(Why over 200,000 Harris County home owners are over-taxed by more than 10% and 30,000 are over-taxed by 50%)

Appraisal districts use a process called mass appraisal to value hundreds of thousands of houses. In Harris County, they value about 1.2 million houses each year, using a very limited staff. Most of the property inspections mandated by state low (every three years) are now done using aerial photography! Seriously, how much can you tell about the condition of a house viewing an aerial photograph?

In many cases, the computer-generated estimate of market value is within 10% of the true value. However, in about half the cases the value set by the appraisal district is either 10% high or low, because of defects in the mass appraisal process.

We believe about 30,000 homes in Harris County over-taxed by 50% or more in 2014. And about 5,000 homes in Harris County over-taxed by 100% or more. Between 200,000 and 300,000 Harris County taxes are over-taxed by at least 10%.

While this may seem incredible, it is due to the errors in appraisal district property records, inaccurate data regarding cost, depreciation and comparable sales. Further, most property owners have limited knowledge about the appeal process and believe myths about appealing property taxes. They do not understand the HCAD jargon of grade, CDU, level of remodel, land lines, etc. Compounding the problem is a reluctance to revise HCAD records. If an HCAD appraiser agrees a property is over-taxed, he will change the value. However, to correct fields of data such as grade, condition or land value is highly unusual. So the same problems occur from year to year, frustrating home owners and causing HCAD a consistently high appeal value.

Since HCAD targets 100% of market value for their homes, half of all houses are over-taxed and half are under-taxed. The result is there are at least 200,000 houses in Harris County over-taxed by at least 10%. Following is a list of some of the most egregious examples of homes over-valued Zip Code 77073. If you recognize the address, please call the owner and make sure they protest.

Property Zip Code Property Address Assessment Ratio 2014 Market Value Gross Sale Price Owner Name
77073 1710 Hollyberry Dr 161% $126,908 $78,600 Graciano Jose Luis Jr
77073 2907 Thorne Creek Ln 147% $148,718 $101,000 Veterans Affairs
77073 2810 Thorne Creek Ln 144% $149,417 $103,754 Us Bank Trustee
77073 19518 Remington Prairie Dr 137% $98,855 $72,000 Pena Marlen & Jesus A
77073 16411 N Bend Dr 135% $101,313 $75,100 Austin Nicholas W
77073 1214 Kingsbridge Rd 134% $135,676 $101,000 Federal National Mortgage Association
77073 16323 N Mist Dr 133% $82,138 $61,731 Lackey Mark W & Denise
77073 21210 Lazy Ravine Ln 132% $99,059 $75,000 Burton Stanley L & Rebecca C
77073 21211 Burnt Amber Ln 130% $131,316 $101,000 Deutsche Bank National Trust
77073 454 Silky Leaf Dr 127% $71,236 $56,253 Majano Alma
77073 2931 Cypress Island Dr 126% $96,228 $76,085 Simy Resources LLC
77073 16519 N Meadow Dr 125% $103,628 $83,000 Federal National Mortgage Association
77073 21803 Siberian Elm Ln 125% $104,259 $83,600 Housing & Urban Development
77073 227 Silky Leaf Dr 124% $94,515 $76,001 Ferman Jacqueline M
77073 1414 Glens Ferry Ln 123% $76,316 $61,800 Viba Homes LLC
77073 1418 Stillstone Dr 122% $123,350 $101,151 Le Diane
77073 21122 Tancah Ln 121% $160,633 $133,000 Duffy Jonathan R
77073 2722 Blue Glen Ln 120% $149,006 $124,000 Nguyen Judy
77073 20939 Vista Trace Dr 119% $102,299 $85,900 Dang Klee
77073 815 Kiley Dr 118% $94,015 $80,000 Nguyen Tom
77073 19530 Fletcher Way Dr 117% $108,081 $92,000 Anderson Seth C
77073 16703 Vista Oak Dr 117% $87,662 $75,000 Saravia Antonio G & Miram E
77073 1203 FORSYTHE LN 117% $130,569 $112,000 Najera Oscar & Enriqueta
77073 1015 Upward Ct 116% $113,758 $98,000 Blanco Mario G
77073 3106 Woodcreek Glen Ln 115% $141,805 $123,000 Amv Properties
77073 1618 Hade Meadow Ln 115% $90,181 $78,500 Richard Gregory T
77073 19527 Remington Martin Dr 114% $121,979 $106,720 Milum Lisa M & Rodney E
77073 351 Remington Ridge Dr 114% $102,254 $90,000 Bonilla Julio P
77073 1435 Stone Bluff Dr 112% $151,863 $135,000 Kamajou Chanelle
77073 21106 Harvest Hill Ln 111% $169,212 $151,824 Wells Fargo Bank Trustee
77073 422 Brushy Glen Dr 111% $108,920 $98,000 Arevalo Monica P
77073 707 N Rock Dr 111% $99,327 $89,500 Hernandez Jorge
77073 19311 Remington Bend Dr 111% $135,229 $122,000 Tran Bo
77073 19430 Remington Wick Dr 110% $123,517 $112,000 Federal National Mortgage Association
77073 21203 Tancah Ln 110% $121,212 $110,500 Suleiman Sadeh A

