Rising home values and Tarrant County appraisals: What you don’t know CAN hurt you
READ MORE
Rising home values: What to know about your Tarrant County appraisals
An unprecedented year for the North Texas housing market is likely to stoke homeowners’ discontent when their home value notices arrive.
Expand All
If you’re a Tarrant County homeowner who’s paid any attention to the housing market this year, you’re probably worried.
Starting Friday, the Tarrant Appraisal District will mail out notices containing property values. This information is also available on the appraisal district’s website.
It’s the first step in the county’s annual tax collecting process. Based on the value of properties, taxing entities like school districts and cities then set the tax rate. Your bill is due in December.
In an email to the Star-Telegram last month, TAD chief appraiser Jeff Law said he anticipates a 20% increase in residential property values.
As the face of TAD, Law gets flak for the impact of a hot housing market on appraisals, but this is what appraisal districts are legally obligated to do: adjust home values in accordance with the housing market.
Home prices have increased 171% in Fort Worth since 2011, when the median home price was $120,000. In December 2021, it was $325,000. That’s a 25.4% increase from the previous year.
“That is just insane,” said Chandler Crouch, a broker and founder of Chandler Crouch Realtors. “It’s mind-blowing. It’s the highest appreciation in one year I’ve seen since I’ve been in the business and I got in 20 years ago.”
But, two years in an unnaturally hot housing market don’t explain why frustrations with TAD have been ratcheting up for the last decade.
The rules of protesting
Wes Bullock of Keller emerged from the Tarrant County Appraisal District in November 2020 feeling dejected.
He had spent at least 10 hours compiling data to protest his home appraisal before the Appraisal Review Board, but he was unsuccessful.
In a nine-slide Powerpoint, he laid out evidence for why his appraisal value should be lowered. TAD compared Bullock’s home to a nearby property that had recently sold. Bullock showed that TAD appraised this nearby home at a higher value than the ultimate sale price. He argued the same margin of error should be applied to his home.
Without explanation, Bullock said, the board voted to keep his appraisal the same.
“It’s like playing football and not knowing the rules of the game,” he said.
It shouldn’t be, argues Crouch, who helps people protest home appraisals for free.
When it comes to protesting property appraisals in Tarrant County, “you’re guilty until proven innocent, and I don’t like that,” he said. “The process to prove innocence is unforgiving, and there’s no real education system to figure out how to navigate it.”
The protesting process may be opaque, but, in the last several years, more homeowners than ever are fighting TAD-assigned property values.
Between 2015 and 2019, the number of annual protests at TAD more than tripled; in 2019, more than a quarter of residential and commercial accounts were protested.
Frustration with TAD’s work and the protest process are Tarrant County homeowners’ most common gripes with the government entity; these aspects, however, are “just the tip of the iceberg,” as Bullock explained.
When he walked into the TAD building for the first time — Bullock had never protested in person before 2020 — he asked himself why the building needs a security guard.
“When I left, I knew,” he said.
‘TAD is out of control’
Richard DeOtte of Southlake wanted to join TAD’s five-person board of directors, because he kept hearing: “TAD is out of control.”
Between a $12 million software glitch leading to an “explosive” audit, protest deadline confusion, errors in tax statements and failure to send protest notices, the last few years at TAD haven’t necessarily inspired confidence in taxpayers.
“My big concern has always been … just that it’s fair, from one property owner to another,” said DeOtte.
With the goal of shaking things up from the inside, he decided to run for a board seat.
“Run” belies the largely un-democratic process of securing a position on the TAD board; rather, candidates must be nominated by taxing entities (such as cities or school districts) and then secure votes from the elected officials on those boards and councils.
In his first two-year term, DeOtte started pushing for an audit of TAD to determine the cause of increased property tax protests.
The explosion in protests was an aberration among large metropolitan appraisal districts in Texas, DeOtte noted. It even garnered the attention of state Sen. Jane Nelson, whose district included much of Tarrant County. In April 2020, she wrote to the board requesting an investigation into the rise in protests.
While DeOtte’s push wasn’t received well by all members, in June 2020, the board narrowly voted to consider a review.
A year and a half passed; no such audit came to fruition.
In January, DeOtte was seated among a new board.
“I don’t know if we’re going to end up getting a review like I want, but I’m very comfortable asking for it,” he said. “And I think this board will listen.”
Behind the curtain at TAD
DeOtte isn’t alone in seeking a TAD board seat out of frustration with the district.
One year after his Appraisal Review Board hearing, Bullock made a bid for a TAD board seat, but was unsuccessful. He did, however, learn all he could about the appraisal process to better protest next time.
After making multiple public information requests and dissecting the TAD residential appraisal manual, here’s what he learned.
TAD uses something called a mass appraisal system to evaluate more than 750,000 commercial and residential properties each year. That requires tracking updates which affect property values, like a new pool or a home addition.
To appraise residential properties, TAD uses market data and determines a value by comparing homes to similar properties that recently sold. When market data is unavailable, TAD uses cost data, specifically from the Moore Precision Cost Tables, to price out a home based on its features.
