Thursday, May 30, 2024 May 30, 2024
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Commercial Real Estate

How to Argue Down the Value of Your Home

When your house is worth a few million, it pays to tell the appraisal district just how shabby the joint really is.
Dallas Central Appraisal District Property Taxes
Asaf Hanuka
As everyone knows, the whole property tax protest exercise with the Dallas Central Appraisal District is a rigged system, thank God. Through repeated protests, I’ve successfully weaseled my home’s property value to about a third of what it would fetch if I listed it with Sotheby’s. Maybe less. It’s like the DCAD thinks I live in a canvas tent on a weed-choked vacant lot and can’t afford a rain fly. Obviously, I’m not proud of this. But it’s a respectable discount. I can at least hold my head high around the guys at the country club.

So imagine my surprise when I opened the letter from DCAD this year notifying me that my reappraised property value had gone up 69 percent! What the? Clearly, someone in my social circle had been reading my Twitter posts about leaving the Republican Party over Trump and figured that I didn’t deserve to cheat on my taxes if I was going to forsake the standard bearer.

Well, fine. I’ve talked down my fair share of DCAD employees with their computers and comps, and this would be no different. In fact, it had been more than three years since I had needed to file a protest, so I was actually looking forward to the challenge.

According to DCAD rules, there are three common bases under which you can protest the value of your property. First, DCAD has made some kind of mistake about the attributes of your property, like claiming you have a swimming pool when you don’t, or claiming that you have six full en suite baths and three powder baths when in fact you have only two powders, and the half-bath in the pool house doesn’t count.

The second is that the valuation is too high. Well, duh. Who conceivably is going to allege that with a straight face? Of course it’s not too high. That’s not the point. The point is, it’s not low enough—especially compared to the ridiculous valuation that your neighbor somehow foisted on DCAD.

And that brings us to the third basis for filing a protest: your property is valued unequally compared to like properties in your neighborhood. In other words, we’re not arguing that our property is not fairly valued (see above). We’re arguing that it’s not undervalued nearly enough compared to our neighbors. Modern Greeks can appreciate this one. It’s not that we’re not going to cheat on our taxes, but we’re damn sure not going to cheat on our taxes less than our neighbors are cheating on theirs. It’s a miracle that this dodge is enshrined in our property tax code.

We’re not arguing that our property is not fairly valued. We’re arguing that it’s not undervalued nearly enough compared to our neighbors.

Finding the appraisals on either side of my house was a bit of a challenge, since our neighbors are smart enough to have their houses listed under trusts and family limited partnerships, but DCAD also lets you search by address, and I can Google Map with the best of them. Their pools, bedrooms, house ages, fireplaces, and acreages lined up almost to a T, but the value per square foot of our neighbor to the north was listed at $88.42, compared to mine at $229.50. What the heck? Have I been fooled this whole time, and their house is actually a movie set with two-by-fours propping up cardboard walls? Still, with the neighbors to the south having their per square footage appraised at $151.06, I had a strong claim that my house was unfairly valued compared to theirs.

Unfortunately, both of theirs were listed as “Fair” condition, meaning that the comparison was not perfect. I needed to find a “Good.” Annnndd bull’s-eye. The neighbor two houses down is a Good. Quick calculation, value divided by square footage, carry the two, and $472 per square foot! Couldn’t close that window fast enough. (Note to self: be nicer to that guy next time you see him.) Three down, same problem. Jesus, my house is puny and apparently cheaply constructed. At least I have a new topic to talk about in therapy besides my mother. Here we go: the house on the other side of my neighbor to the north. Excellent quality, but only $194.30 per square foot. Here’s my ammo.

There are two ways to protest your property value. One is a formal hearing in front of a three-person Appraisal Review Board. The other is an informal one-on-one in the cubicle of some DCAD flunky. Under no circumstances do you want go in front of the panel. I made that mistake one year and will never do it again. You run the risk that the panel could adjudicate the value of your property higher than appraised, forcing you into a court case. And the panel is clearly there to protect the cities DCAD serves—kind of like the U.S. Senate, but not as obviously corrupt.

