How to Protest Your Property Taxes and Win
Victory: Send the Tax Man Crying
It’s 8:15am on a Tuesday morning and you couldn’t be more irritable. You woke up earlier this morning 30 minutes late to the tune of Jimmy Buffet’s “Cheeseburger in Paradise” and it’s still stuck in your head. You loathe “Cheeseburger in Paradise”. There was no time to eat and your dog ran out the door. Nothing could get worse. But wait, there’s more…
Today is the day you go to battle. Like a true warrior you’ve studied your enemy, you’ve intercepted their intelligence and you’ve planned an offensive that would make even Geronimo tremble in his loin cloth. Today is the day you take a stand.
“Enough is enough!” you say.
It’s just you against them. Today, the appraisal district must go down.
All around you sits an endless sea of disgruntled allies waiting for their own opportunity on the battlefield. You can hear their war cries, spiked with anger yet underscored with doubt and fear.
“If they think my house is worth this much I’ll sell it to ‘em today”, exclaims your left flank.
You realize these amateurs have no chance. They’ve lost the fight and they haven’t even seen the enemy. But not you. Minus the grumbling stomach and the less than ideal drumbeat in your head you are nearly invincible. You’re mentally prepared, calm and focused. You’re evidence is in hand and you’re ready to go. Good thing, because your name just got called. It’s showtime!
The purpose of this article is to give you some perspective on a proper approach to a successful protest. Too many property owners have no plan.
Why We Fight
Protesting your property value is like Joan Rivers’ plastic surgery; it needs to be maintained every year whether it moves up or down.
While you may never save a fortune in any given year with a successful protest, you should always protest your property’s value. With a yearly effort you could end up saving several hundred to several thousand dollars in property taxes over time.
It’s just a hunch, but I’ll bet you could find a more effective use for your money than giving it to a highly inefficient, often misguided institution such as the government.
Most Common Misconceptions
First and foremost, understand that when you are negotiating with an appraiser at the appraisal district, you are protesting your property value, not your property taxes. If your strategy for winning your protest is to give the appraiser a sob story about how your ever increasing taxes are a huge burden, your story will fall upon deaf ears. The appraisal district has absolutely no control over your taxes; they simply determine property values. As a former property tax consultant who’s handled more than 5,000 protests, I can’t stress to you enough the ineffectiveness of that argument. Don’t do it.
Another common misconception I’d like to share is that protesting your property value will not hurt your resale value. I actually witnessed a property owner protest on the basis that his property value was too low. He wanted the appraiser to raise the value so that he could sell his house at a higher price. Ridiculous.
Although we are all guilty of referring to the appraisal district’s value as the “appraised value”, the truth is that it is not a true appraisal at all, but is instead what’s referred to as the “tax assessed” value. In most cases, no appraiser will physically visit your property to assess the value. The counties simply do not have the manpower to cover the entire county on a yearly basis. Harris County, for instance, has approximately 150 appraisers who are required to attribute value to more than 750,000 property accounts. It simply can’t be done. Do not consider your tax assessed value to be indicative of your true market value. As investors, do not purchase or even evaluate a property based on the tax assessed value.
Here’s a good one: Your five year old purchase price is no longer valid! Each year stands on its own and the current comparable sales can and will affect your value.
Finally, the appraisal district will not retaliate if you protest! It is your right to protest by law, and again, they simply do not have the manpower to pick on everyone who protests each year.
Proper Preparation Prevents Poor Performance
Preparing for your hearing is most crucial. The following ideas are some that I followed for every property I represented. As a property owner representing yourself you can greatly increase your chances of getting a value reduction if you apply the methods I’m listing here. Appraisers will actually appreciate your due diligence.
The deadline to file your protest for the 2009 season is June 1st. When filing your protest, you want to fill out that you are protesting based on market value as well as “unequal appraisal”.
Request the House Bill 201 Evidence packet. This is the most important step you can take towards ensuring a successful protest. The HB contains all of the information which the appraisal district used to arrive at your property value. The information within this packet is also your main source for ammunition in getting your value reduced. For Harris County property owners, this packet will be made available online 14 days prior to your hearing date. Call the appraisal district for instructions on how to access it.
Pictures are worth a thousand words – Take pictures of any disrepair on your property and of any “negative influences” surrounding your property. Qualified negative influences could be busy streets, water tower looming over your house, sewer plant nearby, commercial property bordering your residential, etc. Your noisy neighbor’s junked out car and overgrown grass probably will not qualify!
Google Earth is a wonderful thing. I would recommend printing a satellite view of your property and the surrounding area. Probably 85% of the time you can find something negative to talk about on the image! It could be anything. Get creative and add support to the rest of your presentation.
MLS Sales – If you have a Realtor who is willing to help you with your evidence gathering, you may want to have them print some of the SOLD properties you find in the House Bill neighborhood sales page. Often times you will see that the appraisal district’s evidence will suggest that a house built in 1965 which sold for $150,000 never had a remodel done to it.
This “never remodeled” house is jacking up your value. However, you may be able to find the property on MLS and see that the pictures and agent’s description suggest the exact opposite! It sold for a higher price because it actually had a complete remodel just two years ago and yours actually is in original condition. Therefore, your value should be adjusted downward from that sale.
