This spring, many Texas homeowners had an extreme case of sticker shock when they received their appraisal notices. For example, the median market value for homes in Travis County soared from $411,658 in 2021 to $632,208 in 2022, a record 54 percent jump. For weeks, the talk of the home-owning bourgeoisie was property taxes, property taxes, property taxes. Renters, meanwhile, braced themselves for another wave of rent hikes. 

What was to be done? Real estate professionals, journalists, and elected officials encouraged homeowners to file protests by the mid-May deadline. And a record number of Texans did so. Protests in Travis County (Austin) are up 20 percent over last year. In nearby Williamson County (Pflugerville, Round Rock), 25 percent. In Collin (Frisco, McKinney, Plano), 24 percent. In Bexar County (San Antonio), 15 percent. The hearings began in May and continued into July. Tax bills go out in the fall. 

After writing an explainer in early May about the vagaries and complexities of the property tax system, which drew on my own home-owning situation in red-hot East Austin, I had to decide whether to protest my appraisal value. Ultimately, I elected not to; there was no way I would be able to lower my market value below the taxable amount capped by homestead exemption. (More on that later.) Nonetheless, I was curious about what these protests look like. So on several occasions in June and July, I attended more than a dozen in-person hearings in Austin at the fortresslike Travis Central Appraisal District headquarters, and listened in on several hearings in the affluent, suburban North Texas enclave of Collin County.

Formal protest hearings are held by local appraisal review boards, typically three-member panels of paid volunteers appointed by an administrative judge. These hearings are conducted like mini-trials. Owners argue that their homes have been overvalued, and the appraisal district defends its estimate. Cross-examinations and rebuttals are allowed. The panel can agree with the district’s number or the homeowner’s estimate or, as often happens, settle on some figure in the middle.

Almost without exception, the hearings I observed were cordial, professional, and relatively efficient, despite the enormous volume of cases. (The most contentious moment came when one Travis County property owner kept badgering the appraisal district rep about the appraisal process. “I’m going to stop this,” the chair said, cutting in. “This is getting out of hand. The district is not lying to you.”) Still, when Texans and taxes collide, colorful things are bound to happen.

Few homeowners seemed to have a full grasp of the process. Many came unprepared, such as the senior citizen in Austin whose only evidence was a single handwritten note on sailboat-themed stationery listing his home’s appraised values for the last five years. Others evinced a misunderstanding of the appraisal review board’s duties. In several cases, panel members gently informed the homeowners that the review board can only adjust market values, not the actual tax bills themselves. Some of the protesters who enjoy exemptions—the homestead exemption, as well as those for senior citizens and disabled Texans—didn’t realize that reducing their appraised value may not actually lower their taxes. (If you want to understand how these exemptions work—warning: it’s complicated—I’ve laid it all out here.

Some of the panel members I spoke to said most homeowners would be wise to hire tax professionals to handle their cases. “Very few over sixty-five have agents,” one panel chairman told me. “They should.” Another panelist chimed in: “You have the odd person who is an engineer or someone who’s analytical. They know what they’re talking about. The rest don’t.”

Still, some homeowners did come away happy. Win or lose, attorneys and businesspeople seemed to relish the opportunity to put on a case. Others, often unprotected by a homestead or other exemption, won a reduction in their appraised value—which will reduce their tax bill. As one woman from Collin County said at the end of her protest, “Thank you so much. You’ve made someone really happy.”

Here are six scenes from the protests.

Travis Central Appraisal District, Austin

June 17 | Panel #13
2022 appraised value: $814,063
Homeowner’s opinion of value: $365,000

Susan Lippman, a 72-year-old retiree and environmental activist, is trying to convince her panel that her house is, well, kind of a dump. According to the Travis Central Appraisal District, Lippman’s 2,544-square-foot home in South Austin increased in value from $320,637 in 2021 to $814,063 in 2022—an astonishing 154 percent jump in just one year. But Lippman argues that the ranch-style house, built in 1976, is worth only $365,000. The district, she points out, had relied on a single “comp”—a supposedly comparable home in the area that sold to a developer in May 2021 for $705,000—in making their determination. “It’s an outlier,” she tells the panelists, as her husband sits by her side. “I believe that the buyer just wanted that property and was willing to pay a huge amount.” The house has been recently remodeled, she says, and sits on a lot twice the size of hers. 

The lifelong Austinite has brought along 24 photos of her house, getting to her feet and gesticulating as she calls the panelists’ attention to a moldering shower, old appliances, and a dilapidated hot tub that has been in disrepair since 1998. “I took pictures of all the trouble spots that made it look like the house is in terrible shape,” she tells me later over the phone.

After a representative for the appraisal district counters with a $782,214 value, Lippman offers a counter-counter-proposal: $490,574, in line with the 54 percent median increase of home values countywide. The chair is unconvinced; he plans to side with the district. “I know for a fact that land has been undervalued for the last few years in Travis County. It’s just caught up with people. That’s just a fact of life.” But the other two members of the panel—apparently unimpressed with the “outlier” comp—settle on $490,574, and the chair ends up agreeing. The vote is 3–0.

