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A Story of Unequal Appraisal

A new complaint from George:

New transplanted Houston homeowner here and my first experience with HCAD is almost identical — bought my house last year because I was transferred from out of state. We didn’t have the benefit to wait and shop — we knew what we wanted and we’re happy with our house but bought it at a premium with similar quick-and-dirty “remodeling” (Granite counter tops, cheap hardware, etc.) that we knew we were going to replace anyway to bring a midcentury back to its roots. A few months later other issues came up (our cast iron plumbing is near the end of its useful life, foundation issues due to dought, fence is falling apart). When we bought it, the tax appraisal was at $119k, we bought it at the $150k premium knowing that we would have to pay about $30k to get rid of the cosmetic “upgrades” and really bring it to market value. Meanwhile, investors have been buying larger houses in our neighborhood with improvements such a pools, garages, extra living space, have been flipped on the market. No serious remodeling work has been done on my house; original 50 year old electrical system, plumbing, and windows are not to code, we are probably the only house in our neighborhood without a garage — yet my property is being valued against these other houses that have been remodeled at least once in the past 5-15 years.

I got my appraisal notice earlier this year, and they assessed the property at $166k — a nearly 40% increase — $47k more than the previous year. At the informal meeting, they lowest they would go would be the price that I paid for the house last year. I argued that now that we know about the foundation and plumbing issues, there no way we can sell it at the price we bought it if we disclosed that information as required by law. He didn’t even bother looking at my pictures or the print outs I made of recently sold houses in my neighborhood. He said that he couldn’t appraise the house at anything lower than market price, and the best that would be would the price i paid for it last year.

I go home and decided to do more research…. I checked on the appraised values of my neighbors who have houses that are at least 500 sq. feet larger than mine, larger lots, garages, and they are being appraised at a nearly $40,000 less than the market price; at less than $65 per square foot — my house is appraised at nearly $85 per square foot. I went further and retrieved all the data for my subdivision and ran a simple statistical analysis — the median appraisal is around $70 per square foot.

While I can’t say anything about the affluence/race issue, from the way I was treated, I assume their marching orders are to take advantage of new homeowners — I don’t understand how I can be taxed at a rate significantly more than my neighbors and against houses that are not really comparable…

George, it sounds like you might be a victim of Unequal Appraisal. Under Section 41.43 of the Texas Property Tax Code:

 

“a protest on the ground of unequal appraisal of property shall be determined in favor of the protesting party unless the appraisal district establishes that…the appraised value of the property is equal to or less than the median appraised value of a reasonable number of comparable properties appropriately adjusted.”

In order for a property to be comparable, it usually should be in your subdivision or at least in your nearby area, and be similar in size, age, and improvements, including remodel. What constitutes a reasonable number of comparables is usually at least two that support your argument for reduction. If you are that far above the median value per square foot, you are not being equitably assessed, and should take the information you have compiled to your ARB hearing. Please keep me updated on your fight.

HCAD Agent Zachary Taylor

From Andy, who just had his informal hearing:

Thank you for making this forum available — I feel alone in this, but I know that my neighborhood is being systematically targeted by HCAD for large increases in property value that are unjustified and unsustainable.

I met with my HCAD agent yesterday, Zachary Taylor, which was rather like talking to the wall — he was disruptive, and disorganized everything I was trying to tell him. He completely disregarded any information I presented, instead comparing my house to “very good” or “excellent” condition houses, that mostly are not even in my subdivision. There are a few new houses on the fringes of my neighborhood that fit this description, but mine is 40 years old and squarely fits the “average” description — but he would not listen, even though every house on my block is listed as average.

For some reason, the previous occupants whom had a tendency to exaggerate everything they did, considered their house the best on the block. They did a kitchen remodel, and put in granite countertops and a cheap Chinese made faucet that they mail-ordered. The cabinets are made out of pine plywood. I showed HCAD this, and they would not listen, instead they compared top end houses that had a remodel done, and how much it affected their value. The people who lived in my house before me were neurotic idiots with no sense of style at all. If they really paid for remodeling, someone had to have been laughing at them all the way from the lumberyard. It surely doesn’t justify a 21% markup in the purchase price of my house which I bought last year because someone put in some plywood cabinets, that aren’t even finished or painted.

The whole point of all of this is that Zachary’s job was to discourage me and discredit everything I said. He did not inform me of my rights, even when I asked him. I informed him I must submit an appraisal, but I was not given the opportunity to do so. Furthermore, the notice that I got for the hearing was dated July 14 was only 14 days from the date of my hearing on the 28th of July. This was then mailed and received the next week, so I could not have known to get an appraisal and submit it in the withing the 14 day time limit called out in Section 41.43. Zachary completely ignored me about this, and said that I needed to schedule a formal hearing. I then said, only if the date selected allows me adequate time to get an appraisal done. He kept ignoring me.

Zachary was doing his job, to make me discouraged. He has instead, out of principle, made me very angry and eager to make it known the way I was treated. They need to hire people that do not suffer from ADHD, or at least it appears so based on the way he was acting. His number one cop-out that he repeated several times was that “he didn’t have the authority to do anything” — if so, why am I even there talking to you???

