Travis County Tax Protest – My Formal Hearing Results

by Steve Crossland, REALTOR in Austin TX on November 12, 2009 · 15 comments

Like many other Travis County residents, I found myself staring at property tax appraisal bills this year that were over-valued. In September, the Travis County Appraisal District (TCAD) unilaterally offered a lower adjusted value for one of the properties before I even attended the informal hearing. I signed off on that and mailed it back in, which dropped the home from $196K to $172K.

But that left a couple of 1+ acre lots I own, which I purchased at the peak of the Austin real estate market in 2007, valued by Travis County at 63% more than I paid. At the informal hearing, I explained to the tcad representative that the lots in the subject neighborhood are not homogeneous, and therefore the comparable sales being used were apples and oranges. I also questioned the “size and shape” adjustment they were applying, which added 35% to their “base” lot value for the neighborhood.

When the developer rolled out this neighborhood in 2006, the lots were all sold to custom builders. Some are high up on a ridge with mature oak trees and distant views. Others are down in old meadowland, no oak trees, and with waterway and floodplain issues. The two that I purchased were the two cheapest lots sold in the subdivision. The runts of the litter. The leftover lots that none of the custom builders wanted because they were in the floodplain and only had 70ft and 90ft widths at the front while the rest of the neighborhood has 100ft to 150ft lot widths. I won’t go into the strategy or thinking that lead me to purchase these “problem” lots, but the fact is, they were the cheapest sold for a reason and now I was sitting in front of a TCAD bonehead who was telling me they were “better than average” for the neighborhood and therefore priced at a premium. He offered a token adjustment, which I declined.

So a month later, two days ago, I attended the Formal Hearing. This is a panel of three incompetent older people. More on them in a minute. How they are selected I know not. And a TCAD representative who was as equally unskilled in understanding facts and data as the informal hearing representative. Bottom line, I prevailed, but not to the degree I had hoped. Here’s how it went.

First, as the property owner, I stated my case and laid out my facts and assertions, backed with data and information. Next TCAD rep states the case for Travis County. Then I had a rebuttal. Then the panel made a decision.

What I found most remarkable was the lack of any critical thinking skills on the part of the panel. It’s as if the case I presented wasn’t even heard. They asked not one intelligent question of either me or the TCAD rep. The body language of one panel member in particular was very unprofessional. She squirmed in her chair, and actually rolled her eyes during my presentation of facts. I paused and asked if she had a question – she said “not at this time”, and I continued with my presentation.

The other two looked like they were just doing their best to stay awake. My appointment was for 4PM. They were running behind. I didn’t get in until after 5PM and I walked out of the building at 6:10. I’m sure they’d had a long day, but if they can’t stay focused and alert and do their job, they should quit.

Next the TCAD rep stated his case, which was the same set of reasoning as the informal hearing guy. They were basing everything off of four lot sales in the neighborhood. Of the four sales, three had been overpriced by TCAD by 25%, 10% and 6% over the final actual sold price. One of the four had been undervalued by 12%. The largest variance between TCAD and an actual sold price was $42,500. I pointed out that this very data proved my point, that the lots in the neighborhood vary wildly in actual market value and that TCAD has trouble getting the value correct, as was irrefutably plain to see in TCAD’s own data, where three of their four own comps were over-appraised.

The lot TCAD had undervalued was one of the trophy lots in the neighborhood, sitting on a high ridge with a great building site and a spectacular stand of tall, mature oak trees and no surface water issues. It sold for the same amount as the appraised value on mine. The others were all fairly standard lots in the neighborhood, but all valued by TCAD lower than my appraised values but still higher that their actual sold values. I think a 5th grader could figure this out.

I can’t say I was feeling confident, but in the face if this data, I nearly fell out of my chair when the TCAD rep concluded his presentation by saying that he felt the values on my lot were correct and should remain unchanged.

Then he and I got into it.

I asked pointed questions, such as “describe to me exactly how you conclude that my lots earn a ‘size and shape’ premium. What specifically is it about the skinnier frontages, the creek that bisects the middle of both lots, the flood plain, the lack of oak trees and views, the existence of a drainage spillway on the west side of one and a flag lot driveway on the east side of the other that you think adds value, and how do you square that with the fact that these two lots were rejected by all builders in the initial release and both sold for less than any lots in the neighborhood, including your own comparable sales?”

