How can the Right Property Tax Agent Simplify My Life?
Increased Results, Decreased Stress
Extending Your Reach
Tax agents may seem like they are a dime a dozen, but if you want a tax agent to simplify your life, you need to dig a little deeper. Tax agents come from a wide array of firms, experiences, locations, reputations, and client experiences. It is important to ask yourself what you are looking for in an agent? Do you want someone you have to constantly check on to make sure they are meeting the deadlines? Do you want to feel like they are just another person you must supervise? Or maybe, your agent cuts you out entirely, doesn’t give you updates until you beg enough, and then only tells you about their successes while leaving out all your other properties.
From my experience, that is not usually what a client wants but it is often what they get when they hire the average tax agent. It is easy to see why an agent who cuts you out or needs your constant monitoring would not simplify your life. It could even seem like more work to hire an agent, after all, if you need to monitor everything why not do it yourself?
If you feel burned out from previous agents, I’m sorry to hear that. An agent should extend your reach. Allowing you to do more with your limited time. The right agent figures out a customized plan with you for how and when you want reports so that you don’t need to ask. They don’t make last-minute requests, causing you to drop everything to answer in time. And they certainly don’t need you to remind them of deadlines. If anything, it should be the reverse where you are being reminded by them because you are so confident they have your back that you can move on with other responsibilities.
The right tax agent will also simplify your life by having experience in your property type. They will be a specialist, not a jack-of-all-trades. They will know the best valuation approaches for your property and market and will use them to secure you the best possible reductions. A large part of experience comes from visiting your properties and the local market. Actual boots on the ground, asking the right questions and documenting the right facts. If your agent is too overburdened to visit your property, then they are missing a critical piece of the valuation puzzle. They may secure you a reduction, but it’s like slinging mud against the wall to see what sticks.
The right specialist tax agent will deliver you the best results possible. Does that always mean a reduction? No, an agent can’t guarantee a result. But, if they have done everything they should be doing, they will come to you and let you know the results with confidence. Knowing they left no stone unturned, and no argument omitted. The results of a specialist in your property type are usually better than the average agent and that can give you confidence when you report the results.
A tax agent may not simplify your life, but the right specialized tax agent will. If you are tired of begging for reports, supervising your agent, or only getting part of the story, it sounds like it may be the perfect time to reevaluate your agent and find the right one to simplify your life!
In multifamily property tax appeals, great tax agents work for a percentage of the tax savings. This means that unless they are successful in reducing your property valuation, you won’t pay them anything. This takes the risk off you as the owner and places the burden on the tax agent to perform. As long as a tax agent is working on contingency, you will always come out ahead.
Great tax agents take a personal interest in you and your property. They visit it every year and build relationships with those at the property and the Central Appraisal District. The results you experience are much better and lasting than those of a volume agent.
The Cost of a Bad Agent
A bad agent can cost you more than just the current year tax savings, they can cost you your reputation, which could impact future deals and tax savings. Just because an agent is working on a contingency fee does not mean they are getting you the best results. They may even be getting you small reductions every year, but if they are only taking those small reductions because they are too busy to know your property, you may be losing out on thousands in tax savings.
A bad agent may save you $10,000 a year on a single property, but a great agent may save you $20,000. If the great agent’s fee is 30% instead of the lower 20%, you will still net $14,000 rather than $8,000 each year by choosing the better, higher fee agent. If they were to average those same results over the next 10 years, you would net $140,000 in tax savings vs. only $80,000. All of that savings is on one property. Imagine if you had 10, 50, or 100 properties; the difference in those results add up quickly.
Don’t Shortchange Yourself
Unfortunately, too many multifamily owners unknowingly undervalue themselves and undercut their success. They think they want the cheapest agent believing it will save them money on fees. The cheap agents are sly and promise them all sorts of things to get the deal, but the client quickly finds out that it was a smoke show to get them to buy. The deliverables are less shiny than advertised, the results are subpar, and appeals are being churned out of a volume machine, with little human interaction or judgment.
Quality representation takes time and personal attention. Multifamily owners with the mindset of long-term success choose agents that specialize in their property type. They choose to pay a higher contingency fee to ensure their properties are visited annually and treated individually. There is a lot of money on the line in property taxes. It is, after all, usually the number one expense for the Texas multifamily property. Successful owners choose quality over quantity. They don’t want to be a number, unable to speak to a live person when they have questions. The value is in the relationship with their agent, and knowing their agent truly cares about their properties gives them peace of mind. And peace of mind is something we could all use more of in the world today.
As a prudent multifamily owner, managing costs is very important. If you hire a roofer, you will want to know and approve the contract cost upfront. Property tax agents sometimes present a tempting offer to cap fees, but there is a hidden dark side when you play that game. You may worry about how much a tax agent without a fee cap will cost, and that is a valid concern. From experience, I have seen that capping an agent far outweighs the benefit to the client. I would like to pull back the curtain for just a moment and help you glimpse the danger lurking in such a deal.