I am determined to study the tax data for my neighborhood, and compare this to those of surrounding neighborhoods. I am fairly sure that my neighborhood is being targeted because demographically it is 3/4 white, and we are “rich” and should pay — which is far from the truth. My house is 40 years old with a leaky roof and old iron pipes — this is not on par with new construction.

With any luck, unequal increases to my neighborhood as a whole will show that we are all subject to unequal appraisal, and so are injured taxpayers — which then allows a class-action suit could be made. But, all of that remains to be seen. I may need to wait to be “injured” before I can get fair, non-runaway, appraisals for my property it would seem. I hate the prospect of going to court over this, but it seems to be what they think they can get away with that makes me want to go.

 

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Andy, thanks for sharing your frustration with me, I hear your pain and feel it too. You are probably right, your neighborhood is probably being systematically targeted. I know mine is, HCAD’s lawyers (Olson & Olson) pretty much told my lawyer that my neighborhood was being targeted, which is why they weren’t willing to accept our very reasonable counteroffer. My lawyer explained that HCAD is taking so much heat from the Harris County Commissioners Court for their mishandling of high dollar commercial properties, that they are taking it out on residential property owners. Your story somewhat mirrors mine – the previous owners of your house did some really superficial upgrades here and there and probably put some exaggerated gloss in their HAR listing about “extensive upgrades” and HCAD used that verbiage to justify raising the condition of the house. In my case, HCAD listed my house as “extensively remodeled” because of it. I was finally able to get that fixed (somewhat) by emailing kellysherbertpia@hcad.org and demanding to know, under the Texas Open Records Act, the name of the person at HCAD who had listed my home as extensively remodeled, on what date they had made that determination, and what method they used to make that determination (ie, did they actually make a site visit, did they actually go inside the house, etc). That told me that a “valuation specialist” had decided my home was “extensively remodeled” in 2006 based entirely on the HAR listing, which was grossly exaggerated. So I demanded that HCAD send someone out to do a real appraisal, and I had my tax agent there for the site vsit to make sure they didn’t ignore important defects that affected value, or try to lie about the quality of something. My tax agent is John Osenbaugh if you want a good recommendation. In your case, you may just want to get your independent appraisal, and ask him if he would also come out when the HCAD appraisers do, and point out to him things he sees that lower the value. Good luck!

Question on the allowable valuation date range

Colton asks:

I have a question about the valuation date for the property taxes. Everywhere I see a date on the HCAD website it says that the market value is the value of the property at Jan 1. I interpret this to mean that my market value, derived by HCAD, is based off information prior and up to Jan 1.

My hearing for my 2014 property taxes was last week. The first comp they used to derive my market value had a sale date of 1/9/2014. This seemed strange to me because every date I have seen references Jan 1. I asked the HCAD representative why this comp was included and his response was that HCAD can use sale dates up to Jan 31 (seems like the website should say that). Then during his presentation of evidence, he brought up sales from 5/31/14 as evidence to support his value. The 5/31/14 sale will be included for 2015 and should not have any impact on my 2014 value. So the majority of HCAD’s evidence to justify my 2014 market value is based on information that should not be used until 2015.

Does anyone know if they are allowed to use dates that are after Jan 1 to justify their market values? I don’t have all the rules to this game memorized, but this just seemed like they were playing dirty.

Colton, yes, everything I have read says that the value must be that of January 1. Whether there is some grace period of the entire month of January or not, it is obvious that a sale on May 31, 2014, about 2 months after your valuation notice was sent out, should not have been allowed. However, as you have found, and I have also experienced, HCAD appraisers routinely lie under oath in ARB meetings, and unfortunately, in the last two or three years, ARB panels have just become yes-men for HCAD, I have personally experienced them blatantly violating the state tax code in making their decisions.

Mayor Annise Parker on Harris County Suing HCAD

KUHT (Houston local PBS affliate Channel 8) had Mayor Annise Parker on Red, White and Blue about a months ago, and she gave her thoughts on the undervaluing of large commercial properties in Houston, and the county’s suit against HCAD.

The Ramp Up to 2014 Protest Season, and a Defense of Property Tax Protestors

I know I haven’t posted a story in a looong time, part of that is this is mostly a seasonal blog, it gets pulled out and dusted off when people are actively receiving their valuation notices and considering what to do next, and going through the property tax protest process. My own process is ongoing, yes, I am suing HCAD in district court, and one day I will write a blog on why I chose not to avail myself of the HCAD-controlled binding arbitration process and why I think you shouldn’t either. Once something significant happens in my case, I will share it with you, but now it is just a matter of waiting to get on dockets, etc.

In the meantime, I would like to address a charge that gets levied against property tax protestors on occasion, and I and people who have shared their story here on this blog have found ourselves accused of this: It is the pernicious and fallacious idea that those of us who protest our property taxes are trying to get out of paying our “fair share” of public services – schools, hospital districts, roads, etc. It is time to put this scurrilous slander to rest once and for all.