Like a broken record, he just kept repeating the same irrelevant nonsense until finally he conceded that perhaps the “size and shape” adjustment could be removed and the lots valued at the “base price” for the neighborhood, but not lower.

At the conclusion of the presentation, the panelists are suppose to ask questions and make a determination. Two did not ask any questions. The other one asked stupid questions that were bizarre. Then one made a motion that they accept the TCAD adjusted recommendation, someone seconded, they voted and it was done. I thanked them and left.

The panelists at TCAD appear to all be older people, perhaps part timers or volunteers. None seemed to me like the deep thinkers or smart people you’d want as a “phone a friend” lifeline for Who Wants to be a Millionaire. My panel of three did not actively challenge the TCAD representative’s assertions, or even ask, “what about that? What about these points Mr. Crossland is making? What is your response? Why is this particular shape of lot deserving of a 35% value increase? Do you have market data that validates your assertion that cone-shaped lots in a flood plain with no trees sell for more than square lots with big trees and no floodplain?”

None of them asked the TCAD rep, “what about the fact that three of the four comparable sales you are using are valued less than Mr. Crossland’s appraised values, and that 2 of the 4 are valued below the base value for the neighborhood even though they don’t have any of the negative attributes existing on Mr. Crossland’s lots?”

These are the  kind of questions one would expect from sharp people digging for the truth. Yet these panelist could not come up with even one good question. Instead they sat there like dead wood, silent dummies without a clue.

Nevertheless, I achieved a total $75K reduction, which translates to a reduction of about $1,400 in property taxes that I’ll have to pay next month, but that still leaves me short about $35K in reductions, and my lots are still over-valued.

Next, if I want to push it, I can either sue in Travis County District Court (which would be too costly) or request Binding Arbitration.

Binding Arbitration is explained well at this website, which explains:

The property owner files a request for binding arbitration within 45 days after receiving official notice of the appraisal review board’s decision. The property owner completes a form, remits payment of a $500 deposit and lists a requested value. The appraisal district forwards the request for binding arbitration to the Comptroller. The Texas Comptroller facilitates selection of an arbitrator who holds a binding arbitration hearing.

There is an exchange of evidence prior to the hearing. Both the property owner and the appraisal district have an option to present evidence at the hearing. The arbitrator will make a final decision regarding the assessed value for the year.

If the value is less than the value set by the appraisal review board, the assessed value for property taxes will be reduced. The assessed value for property taxes will not be increased as a result of the binding arbitration hearing. The Comptroller retains $50 for facilitating the binding arbitration process.

If the arbitrator selects a number closer to the property owner’s value, the appraisal district pays for the cost of the binding arbitration and the property owner receives a refund of $450 from the deposit. If the value selected by the arbitrator is closer to the appraisal district’s value, the property owner does not receive a refund of any portion of the deposit. If the value is less than the value set by the appraisal review board, the value is reduced.

Since the best case scenario of winning at arbitration would be another $638 reduction in my property tax bill this year, I have to decide if that’s the highest and best use of my time even if I knew I’d win. I don’t know if the arbitrator is going to be a person of intelligence or just another dummy. I assume he or she would be of higher caliber than the drones I encountered at TCAD, perhaps even an attorney or trained mediation expert, but one can hardly count on it.

As with everything in life, we pick our battles. But when our County is incapable of listening to reason and interpreting facts and data, and that incompetence leads to property owners being over-billed for property taxes, something needs to be fixed.

As I mentioned in my last blog article about this topic, I have contacted Senator Kirk Watson’s office and suggested a law be passed that would forbid a Texas County from increasing the appraised value on a property that has been over-valued by 10% or more for three years. In other words, now that I’ve had to spend time going down to fight for a reduction in value of 35%, I don’t want to be doing it again next year, and the year after, as some property owners are forced to do after the price gets jacked back up again the following year, for the same reasons that were argued against the year before. It’s ridiculous.  Instead, TCAD should now have to wait three more year before reassessing my property values. I think that’s fair.

Remember, if you have a tax protest coming up and need market data to take with you to justify your price, Sylvia and I offer Free CMAs for tax protesters. Anything we can do to help others “fight the Man”, we’re happy to do.

{ 15 comments… read them below or add one }

1 Jim November 12, 2009 at 2:57 pm

The TCAD people are the lowest of the low, IMHO. They’re job is to intimidate you, make you feel like a rich bastard for owning property and ridicule your every argument.

When I went to argue my appraisal two years ago, the unpleasant old lady there accused me, at one point, of grasping for any unreasonable comp I could find, just to prove my point.

