Per the Texas Comptroller statistics published on their website for 2015, there were 334 land appraisers at the county appraisal districts to value 12,200,000 parcels. The county appraisal districts have hearings 4 months a year and they have 8 months to do valuations, or about 160 work days.
On average for Texas in 2015, county appraisers had 3.4 minutes for a land appraisal. But the appraisers in Harris county only required less than 1 minute per parcel to appraise them at market value and equally. Keep in mind that they must value both the land and the improvement separately.
The Texas Comptroller website also revealed that 20% of the appraisal districts had no land appraisers at all. So how do you appraise the land without any appraisers?
Most appraisal district land values are not reliable given the limited resources to track value. They also have a tendency to lag the market by two or three years. For example, appraisal district land values in sections of Houston are MUCH higher than market value. The values are more consistent with the peak in 2014, three years ago, than with the value in 2017.
Most properties are valued by the cost approach. This involves the educated guesses regarding the following factors:
1) actual land use of each property,
2) actual grade of each property,
3) condition of each property,
4) cost of construction,
5) entrepreneurial profit, if any, related to development and
6) amount of physical depreciation (most appraisal districts do not have resources to attempt to track functional or external obsolescence).
Valuing properties by the income approach is even more difficult, due to the difficulty of accurately guesstimating the rental rate, other income, occupancy, operating expenses, cap rate and deferred maintenance.
Appraisal districts start with inaccurate land values and attempt to “force” their models to approximate market value. Since land values are low more often than high, appraisal districts tend to overshoot in valuing improvement. Appraisal districts estimate your property taxes using a model with an unstable foundation, inaccurate land values. Property owner should annually question the results of such a process to value their property, and determine their property taxes.
Only two items are certain:
1) some of the appraisal district’s information about your property is not correct and
2) you will pay more than your fair share of property taxes unless you appeal annually, to the highest level financially feasible.
If you own commercial property valued at over $1 million, you should be appealing appraisal review board decisions with either a judicial appeal or binding arbitration every time.
Be sure to enroll in the Property Tax Protection Program with O’Connor & Associates to ensure that you never miss a property tax deadline and you don’t overpay on your commercial property taxes. If the county appraisal districts can’t be trusted to value land accurately, then you must appeal every year.
Do you think the appraisal districts this year decided to hire hundreds of new appraisers to value land?