The person who leveled this accusation against me and another person here gave his full name, so I looked him up on the HCAD website, and found no property in his name on HCAD rolls, and is diatribe used very poor grammar indicative of someone with a low level of education, and as we all know it is education that allows us to prosper and be able to afford things like real estate, so it’s a pretty safe bet to assume this guy owns no real estate and therefore pays no property tax. So since I pay several thousand dollars every year that this guy does not  pay, frankly, he is the one not paying his “fair share” of the costs of running this county and state.

This brings up an important point – do people who own $200,000 houses use more public services than people who live in rental properties? Do people who own $300,000 houses use more public services than people who own $200,000 houses? Does a person who makes a cosmetic improvement to his house that raises its value from $300,000 to $350,000 suddenly use more public services than he used to? The answer to all these questions is “of course not”, and yet with each of these situations, the person owning the more expensive property pays more towards public services than the person who owns less expensive property, or no property at all. So let’s do away once and for all with the argument that the amount of money you have to pay in property tax is based on you paying your “fair share.” Frankly, it’s pretty insulting and hypocritical for non-property-owners to accuse property owners of not paying our “fair share”, when we are the ones paying the lion’s share of the public costs in this state, including paying non-owners’ “fair share” for them.

There is also an arrogance to the non-owner’s logic, that even though the non-owner knows nothing about the reality of the owner’s property, the non-owner must know that the owner’s property is worth what HCAD wants to claim it is worth. There are numerous flaws to that logic. First there is the fact that the state of Texas and the Harris County Commissioners Court  themselves found HCAD’s valuation process flawed and it is currently being heavily investigated, and second it ignores the fact that HCAD and its employees’ salaries are paid by tax dollars, so it is in HCAD’s vested interest to do everything it can to keep tax rolls as high as possible, and the easiest way to do that is to pad residential tax rolls, because residents don’t have the same resources to fight them that businesses do.

The other bit of arrogance in the non-owner’s logic is the non-owner is really saying that even if HCAD is overvaluing our houses, we should just shut up and take it, or else we are shortchanging kids’ education. It’s a really dirty below-the-belt tactic, and it is hypocritical for several reasons as well, and it just doesn’t stand up to the barest scrutiny. Take federal income tax. If someone makes $40,000 a year, and the government were taxing them for a $50,000 a year income, would you expect anyone to tell them they should just shut up and take it, or else they are shortchanging our armed forces? Of course not. What’s more, everyone, even the non-property-owner, utilizes every single deduction and tax credit he can to reduce his taxable income as much as possible so that he can pay the least taxes possible. So why is it that it is widely accepted that everyone is going to do everything they can to legally reduce their federal property tax burden, but there are still people out there who try to shame us property owners for simply doing what we can to legally reduce our property tax burden?

Last, this argument that it is our trying to reduce our property taxes that is taking money away from kids education, I want to do away with this once and for all. Harris County government makes all sorts of decisions that are inefficient and wasteful uses of our tax dollars, and that takes money away from kids’ education. Having running two separate law enforcement agencies, the sheriff’s department, and the constable’s office, when it would make a lot more sense to shut down the constables and expand the sheriff’s department, for one. Another example is the Astrodome. Even though the majority of voters in this county voted against saving the Astrodome four months ago, the Commissioners have continued to stall on tearing it down and keep trying to find other ways to repurpose it, when tearing it down would save taxpayers $2 million a year in insurance, utilities, and maintenance.

Harris County Commissioners Court Threatening to Sue HCAD

Sorry for the prolonged hiatus, everyone, the past several months being the property tax offseason I did not have a lot to write about, until now. As the Houston Chronicle reported on January 30,  “county officials said Wednesday that they may consider suing the Harris County Appraisal District over concerns it is undervaluing certain business properties at the expense of homeowners.”

The Commissioners court took an “unprecendent step” of hiring independent appraisers to double check HCAd valuations on business properties, following revelations over the past year by George Scott, the Houston Press, and others that HCAD has agreed to set commercial value properties well below what these properties later sell for.

Former HCAD Chief Appraiser acknowledges George Scott’s criticism of HCAD is accurate

There are few champions of property tax reform in this county as tireless as George Scott (and one of those would be Coach Don Hart). Compared to these two gentlemen, I am a mere dilettant. George was a member of HCAD’s executive staff, and since leaving in 2012, he has been relentless in his investigation and reporting of HCAD’s corruption. One of the targets of his criticism has been former HCAD Chief Appraiser Jim Robinson. Scott reports in his latest column of georgescottreports.com that recently Robinson was asked in front of a room of several hundred tax agents, attorneys, and others, what he thought of George Scott’s criticism of him and HCAD. Robinson confirmed that much of what Scott has reported has been valid and accurate.

Scott also reveals that Robinson had serious reservations about the management team working under him, the same management team that came into power after Robinson’s retirement, people like Sands Stiefer. In the months leading up to his retirement, he had been making sincere efforts at reform, but these efforts did not succeed.

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