raise revenue, many commercial properties continue to be assessed on government tax rolls higher than the true valuations, causing owners to overpay taxes.

2) AI is based on past knowledge which may be flawed when it comes to property tax assessments and analysis.
Assessment and valuation of commercial properties are not always based on linear trends. Although recommending ever-increasing tax revenue might work in governments’ favor, it can significantly affect commercial property owners in a negative way.

3) Lack of transparency in understanding the AI decision-making process.
Viewing the logic behind AI’s conclusions can be challenging because it is not usually visible. Without the ability to double-check assumptions, costly errors can be made.

4) Overall lack of standardization in valuation methodologies
AI thrives when there are universally accepted trends and framework for valuing properties. For new phenomena, such as valuing data centers, lack of standardization and trends can result in inaccurate assessments.

5) Limited availability of local information available to AI.
There is often limited public or private valuation information available to artificial intelligence from which to analyze.

6) Many local taxing authorities can’t afford advanced technology.
Low tech usage by many local taxing authorities could result in data not being available to artificial intelligence.

7) Limited availability of artificial intelligence training in government tax departments.
Local and state governments have not yet prioritized budgeting and training for use of artificial intelligence in tax operations in order to provide professional human oversight over AI usage and analysis, especially regarding property evaluation and taxation.

8) Privacy issues limiting the important information available.
Rents, occupancy rates, tenant information, operating costs, etc. are often kept private limiting the accuracy of machine-based knowledge.

Said Batts, “Although governments are eager to standardize the assessment and property tax process, utilizing artificial intelligence may not be the panacea people imagine. I see AI playing a valuable role in streamlining research, however it does not have the capacity to assess the valuation nuance in quite the manner an experienced human can. Utilizing AI as a tool will be a factor in the commercial real estate industry, however care must be taken to maintain the depth and accuracy of commercial property evaluations in order to minimize the likelihood of organizations overpaying property taxes on their portfolios.”
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ABOUT REDUXX GROUP:
Reduxx Group is a commercial real estate tax advocacy firm supporting investors, owners, lenders, brokers, accountants and attorneys, throughout the United States, in reducing real estate tax “costs” on commercial properties and portfolios. Reduxx Group works with multi-state organizations that own properties in warehousing, hospital/healthcare, manufacturing, retail and other industries. Reduxx Group utilizes its proprietary 6-point program that combines advanced technology and appraisal expertise, called The Reduxx Method.

The Reduxx Group
1800 John F. Kennedy Blvd.
STE 300
Philadelphia, PA 19103

Email: info@ReduxxGroup.com
Phone: 888-711-3697

Website: www.ReduxxGroup.com
LinkedIn: https://www.linkedin.com/showcase/the-reduxx-group/posts/?feedView=all
Twitter: @ReduxxGroup

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GroupLevinson
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