"All these people at the county just keep raising my property value!" "REALTORS must be happy. The county keeps raising the values, so they're getting great paychecks."
Help! My Property taxes!
"All these people at the county just keep raising my property value!"
"REALTORS must be happy. The county keeps raising the values, so they're getting great paychecks."
"There's some sort of racket. Everyone is moving here, so the county is raising the property values to get as much money as they can!"
These are some things I have seen recently on Facebook posts about home valuation and home sales in Dallas. People seem convinced that the county is raising the value of their home in order to get more tax money.
While the result is correct, the intent and the action are way off.
Let's explore two terms. Assessment, and Appraisal.
Appraisal is when either an appraiser or a REALTOR, someone with industry expertise, makes an educated estimation of how much your property would likely sell for in a timely manner.
We look at many things. Size, location, age, finishes (crown moulding, countertops, flooring, windows, paint), appliances and amenities, and exterior finish such as landscaping and overall maintenance. We also look at material improvements, such as roof, plumbing, electrical, and foundation. From this, we can pick out houses in your general area that have recently sold that are similar to your house. We try to stay within the same development, and if we can't do that, we try to keep the distance as short as possible. We also only want to look at houses that have sold recently. Less than ninety days is ideal.
From this, we look at how much money per square foot those houses sold for. We attempt to find at least three "comps" to use.
We average out that price per square foot, and then we apply that number to your home. This is how we get a fair market value for your property.
Assessment is when the County Tax assessor looks at the effective value of your home. This is almost always (and should always be) lower than the market value of your home. This assessment isn't taking into account things like title company fees, REALTOR commissions, staging, or moving costs. This is just the flat material value of the home. And guess what? They use the same method we use! As a matter of fact, if you recently bought your home, or refinanced it, it was certainly appraised by a professional appraiser, and the county has access to that. So they are going to use that same appraisal to make their assessment.
So why is my property value going up so fast?
DEMAND. You see, Dallas has a strong economy. It's highly variable and contains many different industries, so it's relativevly recession proof. Oil tanks? We have shipping. Purchasing power drops? We have Information Technology. In a time when the job market is highly turbulent, and the American Dream is becoming harder and harder to reach, Dallas is a shining beacon on a hill. Compared to California and New York, property here is DIRT cheap. So we have a massive influx of relocations that are eating up all the available housing. Add to this the fact that Millenials (that largest adult generation in history) are all starting to purchase homes, and we have a property shortage.
Shortages mean higher prices. Higher prices will mean higher taxes. This is something we have seen time and again in other large cities.
The moral of the story: Don't blame the county. We are short by 1200 police officers and everyone wants new parks and paved alleys. They're just trying to give the people what they want.
James has been working in real estate services for ten years, starting in a consulting position dealing with large agricultural land acquisitions, moving on to corporate property management with one o....