A home appraisal is an estimate of the value of a particular property. Appraisal values can impact numerous aspects of their owners’ lives and finances, including equity, the cost of homeowner's insurance, and property taxes. For this reason, it’s essential to know which factors appraisers consider when valuing a home.
This blog post will explore some common factors that may affect your home's appraisal.
Many factors can impact your home's appraised value, including but not limited to the features and condition of the house, the neighborhood, and the housing market.
When property tax appraisers assess the value of your home, they will consider specific characteristics about your home itself, including its structure, age, maintained condition, and features. Any of the following factors can affect your property’s appraisal value:
This means that old appliances or poorly maintained heating, cooling, plumbing, or electrical systems can hurt the appraisal value of your home. Outdated interior and external finishes can also decrease your property values, as can hazardous building materials such as asbestos and lead paint.
Your home is worth more if it's located in a desirable area with amenities like good schools, employment opportunities, shopping areas, entertainment, and parks. Therefore, it can seriously hurt your home appraisal if you live in an area with high crime rates or in a lower-performing school district. In fact, your home’s appraisal value will be lower than the exact same structure would be in a more sought-after neighborhood.
Zoning laws and land usage in the area can also impact your home’s value, as well as building density and the proximity to public transportation and other amenities. In some cases having a flood zone on part of the property can reduce its land value but in others the flood zone may be considered an amenity that adds value.
Comparable sales in your neighborhood will likely have the greatest impact on the valuation of your home. They are the “gold standard” for establishing value at the Appraisal Review Board. “Comps” are homes of a similar layout, size, age, and condition in the area. Appraisers compare your home to them.
This means that if the local real estate market is hot, your property’s appraisal value will increase to correspond with higher sale prices. Fortunately, Texas law caps home appraisal value increases for homesteaded properties at 10% per year, so even if the market value skyrockets, you have some protection from excessive tax hikes. However, the 10% limitation on taxable value increases applies since the date of the latest appraisal. So, if that appraisal was two years ago your taxable value can increase 20% in one year.
When it comes to Texas property tax, each county’s appraisal district is responsible for assessing house values for all the real property in the county. The appraisal value is then used to calculate the amount of property taxes you owe for the year. The higher your home appraisal cost, the higher your tax bill will be.
Since each appraisal district is responsible for estimating the value of every single property in the county, the appraisal values are often rough estimates based on properties of a similar size in the area that may or may not actually be comparable rather than the particular attributes of your home. Without performing an actual inspection, an appraiser won’t know that your roof leaks or your appliances are outdated, which often leads to an inflated and inaccurate appraisal value.
The fact is that, while tax appraisal districts regularly overvalue homes, many homeowners simply pay the amount shown on their property tax statement without exercising their rights to challenge the appraisal value. Typically only about one third of homeowners file property tax protests each year and many of those who file neglect to utilize all the grounds available to support their case.
By filing a property tax protest, you or your legal representative can present evidence why your home’s appraisal value is too high. For example, the assessor may have been incorrect regarding certain attributes of your home, such as its square footage, age, or the number of bedrooms and bathrooms. You can also show why your home should be worth less than “comparable” homes by showing documentation of poor conditions, maintenance issues, needed repairs, damages, or dated appliances. Or, if actual comparable homes in the area were estimated to have a lower appraisal value than yours, you can argue that the appraisal value for your home is disproportionately high.
When you file your protest, a hearing will be scheduled in front of an independent group of citizens called the Appraisal Review Board (ARB). The ARB is responsible for resolving disagreements between the county appraisal district and local property owners. After both sides present their evidence, the ARB will determine a final value and issue an Order establishing a new market value or sustaining the district’s proposed market value.
You can challenge the ARB’s ordered value by filing for binding arbitration. Property Tax Protest has often been successful in contesting ARB Orders in binding arbitration. For more information see Binding Arbitration: An Owner’s Last and Often Best Resort.
When your home has been appraised for more than it’s worth, it’s essential to file a property tax protest to get the appraisal value reduced. Since the appraisal district often does not have complete and accurate information about your home, a protest can be the only way to receive an appropriate property tax bill. At Property Tax Protest, we know how to get your property appraisal value reduced, and we have been doing so for more than 20 years. Sign up for our no-risk services today: if we don’t get the appraisal value on your home reduced, you won’t owe us a penny.
Don’t pay more than your fair share of property taxes