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HCAD 2015 Appraisals


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Here we go again.  It looks like this year, HCAD is putting a substantial bump on improvement value while only modestly bumping land.  I will just be trying to stop the tide as all the comp sales around me have been well over HCADs assessment of my 2015 market value.  My only shot will be to bring in estimates for my beat up foundation and AC unit.  But I need to get them to come down over 90k to touch the appraised value.  I am looking at hitting the cap for at least the next three years. 

 

Of course, I will be happy with the equity when I go to do an addition in a few years.  But, in the meantime, can we get some new playground equipment at Love park with all the piles of taxes we are paying?

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 It looks like this year, HCAD is putting a substantial bump on improvement value while only modestly bumping land.

 

Not sure what part of the Heights you live in, but my land value went up 19% as did all of the others on my block and blocks south, north, east and west of me.  We are now at $50/sqft, up from $42 last year and $37 in 2013.

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Interesting...for at least the fifth year in a row, no increases on our block (land or improvements).  Our land price is holding steady at $3/sf.  

 

Earlier in the 2000's we were capped at the 10% increase for several years in a row (3 or 4?)

 

Strange that development keeps moving closer and closer, but appraisals not reflecting it.  I'm not complaining, mind you.  But it does seem curious.

 

I think right around the time our land gets to $50/sf from its current $3/sf will be time for me to cash out and retire.   :)

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Of course, I will be happy with the equity when I go to do an addition in a few years.  But, in the meantime, can we get some new playground equipment at Love park with all the piles of taxes we are paying?

 

Are you referring to a home equity loan or something else less risky I'm not thinking of? 

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Not sure what part of the Heights you live in, but my land value went up 19% as did all of the others on my block and blocks south, north, east and west of me.  We are now at $50/sqft, up from $42 last year and $37 in 2013.

 

Land is at $50.  Last year, jump in land price was way bigger than improvements.  This year, jump in improvements is way bigger than land.  But, everything is jumping.  At least when improvement value goes up, you have a fighting chance in a protest.  HCAD will not budge on land.

 

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My rental property (admittedly a tear down structure on a 6600sqft lot in the west historic district), with zero improvements made in the last 6 years magically had the improvement value jump $3600, while the land jumped $33,000...land is now $50/ft....Tough to protest the land, but I think I could argue the house has negative value, as nobody would ever keep it....its a non-historic home that would easily get approval to demolish.

 

We have had the property since 2009 and the appreciation alone is 221% according to HCAD....however, looking at compareable sales we are actually approaching around 275%

 

Sucks to be a renter in the Heights....we have only ever adjusted the rent to cover the new taxes. 

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This is not a Heights only issue

 

If you look at the map linked on HCAD's main page (http://gis.hcad.org/2014/Percent_Change.aspx) they are showing some pretty massive average changes across the board

 

The one that sticks out to me is River Oaks (24% increase from $1.664 million to $2.087 million).  Spring Branch and Oak Forest had the highest increases at 28% and 27%, respectively

 

Many areas saw 20%+.  West U/Rice/Bellaire areas were "only" up 18% (lucky us) on average

 

The maps they have available suggest all of the assessments are done, so I take it they are just staging in those of us still "Pending" in order to prevent a deluge of protests.  They are going to have a busy year

 

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I think most of the homes that are still "pending" are pending for a reason...Either the house was remodeled, is a new home, had a pool, or some other upgrade installed, etc.  Basically if you pulled a permit this year to do anything at all, they are going to look at it much closer. 

 

My house is pending, but it's b/c it was not finished on Jan 1...it was only about 60% complete.