2 Peter November 12, 2009 at 3:56 pm

Given the cost and error-proneness of estimating *every property value* in Travis county *every year*, I have to wonder why we still have this system in the first place. Where are the big reforms to the system? A uniform yearly increase? A flat sales tax on property purchase?

3 Bill November 13, 2009 at 11:08 pm

Interesting post. I’ve informally protested my property values 4 times in 5 years.

This past year, I noticed a trend in the informal hearings — the appraiser is only willing to adjust the prices on the structure, not the land value. This happened last year when we bought our current home, and this year (when they jacked our property value up by 23%). So we have an over inflated land value and unreasonably small value of the structure. What is ridiculous about this is that my neighbors who both have larger lots — on twice as big — have EXACTLY the same land value.

I suspect that the TravisCAD appraisal algorithm has some strange land value algorithm that makes the appraisers very reluctant to change land values — if they did, it might trigger some dramatic changes…..

4 Steve Crossland November 14, 2009 at 3:30 pm

Hi Bill,

I think you’re right. They have hidden pressures or something going on internally that causes a predisposition toward bias that don’t make sense to a casual observer.

Maybe I’ll have my Mom infiltrate the system. She’s 68, retired, and knows nothing about property values or how they are determined. She’d be perfect as a Formal Hearing panel member. I’m going to have her check into part time opportunities at TCAD.

Maybe if us Austin baby boomers who own real estate can stack the TCAD hearing panels with our aging parents, we might start getting better results!

Steve

5 roots planted here November 16, 2009 at 6:25 am

I protested formally this year. I agree, based on my experience, that the land value seemed sacred.

During my informal hearing I “randomly” was seen by a guy in a corner office. He suggested my home be worth 3.5% of the total property value and the lot be worth 96.5%. I said %$#$#*!!!! and asked him to lower the land value and make the the ratio between land and dwelling at least reasonable. He said ” Listen, I have values to protect here.” I walked and prepared for my formal hearing.

Get this – During the formal hearing one person suggested the home value be NEGATIVE! to get the value of my property in line with its true value. One of the folks had the common sense to read the proposal I had provided and eventually dropped the land value. I won out in the long run but I felt very lucky..lol..

Steve – dig the blog, thanks

6 M1EK November 16, 2009 at 9:46 am

The state was coming down hard on county tax appraisers for supposed undervaluing of properties – you might be seeing some of this percolating in your cases.

7 David November 17, 2009 at 11:52 pm

Steve- Thanks for the topic and details of your experience. Owning various SF residential properties since ’84, I have won 7 out of 8 in the informal hearings. I have never been to the formal–but I bet it is much harder to win a protest over the value of land only.

I attribute my past success to the following: I learned that the informal reps don’t want to be there arguing with you. They want to save face, but their actions are limited by illogical TCAD methodology– that rarely gets at the truth. Your goal is to make them feel that it is not their fault the value is too high. Show up with a binder of pics, engineering reports, and other contractor estimates to “fix” the ” issues” inside your property–it works everytime. I have had $20k to $50k+ reductions.

I show the poor TCAD rep a ton of true respect because how could the TCAD field rep know my property was in such sad shape–they never went inside! It is amazing how bad you can make your house look, and the reps take all the pics and file them.

A Broker friend of mine only protests when there is a $50k discrepancy–and he never attends the informal. He goes to the formal knowing he’ll likely have the same experience you did. He sues, but he tells me that TCAD never takes it that far. Before the court date some reasonable rep finally calls and they work it out. He has won three times this way and never been to court.

Kirk Watson should build his case with his fellow politicians and get the three year rule passed! I doubt this will happen though until the legislature gets rid of the Robin Hood school tax plan–and they have been unwiliing/unable to fix that one either. At least Austin goes up in value.

8 Steve Crossland November 18, 2009 at 1:13 pm

Hi David,

Yes, you’re right, there is a certain amount of tact that must be used in the informal hearings. Sadly, the “feelings” of the rerpesentative come into play. I use to take in 30 to 40 rental properties at a time years ago for my property management clients. I learned after the first year that I had to include a bunch that I really didn’t need a reduction on, just so I’d have something to give up, because they would not let me go 30 for 30 even when the evidence clearly indicated the correct values.

They stopped letting property managers take big batches of properties into the informal hearing years ago. Now we’d have to go strait to the formal, so I think most owners are better off trying the informal route themselves first..