If you see that the district’s evidence is not up to date on a house in an older neighborhood, check the Neighborhood Profile page (HCAD) and see what date is listed as the last time someone physically visited your property. I’ve seen some where no appraiser had been to the property in 15 years.
This is an excellent way to weaken the credibility of the appraiser’s opinion of value in a board hearing.
Have an opinion of value ready when you meet with the appraiser and then support that value with the evidence you have prepared. Saying you want a lower value without knowing what that lower value should even be suggests to the appraiser that you have no idea of what you are doing and you are likely to go on and on begging like a child until you get a reduction. Appraisers respect property owners with opinions of value.
The shorter the story, the better. Appraisers may sit with 20-40 property owners every single day. They hate protest season and they hate people in general by the second week. Limit your stories and stick with the evidence. The appraiser will appreciate it and will hopefully return the love in the form of a value reduction!
The House Bill Nitty Gritty (HCAD Specific)
There is no way for me to completely train you on how to effectively use the appraisal district’s own evidence against them in a short article such as this. However, I would like to point you in the right direction as far as what you need to be looking at as the HB is extremely powerful. I never personally visited any property I represented in Harris County, yet had a high success rate at getting values reduced simply by learning to read the story provided in the HB.
There are four main pages I want you to look at in the HB. The “ISD”, Neighborhood Sales, “CPA” (Comparative Property Analysis) and the Neighborhood Profile page.
On the ISD page you will find a small sample of neighborhood or surrounding area sales which the appraisal district has used in order to come up with your value. In the past, there were five sales used and the three with the least amount of adjustments needed to make it “equal” to yours were averaged together. On the bottom of the page (in past years) you should see the Noticed Value, the Indicated Market Value and the ISD Ratio. If your Indicated Market Value, which is based on the three averaged sales, is less than your Noticed Value, multiply the IMV by the ISD Ratio (if less than 1.0) and you should get a reduction in value. For example:
- Noticed Value – $100,000
- Indicated Market Value – $97,500
- ISD Ratio – .98
$97,500 X .98 = $95,550
In this example, the district’s own evidence suggests that your property should be valued at $95,550 rather than the current $100,000 they have you on the tax roll for. Neat, huh?
On the Neighborhood Sales sheet you will see what should be each and every property that sold in your neighborhood within the last year. Find the most similar ones to yours and break them down on a price per square foot basis. Take the average $/sf of at least three sales and apply that to your square footage. If the resulting number suggests a lower number than what you are noticed at, you have a reduction!
The CPA, or Comparative Property Analysis, shows what other properties just like yours are assessed at on the tax roll. Based off of these sample properties there will be a suggested value at the bottom of the page. If it suggests you are overvalued, you win! NOTE: If you did not protest based on “unequal appraisal” as I suggested earlier, you will not be able to use the results of this page.
The last page you should review, which is also the least effective of the bunch, is the Neighborhood Profile. On this page you can find what the typical property is in your neighborhood. You can see how many properties there are in the neighborhood, the typical year built, the typical build grade and quality as well as the typical size. Notice that I used the word “typical” over and over again. If all else fails with the other approaches you may be capable of giving the ole standby argument that your property is atypical for the neighborhood.
For example, if the typical property in the neighborhood is 1800sf and your property is 2400sf, explain (not argue) that your property is at a disadvantage because you are overbuilt for the neighborhood. In other words, your property’s resale value will be negatively affected due to the smaller houses selling throughout the neighborhood. Also, if you’re property is a “B” grade and the others are “C+”, the C+ properties are lowering your value. On the other hand, if you are a “B” and the others are “As”, you are at a disadvantage because your property is of lesser quality than the typical in the neighborhood. Hopefully you get the point that regardless of what’s different about your property than the typical for the neighborhood, you are at a disadvantage!
The key to using the House Bill information is simply familiarizing yourself with the information provided and creating a storyline which you can clearly and effectively explain to the appraiser or Appraisal Review Board if you end up going that far. Unless you are in a newer cookie cutter style neighborhood with a lot of recent sales you can almost always come up with a little something which can persuade your foe to nudge your value down. Never argue, complain or whine. Present the evidence at hand and speak with confidence.
Your Other Option
Hopefully I have shed some light on how you can go about protesting your property value on your own in an effective manner this tax year. For those of you who simply don’t have time, are terrible negotiators, are afraid of talking to people or perhaps just don’t care; you can always hire a professional to represent your property on your behalf. Most property tax companies will charge a fee based on a contingency agreement. If they don’t save you any money, they won’t charge you a fee.
There are many property tax companies out there. However, if you are a Lifestyles member always check the vendor list for up to date information on Property Protest companies.
Whichever way you decide to go, whether on your own or with a professional, I hope you can feel more comfortable in knowing that you have the ability to stick up for yourself with a solid case. Too often property owners think that they can walk into the appraisal district and gripe or bully their way to a reduction in value. There is definitely a human element involved when negotiating a reduction. Angering the appraiser is no way to be productive and reflects poorly on your character (ouch!). Stick to the hard evidence, remove all emotion and personal feelings out of your case and you will greatly increase your odds at saving yourself some money.
For those of you fortunate enough to be Lifestyles members with unlimited question and answer, I will be at your disposal as always. Good luck and good hunting!Source: www.lifestylesunlimited.com