No, your better bet is with the flunky. Challenge: how do you sweet talk someone who sends his or her child to public schools into lowering your property value by an amount sufficient to produce tax savings equal to his or her annual salary, thereby robbing his or her child of textbooks and music teachers? Answer: you don’t. Shoot for half that. Sixty percent, max.

On the day I went in, I put on some pressed chinos, a short-sleeved collared shirt, and clunky shoes with thick soles that I’ve had in the back of my closet since college. You can’t sail in there sporting a bespoke suit, obviously, but you can’t look homeless either. You have to pass as an everyday person, whatever that means.

I waited until the Wednesday after Memorial Day (figuring Tuesday after a holiday weekend would feel like a doubly-bad Monday to office workers) and arrived about half an hour after they opened. Informal hearings are on a first-come, first-served basis, but you want them to have a chance to get their coffee and check Facebook before you start whining about your property value.

My name was called about 15 minutes after I sat down by a clean-cut young man wearing a sport coat and tie. I had gauged it perfectly. I introduced myself and asked about his holiday weekend. I continued the patter as we walked to his cubicle, and by the time we sat at his desk, I felt that I had ingratiated myself completely. If I were George Bush, I would say that I had looked into his soul.

He pulled up my property on DCAD’s website and asked the basis of my protest. I noted that the per-square-foot appraised value of my house exceeded one next-door neighbor’s house by 160 percent and the other’s by 52 percent, and, obviously, my property was not being valued equally. He pulled up the two properties in question and immediately keyed in on the fact that theirs were labeled Fair while mine was designated Good. (Clearly, not his first rodeo.) Still, I pointed out, that’s a pretty substantial jump. It was, he conceded, but there was a category between Fair and Good: Average. (Who knew?) Having already anticipated this argument, though, I laid down my ace: the property two doors down was listed as Excellent but was valued at only $194.30 per square foot, and how many categories were there between Good and Excellent, by the way?

“None,” he said cheerfully, and added, “Let’s have a look.” Again with the computer, humming while he typed in the address. “You’re right,” he said, “but look at their square footage.” He turned his screen so I could see it. “Their house is a bit more than twice the size of yours.” I gotta tell you, these jabs at my house size were getting old.

“Lucky him,” I said, “but how does that have anything to do with it?”

“Well, the bigger the house, the more open space, so amenities such as stairs and fireplaces are spread out over a larger denominator.” The kid was smart. It was the exact argument I would have made if I were sitting in his chair. Plus, he was being unfailingly polite, which made it worse.

“Come on,” I said, feeling everything slipping away. “Isn’t there something we can do? Bump me down to Average?”

“Maybe. Did you bring any pictures of your interiors? Anything showing, say, cracked walls or linoleum flooring?” He paused to let that sink in. We smiled at each other, both of us knowing. “Granite countertops would count against you, though,” he said, twisting the knife. I contemplated coming back with pictures we’d taken before our renovations, or pictures pulled from the internet of the inside of a mobile home. But a rigged system was one thing; outright fraud was a bridge too far, even for me.

He was helpful, though. We tried a few more things, like looking up sales comps that real estate agents had reported in trying to talk down the values of their own homes, but I knew the game was over. The actual sales prices were magnitudes higher. He asked if I wanted to go forward with the formal appeal before the Review Board. No, I said. He had shown me enough to know that I wouldn’t do any better against them and risked an upward revaluation.

We chatted for a few more minutes. Despite walking away with nothing, I had to admire his competence and professionalism—and felt grudgingly lucky that the Appraisal District has public servants that were this good. We stood and shook hands, and he thanked me for being respectful. I joked that that should be worth at least a hundred K off my appraisal.

“No, sorry,” he said. “But come back and see me next year.”

You can bet on it.