As far as suing in District Court, I’m curious to find out what is actually involved in filing the suit then waiting for a settlement offer.

If there was a standard do-it-yourself boilerplate Property Tax Lawsuit form, similar to how easy it is to file an eviction, I think more property owners might try that.

Steve

9 Eugene December 4, 2009 at 7:32 am

Steve,

I had similar bad experience as you do. But I’m not to give up yet. I have a few questions maybe you can help me before decide what moves to take:
1. I looked up the ARB member list http://www.window.state.tx.us/taxinfo/proptax/apprdir06/227.pdf, but only saw two of the penalists names on it. In other words, the third penalist (the leading one) is not a ARB member. Is this hearing valid?
2. You mentioned “come and see me” number for the chief appraisor. do you still remember that number?
3. Other than going to arbitration, is suing in a local court also an option?
4. Last but not least, I also want to write to Kirk. Could you give me his mailing address?

Thanks

10 Steve Crossland December 12, 2009 at 11:57 am

Hi Eugene,

1) Can’t ansswer. Don’t know.
2) It wasn’t an actual number, but a comment used to describe the theory of TCAD overpricing a property, such that the property owner would want to come in and protest, therby letting TCAD obtain information about the correctness, or lack thereof, of the amount.
3) Yes, you can sue in district court. You’d need to consult an attorney or research the procedure if you want to initiate it yourself.
4) http://www.KirkWatson.com

Good luck,

Steve

11 Natalie July 14, 2010 at 8:15 pm

We spent 5 years protesting TCAD’s inequal over-valuation of our primary residence and finally were told 2 years ago at in informal hearing that our file was red flagged because we kept protesting. Each year they tried to increase the value at over double the percentage rate increase of all the other homes in our neighborhood. We found that we were being ‘penalized’ because we had built an addition legally so it was on their records. All the ‘under the table’ additions in the neighborhood are valued at an unimproved value since the additions are not on TCAD’s records. We get hosed for being honest while the cheaters pay lower taxes!
This year, our appraised value decreased but due to hitting the 10% increase caps in prior years, our taxable value still increased!
A newly built (2008) home in our established neighborhood DROPPED off the TCAD records this year. I can’t locate it by owner, address, or by property number!

12 Michael September 1, 2011 at 11:03 am

I just had a call from the arbitrator on my case. He believes the third party appraisal that I had ordered is more correct than the TCAD appraisal, but would like to visit me at my home to see the house. On of issues he brought up is that our house is listed as a 6 and that seems to him too high.

I liked him and I agree, but I am nervous about showing him the house and it looking nice to him. Does anyone have any thoughts?

13 Steve Crossland, REALTOR in Austin TX September 1, 2011 at 12:02 pm

Michael,

I’ve not heard of them coming to houses, but if you have nothing to hide and you can get the value adjusted to the right amount, I can’t think of a reason not to.

Steve

14 kathryn mueller September 14, 2011 at 1:20 pm

From the start this year my goal (as I stated at the informal) is to fix the class. By mistake, it was ‘promoted’ from WA3+ to WA4 in 2002 without any visit from an appraiser. The building exterior has been wood all along. I expected values to level off after 9/11, they took off on that property! Is it because of our electrical permit late summer 2001 to reconnect after storm damage?
TCAD informal folks told me that I must attend formal before submitting to arbitration. My formal is Sept 20, 2011 at 10am.

15 Sara December 12, 2012 at 9:18 pm

I protested my tax assessment/appraisal on the grounds that I purchased in Jan. so my purchase price should be legal market value. House was on market 90 days and uninhabitable unless hobo. Wilco tax assessor said Deutsch Bank sold it to me under market value as they were under duress. 3rd largest bank in universe. Formal agreed except one member who agreed with me. 3 to 1. 3 fat old guys, 1 female. My guess, 3 Aggies,1 UT. I went to the Harris County clerk’s site and copied a petition that fit my circumstances with minor alterations and filed it in district court pro se. $320. Went back and forth with some Austin attorneys sending papers, etc (discovery) and settled out of court. I settled for 20k over sales price (and refund of court cost) because I thought my property would just be raised a percentage along with all the others in the neighborhood in the following year. Didn’t want a red flag. Didn’t want to go to court. Was wrong on the red flag. Had to go back and protest the next year. There is some kind of law about not being raised too much the year after a sucessful protest but it is vague and Wilco interprets the law the way they want, them good ol’ boys do.

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