Since the property taxes are paid by the mortgage company for most home owners, the pain point for the home owner is about one year too late. When they receive the notice their monthly payment is increasing by $100 or $200 or more per month, the appeal deadline has likely passed. The property tax appeal deadline in Texas is May 31, or the following workday if May 31is on a weekend. However, the owner will not be aware of the consequence until early next year.

The mortgage payment will not likely be increased until after the current year taxes are paid. For example, if your home is grossly over-assessed in 2014, the monthly payment will likely be adjusted in the Spring of 2015. But the deadline to protest your 2014 property taxes is May 31 (actually June 2 since May 31 is on a weekend).

There is really no meaningful relationship between the methodical work done by an independent fee appraiser and an appraisal district appraiser. The fee appraiser typically inspects and measures the subject property, so he has accurate data. He also personally visits each of the comparable sales to see if they are really comparable. Conversely, part of preparing a mass appraisal does not include inspecting the subject properties.

For homes build before 1980, an appraisal district appraiser has almost never seen the inside of the house. They just guess at the quality of construction and condition. For homes built after 1980, the appraisers attempt to measure them. However, they are often not completed when the appraisers measure them, leading to errors including size (by double counting vaulted ceilings), and level of finish.

The appraisal districts errors regarding your property are compounded by errors in their information regarding comparable sales. The appraisal districts commit several errors systematically that tend to cause them to over-tax home owners. First, properties that sell are typically prepared for sale by putting them in prime condition. Properties that sell have often been recently painted have new flooring, a new roof, a new HVAC and other similar items. If a buyer was considering buying a typical house not prepared for sale and one that had been prepared as advised by the Realtor, the buyer would certainly pay more for the latter. HCAD terms the cost of preparing a home for sale “maintenance” and does not recognize any difference in condition between a recently sold house and a livable house. Harris County Appraisal District also does not recognize seller concessions, which reduce the true sales price.

A second serious problem is that appraisal districts tend to use sales that have been remodeled to value houses that have not been remodeled. Incredibly, the insular culture at some appraisal districts, including Harris County Appraisal District, is they require you to prove your house has not been remodeled. This is simply a red herring to cover up the extensive errors in their evidence regarding comparable sales. There is no requirement that the property owner prove the appraisal districts records are correct. If anything, the appraisal district doubting the accuracy of their evidence about your house should undermine their credibility on other issues.

In addition to errors regarding the information about your house and the errors regarding the comparable sales, the model used by the appraisal district is imperfect. There is no model that can consistently value houses with precision. A computer model simply generates an estimate of value, based on the data provided.

Texas law requires property owners to file a property tax protest to be able to obtain the evidence regarding their house. Protest both market value and unequal appraisal and include a note asking the appraisal district to make their evidence available two weeks prior to the hearing. The protest form is available at http://www.poconnor.com/pdf_forms/41-44.pdf

In many cases, given the large number of substantial errors in valuing houses, the appraisal district’s evidence will clearly show the property is over-assessed. It is critical that you protest prior to May 31, or you will not be able to get the information and determine if you are taxed fairly. Since over 200,000 houses in Harris County are over-taxed by at least 10%, encourage your family and friends to protest, so they at least get to see the appraisal districts evidence.

After you protest and obtain the appraisal district’s information, one of the first priorities is to see if their evidence is accurate for your house. Then check to see if the sales data is accurate. The Houston Realtors make the photos of properties sold are on-line after the sale. For Harris County Appraisal District, you can access these at har.com.

The data used for analysis was all sales of houses in Harris County that occurred during October 1 2013 to March 31 2014, for which we had a purchase price and a 2014 HCAD market value. The only records that were eliminated were those where there was a major discrepancy between the Realtor MLS data and the HCAD tax roll regarding the size of the land and / or building. Stated differently, this analysis includes all sales except those for which complete information was not available.

For more information, contact Charlissa Holman at 713 375 4367 or Patrick O’Connor 713 822 8613.