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Old Braeswood, Southgate, and West U all still show up as pending for whatever reason.  I think you are right for areas that have had the appraisals released, but for whatever reason certain areas/neighborhoods aren't yet out there

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I just got mine and it's a full $60K more than the best of two real estate appraisals I had done ten months ago, the other would make it $80K more. Of course, that value is supposed to be the Jan 1st value, but that would be even worse, meaning my house shot up astronomically in just 7 months if hcad is to be believed. I can't help but think they are running the prices up while they can for a possible if not inevitable decline next year if oil prices stay low. Admittedly, this is anecdotal but I know from at least two friends who live in other parts of the city they have HCAD market values exceeding what the real market is doing. I won't claim to be a professional, but my perception watching har for Heights homes in the general category of mine is that stuff isn't moving this spring, certainly not like the last few years, but in a lot of cases not even the 4-6 weeks it should in a normal market. The only odd thing I’ve seen so far is few sellers seem willing to come off their original price.

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I feel like I'm going to need a good attorney on my side.  I bought my house in August last year.  My account is still pending, but they increased my sq footage by 580 sq ft, and the house is the same sq footage as the day it was built in 1963.  Anybody have any ideas for good representation?  That's just an insane money grab in a time where appraised values are already going through the roof.

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According to HCAD FAQ..appraised value is lesser of

  • the market value (what the property would sell for on the open market); or
  • the preceding year's appraised value
  • + 10%
  • + the value of any improvements added since the last re-appraisal.

So.. if the appraisal value all of a sudden catches up to and equals market value.. that means those two bullet points are equal (or the second bullet point is higher than market value)

So.. the "value of any improvements added since last...."      Is that essentially their fudge factor to get home sells a boost ? Do they actually mean "improvements" as in only remodel/addition.   How would they know that?

One does not need a permit for just an interior remodel.

 

In my case, I bought the house in november and I had to report a garage conversion that the previous owner/flipper did(which benefited us greatly in getting that SF taken out)...   

2014 my appraised value was 20k less than market value...

2015 they are both equal with a 30k jump in apprasied value and 10k in market.  (market value would have gone up 40k had I not reported the SF decrease)

 

So my question is.. Had they not known of that 'improvement' would that line item be zero and therefore the LESSER would only be the 10% capped increase ????  Because I reported that change.. did that clue them in and give them a blank check to add some value to that line item which in turn allowed them to go over the 10% cap..

OR.

Do they always come out when a home changes ownership and re-appraise?   Even-so...  I did not and would not have invited them in..  And from the outside, there's no major sign of improvement..   so how would they know of any improvements?

 

So again.. my real question..

the "value of any improvements added since the last re-appraisal...."      Is that essentially their fudge factor to give homes that change ownership a boost?

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Your homestead cap is the lower of 1) last year's market value or 2) The sum of last years appraised value + 10% of last years appraised value + the market value of all new improvements to the property.

 

In general the new improvements must be something that adds to the market value of the property but does not include repairs or ordinary maintenance.  So the value attributable to the property of adding a pool, or value attributable to renovating the property, or value attributable to adding an addition is not subject the cap, but is instead added in on top of last years market+10%.

 

In general the "last reappraisal" is always last year.

Edited by JJxvi
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Also, if you bought the house in November 2014, then the first time you will qualify for a residential homestead is January 1 2015 (it must be your principle residence on January 1 of the tax year you apply).  Your appraised value for 2015 will be equal to the market value in that case, because you did not have the exemption in 2014. (You will get the other benefits of the exemption in certain taxing jurisdictions on your tax bill though for 2015, just not the 10% appraisal cap).

 

To state it another way,  the new owner does not benefit from the old owner's homestead exemption.  In general, a new owner's appraised value will be equal to the total market value (which should be pretty close to what you actually paid) in the first full year that they own the property.  Then in the second full year they will be capped at 10% increases.

Edited by JJxvi
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Your homestead cap is the lower of 1) last year's market value or 2) The sum of last years market value + 10% of last years market value + the market value of all new improvements to the property.

 

In general the new improvements must be something that adds to the market value of the property but does not include repairs or ordinary maintenance.  So the value attributable to the property of adding a pool, or value attributable to renovating the property, or value attributable to adding an addition is not subject the cap, but is instead added in on top of last years market+10%.