Let’s say you’ve lived in your home for 20 years. Even if it’s being compared to a recently sold home in your own neighborhood, it’s likely those two properties look a lot different.
“If the house sold, it was fixed up,” said Crouch. “It was prepared for the market. If your house is not prepared to sell, almost without fail, it’s in worse condition than the house you’re comparing it to.”
In today’s market, severe lack of inventory has pushed buyers to purchase homes as-is and even sight unseen. But, ordinarily, homeowners should model their protest strategy with this comparative appraisal information in mind, said Crouch.
“The best thing you can provide are estimates from a contractor showing what needs to be fixed. If it’s a substantial type of repair then the appraisal district oftentimes will give you dollar for dollar reduction based on whatever that estimate is,” he said.
But, in a non-disclosure state like Texas, appraisal districts’ access to market data isn’t exactly clear cut.
The question of MLS access
When you buy or sell a home in Texas, you’re not required to report how much you paid or sold it for.
However, if, as a homeowner, you have the reasonable expectation that the government doesn’t have access to this information, you’d be wrong.
Despite the state’s non-disclosure status, some appraisal districts, including Tarrant County, have access to the MLS database, which records most residential property sales.
Robert Gleason, CEO of the Greater Fort Worth Association of Realtors, and multiple Fort Worth-area Realtors confirmed TAD’s access. Law, the chief appraiser, did not respond to requests for comment on this matter.
When asked if it has access to the MLS database, the Dallas County Appraisal District responded: “Dallas CAD has various sales sources that are deemed confidential. We neither confirm nor deny our specific sources,”
The same question has plagued the Travis County Appraisal District in Austin for years.
In 2019, the Austin Board of Realtors learned TCAD has purchased access to its proprietary MLS data via middleman, Core Logic, the Austin American-Statesman reported. In addition to sales information, TCAD received photos of home interiors.
Upon request from the Austin Board of Realtors, Core Logic terminated its relationship with TCAD and ordered it to destroy previously shared data.
How MLS data affects appraisals
Those who support appraisal districts’ access to this data tend to believe that, with more data, the appraisal district can more accurately value properties.
But not everyone agrees access to MLS data is in the best interest of homeowners.
According to Bill Aleshire, a lawyer and former Travis County tax assessor-collector, appraisal districts use MLS data against taxpayers to raise property values.
Then there’s the basic principle of the matter: should a government entity have access to housing sales information in a non-disclosure state?
“I guarantee you wouldn’t want your bank out there sharing information you gave your bank or that your bank had about you for other purposes you didn’t realize it was being used for,” Aleshire said.
“To me, that’s not right,” said Sarah Boggus, a Fort Worth real estate agent with Coldwell Banker. Access to the data shouldn’t be on a case-by-case basis, she noted.
For Gleason, the CEO of the Greater Fort Worth Association of Realtors, it’s kind of a moot point; TAD already has the data.
“I feel like I have screamed from the top of the hills, and nobody seems to care,” said Boggus.
Both sides of HB 1313
Politicians have gotten involved in the problem of rising property taxes and protests to mixed effect.
When House Bill 1313 went into effect Jan. 1, 2020, it was lauded for preventing increases in property taxes.
The legislation championed by Rep. Phil King of Weatherford stipulates that if you successfully protest your home’s value appraisers cannot increase the following year without “clear and convincing evidence” that the increase is merited.
Previously, the legal standard was “substantial evidence,” “really, meaning any,” said Law.
“The Legislature make it pretty clear that, in some instances, they didn’t want property values increasing,” said Law.
The new standard applied for the first time in 2020. In 2021, homeowners who successfully protested the year before may not have seen an increase in their appraisals, due to the requirements of the law.
But, remember, the district is legally required to ensure appraisals match the market.
This year, “the appraisal district is going to make up for all the value lost from January 2020 to today,” Crouch predicts.
For example, a homeowner paying property taxes on a house valued at $300,000 in 2020 could pay the same amount of property taxes in 2021, even if the market value of their home rose. This year, they would see the increase in value for previous two years.
“The best thing they can do is make sure they have all their exemptions in place,” said Crouch.
And, of course, protest.
“I recommend everybody protest every year,” Crouch said. “You only stand to gain.”
The first step to doing so is visiting TAD’s website, which allows homeowners to protest and get an immediate response.
Learning from the past
This time around, Bullock is prepared to protest his property value — if it rises, as expected.
In fact, he’s been preparing for months, meticulously scrutinizing the homes he believes his will be compared to. He’s identified structural differences, made adjustments for the age of each house and priced out the cost of every update he’d have to make to sell his home.
He hopes his strategy will work this time.
In an evening of bull-fighting, no bull is used twice. That’s because a bull is a lot more dangerous when given the opportunity to learn what the matador is doing.
Bullock compares the property value protest process to a bull-fight, with the tax-payer as the bull.
“He learns. Then the matador is in trouble,” said Bullock.
This story was originally published April 14, 2022 at 11:05 AM.