Afterward, one of the panelists confides that the agreed-upon market value—$170,000 more than 2021’s figure—still represents “a monumental jump.” But, he adds, “The problem is, that’s just what the market is. And, you know, people are just dumbfounded.” As sympathetic as appraisal review board members may be to their neighbors, state law requires that properties be appraised at their market value as of January 1. They can’t address homeowners’ tax bills or make decisions based on evidence that doesn’t concern market value. 

Lippman knows all that. She spent at least ten hours putting her case together, even going so far as preparing an analysis, by zip code, of home values in her part of Austin. She tells me she’s “pretty relieved” at the outcome. But Lippman is the rare protester who also knows another semi-secret of the protest process: lowering your market value, even dramatically so, in a bonkers market like Austin’s may have no effect on your tax bill. “For us to go down there and put the time and effort into it, in one sense it’s unnecessary because between the senior exemption and the homestead exemption, it doesn’t affect what our taxes will be.” (Her homestead exemption, for starters, guarantees that the home’s assessed value—the amount she’ll pay taxes on—won’t increase more than 10 percent from 2021.) For 2022, Lippman’s homestead-limited value is $340,713, almost $150,000 less than the amount the panel settled on as her market value. 

So why has she bothered protesting? “Just that sense of not wanting it to be a crazy number that’s three times out of line with the rest of the city,” Lippman says. Plus, she owns a rental property—the house next door to hers—and its appraised value has more than doubled from 2021 to 2022. She figures the taxes on it could now double too. And if they do, her net profit for the year would be a measly $425 if she doesn’t hike the rent. With no homestead exemption on her rental property—you get only one homestead benefit—she and her renters are fully subject to Austin’s sizzling (for now) housing market. Maybe, she reasons, tugging down the appraisal for her homestead will have the knock-on effect of bringing down her taxes on the rental house, and thus the rent for the “very nice people” next door. 

Travis Central Appraisal District, Austin

June 17 | Panel #17
2022 appraised value: $9,643,352
Homeowner’s opinion of value: $7,650,000

Lawrence and Cher Pope are leaving nothing to chance. To their hearing, the well-dressed couple—owners of a 11,749-square-foot, five-bedroom, nine-bath Tuscan-inspired mansion on Lake Travis—has brought several thick binders of evidence, including two independent appraisals, to prove that their home is overvalued. Lawrence, an executive at Halliburton, does the talking. He is articulate, composed, and well prepared—and, in the end, utterly unconvincing.

What’s not in dispute is that the couple bought the property, a second home, for $7.65 million in February 2021. But the appraisal district has pegged the 2022 market value at about $9.64 million. Lawrence argues that it’s in fact still worth just $7.65 million—that it hasn’t appreciated at all between February 2021 and January 2022 despite soaring home values across Travis County. 

The problem, according to Lawrence, is that the appraisers had trouble finding sales-price data for homes as large and expensive as his. The comps, he argues, “are just not comparable in terms of neither value nor square footage. I mean, I think the square footage is like half our house and also the prices are in the $2 million [range].” 

But as part of his rebuttal, the representative from the appraisal district counters that sales data indicates that the market in the area was increasing 3 percent per month. Just based on that, the Popes’ home was probably worth $10.4 million—far more than the appraised value. 

The executive balks, politely, at the notion that prices for “high-end houses” have risen at the same rate as those in the “broad-based housing market,” arguing: “The people that I’m buying this house from are sophisticated enough to know how much this housing market is moving. They knew what they could get on this house, so that was baked into the price when we bought it.” The only other comparable home on the north shore of Lake Travis had recently been reduced in price, he adds. “I just think there seems to be a lot of subjectivity in this process.”

But the panel chair tells the Popes that the appraisers are bound by Texas law to treat all properties the same; they must factor in the unprecedented surge in prices in the last year in Austin. “They are certainly not out to screw you,” the panel chair says. The panel votes 3–0 to keep the executive’s market value at $9.64 million. 

Collin Central Appraisal District, McKinney

July 1 | Panel #7
2022 appraised value: $1,223,412
Homeowner’s opinion of value: $750,000

Mr. and Mrs. Lawless, of Crooked Stick Drive in Prosper, have built their whole case on the notion that their 5,072-square-foot home is in need of extensive repairs, and they have the photos to prove it. Here’s water damage from leaky copper pipes. Here are stained carpets. Here are windows that need to be replaced to the tune of $100,000. And here’s a Nerf football that has been crammed into a hole in the masonry as a temporary plug. 

But there’s a problem, the panel notes: many of the photos are identical to the ones the couple had submitted three years ago. And when the Lawlesses are questioned by the appraisal district representative about some of the damages, they admit that some of them have been repaired. The rep asks that the panel consider tabling the hearing until an appraiser can visit the site and see for themselves. 