Compensated based on success
Property tax agents are typically compensated based on their success. This means that you always come out ahead if you are paying them a fee. When there is no cap, excellent agents do their best to examine every angle and opportunity to reduce your property taxes. They know that the better they represent you, the higher your savings and their fee.
On the flip side, you may see agents with a contingency fee plus a cap. This means that no matter how good they do, they will only receive the maximum cap amount. Agents under such a deal know exactly the amount of reduction they need to hit the cap and the temptation is to do just enough to hit the cap. Anything above that they are doing for free. The true danger to you, as a multifamily owner, is that you don’t get the lowest value and tax bill. You only get it low enough for your agent to max out their cap. Thousands of dollars of additional tax savings may be readily on the table, but since there is no upside to a capped agent, they aren’t asking for it. You ultimately lose tremendous tax savings, which usually far outweighs the cost of removing the cap.
You become a volume client
Another danger with using caps with your property tax agent is that you become a volume client. There is hardly any incentive for them to visit and know your property. They can likely secure the reduction necessary to hit the cap with minimal effort. Your property is just one of the thousands that churned out with little thought about the property itself. Getting an update on your property will likely be difficult if you can get one at all. Volume clients usually hear from their agents a few times a year. Does the following communication sound familiar?
1. When they need something signed by you.
2. When they need information, usually last minute.
3. When you get their invoice.
Your company and properties are unique and important to you. Hire an agent who treats them that way. The agents who give excellent service don’t have fee caps, and you wouldn’t want them to. I want you to have confidence you are getting the best representation possible. We have put together an agent checklist that helps you evaluate your current agent. It is valued at $1,000, but I want to gift it to you and my expense today so you can make sure you are prepared for the 2022 Texas appeal season. I hope you will take advantage of reviewing your agent and securing your maximum tax savings next year.
Can your tax agent get you bigger reductions than you can on your own?
If not, it’s time to reevaluate your agent
Property Specific Knowledge
Knowing the subject property is one of the first rules in valuation. As an owner or property manager, you likely have visited your property and know the difficulties it is facing. This is critical to determining an accurate value. For an agent to secure a greater reduction than you, they should know the property as well as, or better than the owner. This can only be achieved through site visits where the agent puts boots on the ground. First-hand knowledge by a dedicated agent allows them to find valuation issues that even a very diligent owner may overlook. Online maps, street views, and satellite pictures can never replace a real visit.
Valuation Knowledge and Time
The next critical step is knowing standard valuation methods, and which ones are most appropriate for your property type. For Texas multifamily, the income approach is usually the best method for determining value. In the case of new construction, cost would be more appropriate. As an owner, if you have experience with the approaches and the time to research market income conditions, you might do fine appealing on your own. However, if like most owners, you have dozens of other important issues demanding your attention, it may be difficult to devote the necessary time and resources to a valuation appeal. Your time would be far better spent doing that which only you can do and utilizing a professional specialized in Texas multifamily property taxes.
The right property tax agent has the time and resources to focus on your valuation appeal. They have extensive experience in the approaches and market. By utilizing a dedicated agent, you can free up your time to accomplish your vital priorities and still secure results. Thereby increasing your productive output, without becoming overwhelmed.
Relationship with the Central Appraisal District
As a final point, it is critical to remember that relationships matter. If you plan on owning the property for any length of time or want to keep doing business in the county, you should consider your relationship with the Central Appraisal District (CAD). They are trying to do their best with their limited time and resources. Approaching them with an aggressive attitude usually will result in the same behavior right back. When both sides begin by entrenching themselves in their position, it is hard to make progress. Unfortunately, some agents take this approach. Not only does is it hurt your potential valuation, but it can also harm your company’s reputation in the county. Whether you appeal on your own or seek a tax agent’s help, find those who are good at building bridges.
How Can I Reevaluate My Agent?
If you have an agent but wonder if they are getting you the best results, use the Tax Agent Checklist to evaluate your agent today. The insights you will gain from these 10 easy questions will help you determine if your agent can really get you a bigger reduction than you can on your own. You shouldn’t have to go it alone or settle for mediocre help. With something as important as your property taxes, you should Experience Excellence.
Imagine you are traveling and you come to a fork in the road. Both routes eventually lead to your destination, which makes you wonder if it matters which route you take. So you ask yourself this question: Which route will get me to my destination in the fastest, most enjoyable way? If you are going to make the drive, you might as well enjoy it.
So it is with property valuation appeals. Whether you appeal it yourself, or you hire a property tax agent, the goal is to still settle with the Central Appraisal District (CAD) or have a hearing before the Appraisal Review Board (ARB). The destination may appear the same, but the journey and results can be very different.