 

In general the "last reappraisal" is always last year.

 

Right.

But how do they know if there is an improvement or what it entails?

Something exterior-wise that required a permit.. sure. Makes sense.

 

But for interior finishes remodeling..That reuiqres no permit. Nobody is going to willingly report that to HCAD.

Without details of know what was done inside, how could they begin to quantify an improvement value?

 

If they dont know of any improvements then

 1) last year's market value or 2) The sum of last years market value + 10% of last years market value +  ((( the market value of all new improvements to the property.  .... this part equals 0 )))

So it would only be vs last yr's apprasial value (not market) plus up to 10%

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Also, if you bought the house in November 2014, then the first time you will qualify for a residential homestead is January 1 2015 (it must be your principle residence on January 1 of the tax year you apply).  Your appraised value for 2015 will be equal to the market value in that case, because you did not have the exemption in 2014. (You will get the other benefits of the exemption in certain taxing jurisdictions on your tax bill though for 2015, just not the 10% appraisal cap)

 

The previous owner had the homestead exemption as well.. and I only had to pay taxes for less than a month and half of 2014.. no not worried bout 2014.

 

"Your appraised value for 2015 will be equal to the market value in that case"

 

Why? What ?

The appraised value is never just equal to market value.. and that difference has no bearing on whether you have the exemption.

You get the exemption on the appraised value.. doesnt matter if your market value is 100k more or 100k less.

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To state it another way,  the new owner does not benefit from the old owner's homestead exemption.  In general, a new owner's appraised value will be equal to the total market value (which should be pretty close to what you actually paid) in the first full year that they own the property.  Then in the second full year they will be capped at 10% increases.

 

Why is this?

Texas is a closed record state, right?

I didnt report my sale value.  And as my real estate agent and lawyer warned me..  when I turned over documents to HCAD to get the property in my name or fight a SF issue.. i was careful to always cross out any sale or loan values.

So why does a new owner's appraised value equal the market value ?

 

I don't see how homestead exemptions are any part of market vs apprasied value.. that's just muddying the water.

 

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The owner on January 1 is who pays the tax.  You only paid the tax for them as a contractual agreement with the previous to owner to clear the title.  You got the benefit of their homestead for that one month, but you will not get capped based on their value for 2015.

 

As an example.

 

Lets say a house appraised by HCAD had a market value of $200,000 and that the owner's capped value was $175,000 on January 1, 2014.  Automatically that owner owes tax based on $175,000 which will be due by the end of January 2015.

 

You buy the house for $500,000 in November 2014.  You agree to pay the old owners taxes (so that you as the new owner can make sure they will be paid so you don't lose your house to the lein) in exchange for them paying you 11 months prorated portion at closing.  You pay taxes based on $175,000 in January 2015.

 

On January 1 you become qualified for a homestead exemption for tax year 2015 and apply.  You are a new homeowner of this property and have never had a homestead exemption on it before.  Your appraised value and market value will probably be $500,000 and will be equal to each other for sure.  The cap only applies if YOU had a homestead on the property last year. You did not, the other guy did.

Edited by JJxvi
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As for them finding out the sales price, if your home was listed in HAR/MLS the CAD will eventually know it.  The listing agent will have popped in the sales price when they closed their listing and it will be searchable to someone who has access to that data.

Edited by JJxvi
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I understand what you are saying about the cap now.... I thought it applied to all real property, not just those with homestead exemption.. but I see you are correct sir on that one.

 

However..

 

Market value is based though on the "Market" value.. of the market or the neighborhood.. not the individual property.

If all the houses in the neighborhood are going for 200k.. and I overpay at 500k.. I won't be paying taxes on that 500k.  IT means I was stupid to buy that house for that price...

Will my 500k jack with the market value of the rest of the neighborhood and artificially inflate it.. perhaps.

Paying too high for a property or getting a great steal doesnt have Direct bearing on what HCAD deams the market value of your home is.

And yes.. the MLS sale values are available..  but the county uses those to come up with valuation at the market level.. not individual.

 

 

But I guess i have answered by original question....  Based on all sales in my neighborhood..  my market value has gone up, like all my neighbors.. roughly equally...  And BECAUSE I'm a new owner and not protected by the homestead exemption.... the one device available to keep my apprasial value artifically lower than market value.. is not available to me.

 

So JJ.. while I dont agree with eveything you are saying..  you have helped me and I did learn one thing new.. so thank you, sir.

 

 

 

 

 

 

 

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What was the SF on the listing when you bought it. Is the new SF actually wrong, or was the old number wrong?

Either the banks appraisal is wrong (which agreed with hcad when I bought the house) at 2611 sq ft, or hcad found 580 unknown sq ft

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Either the banks appraisal is wrong (which agreed with hcad when I bought the house) at 2611 sq ft, or hcad found 580 unknown sq ft

 

They do this all the time.  The appraiser measures the outside, and just creates a magical number whether its right or wrong.  Correct them and your appraisal will drop drastically.  HCAD calculates their value on a $/ft basis.

 

My new house they had the square footage wrong by more than 1,700 sqft.  When I corrected them by bringing the floor plan submitted to the city it dropped my appraised value by the price of a small house.  They had attic space as finished space b/c there were windows in the attic, and b/c I used foam insulation and the attic is technically conditioned space.  But its still attic, and they corrected it.

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They do this all the time.  The appraiser measures the outside, and just creates a magical number whether its right or wrong.  Correct them and your appraisal will drop drastically.  HCAD calculates their value on a $/ft basis.

 

My new house they had the square footage wrong by more than 1,700 sqft.  When I corrected them by bringing the floor plan submitted to the city it dropped my appraised value by the price of a small house.  They had attic space as finished space b/c there were windows in the attic, and b/c I used foam insulation and the attic is technically conditioned space.  But its still attic, and they corrected it.

 

Thank you for your response.  My blood pressure is dropping enough to add years to my life.

 

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Either the banks appraisal is wrong (which agreed with hcad when I bought the house) at 2611 sq ft, or hcad found 580 unknown sq ft

 

The appraiser for the bank likely just went to HCAD to get his SF, because they really don't do their job.

 

What did sellers agent claim the SF was in the MLS listing when you bought the house?

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The appraiser for the bank likely just went to HCAD to get his SF, because they really don't do their job.

What did sellers agent claim the SF was in the MLS listing when you bought the house?

This house has been listed by hcad and several appraisers at 2611 sq feet since 1963. I did a small kitchen Reno and now hcad lists it at 3241. It's a story and a half, so I assume the county took the outside upstairs and counted it all as liveable which half is attic/utility.

The appraiser for the bank likely just went to HCAD to get his SF, because they really don't do their job.

What did sellers agent claim the SF was in the MLS listing when you bought the house?

This house has been listed by hcad and several appraisers at 2611 sq feet since 1963. I did a small kitchen Reno and now hcad lists it at 3241. It's a story and a half, so I assume the county took the outside upstairs and counted it all as liveable which half is attic/utility.

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Can anyone explain the logic (I know I'm stretching here) behind appraising land differently?  HCAD stipulates an "average" lot size for an area and assesses a $/sqft value.  If your lot is larger than the average, the amount in excess is typically assessed at 50%.  If your lot is smaller than the average they apply a multiplier that has no root in reality to increase the assessed value.  For example if you take two 25 ft lots at 3300 sqft each and build two shotgun houses on them the value of the land suddenly quadruples.  How is that fair and equitable?

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Can anyone explain the logic (I know I'm stretching here) behind appraising land differently?  HCAD stipulates an "average" lot size for an area and assesses a $/sqft value.  If your lot is larger than the average, the amount in excess is typically assessed at 50%.  If your lot is smaller than the average they apply a multiplier that has no root in reality to increase the assessed value.  For example if you take two 25 ft lots at 3300 sqft each and build two shotgun houses on them the value of the land suddenly quadruples.  How is that fair and equitable?

 

Do you know why developers buy large lots and subdivide them to build denser housing on them?  Its because it maximizes the value of the land that they purchased.

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Do you know why developers buy large lots and subdivide them to build denser housing on them?  Its because it maximizes the value of the land that they purchased.

 

That doesn't explain the logic of taxing smaller and smaller increments of land at multiples to larger lots.  In fact, you are arguing that the opposite should happen.  Larger lots have more value per sqft because they can be subdivided.

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That doesn't explain the logic of taxing smaller and smaller increments of land at multiples to larger lots.  In fact, you are arguing that the opposite should happen.  Larger lots have more value per sqft because they can be subdivided.

 

The logic is that the land value is based upon X price per square foot.  Not all larger lots can be subdivided, usually because of deed restrictions or a prevailing lot size ordinance.

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The logic is that the land value is based upon X price per square foot.  Not all larger lots can be subdivided, usually because of deed restrictions or a prevailing lot size ordinance.

 

Sorry but that is NOT what happens.  I'll use 1802 Harvard as an example.  This house sits on two 55x132 platted lots for a total square footage of 14,520 sqft.  The first 6600 sqft is assessed a $50/sqft value for a total of $330,000.  The "extra" 7920 sqft is assessed at $25/sqft for $198,000.  The market value of that lot is somewhere between $400,000 and $500,000 and could be split out with NO subdivision.  

 

1719 Ashland is a townhome that is assessed a land value of $78.60/sqft.  The fact is the $/sqft land value is adjusted in the exact opposite direction that it should be.  Larger lots have more value than smaller lots.

 

I have dozens of examples just like this.  

Edited by BBLLC
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Larger lots have more value TOTAL. They do not have higher values per square foot, generally.  A house on two lots is not being valued as one lot with  house and one lot vacant.  It is valued as one oversized lot.

 

Go to the following address.  It shows HCADs land sales for last year with dates, size, and price/sf.  If you look for sales close to one another in both location and date with different sizes, you will see that in general smaller lots sell for more per square foot.

 

http://www.hcad.org/HearingEvidence/2014/SalesMAPS/p5359.pdf

 

 

 

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You can change that number (5359) to whatever map number you want to look at to view the phenomenon elsewhere (Shady Acres is probably good with lots of sales and sales of different size if you type in the number to the west of this page)

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On that page I gave you there is a good example right on the left hand edge of the page.  2 lots back to back on the corner of Lawrence.

 

The one facing 25th St is 6550 SF and sold in September 2013 at $45.80/SF ($300k).  The one directly behind it which had a warehouse on it and is being divided for townhomes facing 24th St was roughly six lots together at 39,300SF and sold in June 2013 for $22.77/SF (roughly $900k)

Edited by JJxvi
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Larger lots have more value TOTAL. They do not have higher values per square foot, generally.  A house on two lots is not being valued as one lot with  house and one lot vacant.  It is valued as one oversized lot.

 

Go to the following address.  It shows HCADs land sales for last year with dates, size, and price/sf.  If you look for sales close to one another in both location and date with different sizes, you will see that in general smaller lots sell for more per square foot.

 

http://www.hcad.org/HearingEvidence/2014/SalesMAPS/p5359.pdf

 

I am questioning WHY a smaller subdivided lot should have a HIGHER assesed tax value per square foot than a house on a larger lot.  How does having two houses on 25 foot lots suddenly make the value for the lot higher when compared with one house on both lots?  Using the example of 1802 Harvard, it is in fact a vacant lot next to a lot with a house on it.  The market value of that land is much higher than assessing it at 50%.  I have personally been involved with over 300 real estate transactions and understand the numbers for creating and capturing value.  When a lot is subdivided, the total value is increased and optimized.  However, all things being equal a 2200 sqft house on a 3300 sqft house should not be appraised the same as a 2200 sqft house on a 6600 sqft house.  THAT IS what HCAD is doing.

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