“I don’t know why you would represent something to us that wasn’t true,” the panel chair says to the Lawlesses. “That concerns me a little bit.” Still, the panel decides to press ahead, voting 3–0 to slightly lower the market value to $1,190,000. It pays to be Lawless—just not much.

Collin Central Appraisal District, McKinney

July 1 | Panel #7
2022 appraised value: $907,961
Homeowner’s opinion of value: $520,000

I can’t see Aparna Viswanathan—I’ve logged into the hearing via Microsoft Teams, and there’s no video—but I can tell she’s beaming. “Thank you so much. You’ve made someone really happy,” she says.

Her panel has just voted to slash the market value by 38 percent on her 2,743-square-foot custom home from $907,961 to $563,925, with one panelist remarking that Viswanathan “seems to have grabbed the golden ring.” Viswanathan had put on perhaps the best researched, most cogent case I had sat in on. She and her husband had bought the home in Lexington Frisco, a master-planned community with luxury homes that start in the $500s, in 2021 for $515,000—a downgrade from their previous home in order to pay for their son to go to college. But they’d opted for the no-frills luxury model: unlike some of the comps the district relied on, as Viswanathan has pointed out, their house had no hardwood floors, no Jacuzzi-style tub, no waterfall feature in the kitchen, and was “99 cent tile.” 

The real clincher, though, is that while the contract with the builder was inked in 2020, the Viswanathans didn’t close till August 2021, and therefore had only a few months’ worth of appreciation before the January 1, 2022, appraisal date. 

More than any other protesters I encountered, the Viswanathans should see real savings on their tax bill. Before the protest, their estimated property tax bill was $11,506. All else being equal this year, their protest would bring their taxes down to $7,134. That should be enough savings to afford a textbook or two. 

Travis Central Appraisal District, Austin

July 6 | Panel #6
2022 appraised value: $1,109,893
Homeowner’s opinion of value: $750,000

English is not Luz Maria Vasquez’s first language, so she’s brought her daughter, Cecilia, along to translate. Her 79-year-old mother is “freaked out” over her “mind-boggling” appraised value, Cecilia says. The district has estimated that the 1,249-square-foot home is worth $1.1 million. How is that even possible?

Luz Vasquez, originally from Mexico, moved to Holly Street in the 1970s, back when the East Austin neighborhood just north of Town Lake (now Lady Bird Lake) was still a Mexican American barrio in the shadow of a loud, polluting power plant, and not the hyper-gentrifying pocket of affluence that it has largely become. Until 2006, when a city program rebuilt her home, Vasquez’s house lacked adequate plumbing or reliable electricity. Today, her modest home is a stone’s throw from a tinkering school and a posh cafe called Launderette, located in what used to be a neighborhood washateria. 

All over the neighborhood, homes like Vasquez’s are being razed and replaced with modern farmhouses and condo regimes. Along with the change comes higher taxes. Many longtime residents have fled the Holly area for outlying parts of Austin or Williamson County. Her mother, Cecilia says, wants to stay. She sees the home’s value not so much as a potential payday but as an obstacle to her late-life plans. But Luz is worried about affording her property tax bill on a fixed income. 

As the proceeding unfolds, it dawns on the panel that the Vasquezes may not understand that Luz will be paying taxes on an amount far below the market value. Because of the homestead cap and her over-65 exemption, the district rep explains, Luz’s net appraised value is $558,952, not $1.1 million. “It can be confusing, I can understand that,” he says. Cecilia explains the revelation to her mother, then translates her response: “She is saying, ‘Then I don’t have to worry that much.’” 

She may have to worry a little, though. Even with the powerful buffering effects of the senior citizen and homestead exemptions, Luz’s tax bill is $120 more per month now than it was in 2016. That’s about the price of a bottle of champagne at Launderette, but for Luz it could be the difference between staying in her home or selling. 

Travis Central Appraisal District, Austin

June 17 | Panel #17
2022 appraised value: $891,728
Homeowner’s opinion of value: $600,000

Jay Coggan, a lawyer from California, is doing his best to convince the panel that he and his wife overpaid for their 2,598-square-foot home on a cul-de-sac in southwest Austin. Eager to move to Texas, they purchased the house in May 2021 for $800,000 in what the man called “a bidding war at pretty much what was the peak negotiating period in Austin.” The couple waived the inspection and pressed forward even when the bank’s appraisal came back at “way less” than $800,000, Coggan says.

In January 2021, the district had pegged the home’s value at $532,700; a year later, the appraisers estimated its value at $891,728—an amount the lawyer says is “not only absurd but almost unconscionable.” So, the panel chair askes, how much does he think his house is worth? “I personally think [it] was probably only worth six hundred thousand when I bought it,” Coggan says. “Maybe six seventy-two.”

It is not a convincing argument. The appraisal district’s representative presents evidence of rapidly increasing home prices in the Coggans’s desirable part of the city. On a 2–1 vote, the panel sustains the district’s estimate. 

“Welcome to Texas,” one of the panelists says, with perhaps a hint of irony. The former Californian takes it in stride. “I love it here,” he says. “Wish I had moved here years ago.”

Source link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *