Dealing with the property-taxing authorities can be daunting. In fact, it’s so daunting many owners simply cave in and pay the increased property taxes. If you want to create great buzz about your business and help your clients as well, helping them with an appeal on their taxes is one of the best ways to do this.
We received our property tax bill in January and it showed an increased assessment on our home of 4.3 percent. Because we’re in the most expensive school district in the state, this translated into almost $2,300 more in taxes than the comparable sales suggested our evaluation should be.
Our formal hearing was a real eye-opener on how the taxing authorities work, as well as what you can do as a customer service-savvy agent to help your clients.
The guidelines from our local appraisal district said that the district would use the median sales prices. I had our Realtor pull the comparable sales and there were four excellent comparable sales with the same lot size, similar age, as well as within 10 percent of the square footage on our house. The guidelines also said that the sales date should be as close to Jan. 1, 2011, as possible.
I also came armed with information showing that prices in Austin had declined 7 to 10 percent overall. My comparable sales information supported this as well.
The last two times we appealed, we went through the informal hearing process and had our assessed valuation reduced. The appraisal district made its decision based upon the closed sales. Because we were out of town, we had to attend the formal hearing.
What was odd about the whole hearing process was that the district officials did look at the comparable sales, but they had another set of data called "comp equity." I simply wasn’t prepared to deal with this second set of data that was based upon the values the appraisal district had determined for each property that did not sell.
After the hearing, I dug deeper into the comp equity numbers and saw a number of additional comparables, and the process for "equalizing the prices" appeared questionable to me. It seemed that most of the recent sales were for new construction, which could skew the valuation if you live in an older home.
Furthermore, the builder had just completed a number of much smaller homes on smaller lots. The challenge with using those comparables is that the smaller size can translate into a higher price per square foot than for larger homes.
We were successful in keeping our assessment at a level comparable to last year, but the people hearing the case refused to lower the assessment beyond that point.
The opportunity
One of the best ways to create a positive buzz in your market area about your real estate services is to help people obtain a reduction in their property taxes. There are three ways you can do this.
1. Provide the homeowner with the comparable sales data, as well as the forms necessary to schedule a hearing
The best time to do this is when your taxing authority sends out the property tax assessments each year.
2. Attend the property tax hearing with your client or on his/her behalf
If you are going to represent your client, you may run the risk of coming back with a higher assessment. This can be a serious problem. It’s important that you attend two or three hearings so that you understand the process before representing someone else.
3. Partner with a professional
What was apparent when I was waiting for our hearing: if you’re not familiar with the appraisal board process, working a professional who does this on a regular basis could serve you well. In most cases, the people engaging in this work take a percentage of the savings they obtain for the homeowner.
The people waiting were not just representing homeowners; they were representing large commercial properties owned by major corporations. In most cases, it’s smart to defer to an expert — especially someone who has a proven track record.
Regardless of which strategy you select, being the agent who helps people obtain a property tax reduction creates positive buzz about you and your services. Just make sure that you are thoroughly prepared with the knowledge of the processes and then the data that best supports your client’s claim.