Course 1: Doing it Yourself
When handling your own protests, it is common that there are many projects and important tasks that pull you in a million directions, because property taxes are usually only one of the hats you wear. They are easily put on the back burner for another day down the road, while more pressing sales tax issues or real estate deals are considered. Since property taxes on Texas multifamily are the number 1 or 2 expense item, it is clear that affecting that expense can have a tremendous benefit to your bottom line. Yet, it is still easy to be overwhelmed with all the specific deadlines and valuation evidence. Successfully appealing your valuation involves arguing valuation concepts and knowing the market. It involves studying comparable properties, documenting adjustments to their valuations, and attending meetings with the CAD or ARB. In the end, your simple appeal may take many more hours than you anticipated or wanted to give it.
Course 2: Hiring a Property Tax Professional
Hiring a property tax agent can alleviate most if not all of the above stress. An agent takes on the responsibility to ensure filing deadlines are met, evidence is gathered, and hearings are attended. Because agents focus on property valuations, they can give dedicated time to knowing your properties and aiming to secure you the best reduction. They are familiar with the laws and the markets. Following this course usually results in better outcomes for you, with a lot less time commitment and stress.
So How Long Will My Protest Take?
The ultimate answer depends on the course you choose. While both will typically last about the same number of calendar days, doing it yourself will involve substantially more time and commitment from you. If freeing up your time for other important projects, and potentially securing greater tax reductions is appealing to you, consider hiring a property tax professional to handle your appeals.
How Does Filing an Appeal Make a Difference on my Property Taxes?
Don’t assume that the Central Appraisal District is correct
What types of issues can be corrected by filing a protest?
One of the simplest reasons for filing a protest of your noticed value is to correct misinformation. This could be from incorrect building size, land size, construction quality, ownership, or other reasons. Additionally, contesting the noticed value can allow you to provide property-specific facts that are not accounted for in the mass appraisal valuation method, and thereby change your taxable value.
Is the system set up for me to fail?
Texas has a wonderful property tax system that is designed to ensure taxpayers are heard. Part of this process revolves around evidence supporting the noticed value. As a taxpayer, you need to prepare and bring your own evidence, but unlike most other states, the Appraisal District is not presumed to be correct at your hearing.
Under the Texas Tax Code §41.43(a) the Appraisal District bears the burden of proof to support their value. In other words, they need to prove why the value they set is accurate. This unique system is not set up for you to fail. Come with evidence supporting the correction you are seeking and present your case before the Appraisal Review Board.
How does any of this make a difference to me?
Your Texas property tax bill is determined from your taxable value multiplied by the tax rate. When you protest the noticed value and the result is a reduced valuation, your tax bill will be lower. Additionally, under Uniform and Equal provisions, others can be helped by your protest. Placing checks and balances on government taxation and overreach is a freedom we hold dear in this country. While we are subject to property taxes, filing an appeal of your valuation is one way you can exercise your freedom to ensure that you are not being overtaxed.
Here is an example of just what protesting your taxes can look like to you.
The noticed value was $2 million and after the taxpayer’s appeal the value was reduced to $1.5 million. The tax rate in the jurisdiction is 2.5%. The $500,000 reduction in the noticed value would reduce the taxpayer’s property tax bill $12,500.
Wayfinder offers taxpayer representation and assistance
If understanding and filing your own protest feels overwhelming and complicated, don’t worry. Wayfinder’s property tax experts offer personalized service to know your properties and help you achieve the lowest legal value for your property. We help liberate capital for our clients so they can do what they do best without stress.
What is the difference between the tax rate and the taxable value?
Who Exactly is Taxing You?
To accurately determine your property taxes, you need to identify each taxing jurisdiction for your property. There are typically several entities that will be taxing your property, and they are listed on last year’s property tax bill(s). Once you locate that list, you can confirm by reviewing the current year’s notice of proposed value. Typically, the notice of proposed value will list the taxing entities along with the estimated tax rates, possibly answering two of your questions at once.
It is also important to note that the taxable value and tax rate work together, but are very different pieces of information. The taxable value is the value that has been determined for your property as the basis for taxation. The tax rate is multiplied with your taxable value to determine the tax bill owed.
Where do I go to find out my tax rates?
Once you have identified the taxing entities, it is now time to locate their current tax rate. If you are determining the 2021 tax bill from the 2021 valuation, you will need to find the 2021 tax rates. Most of these rates are set in August or September, right before the tax bills are sent to taxpayers. The Central Appraisal District does not set the tax rates, but many times they will put the tax rates on their websites in an attempt to help taxpayers know who is taxing them and their estimated taxes.
For example, when reviewing the Dallas CAD website (dallascad.org) you can select “Search Appraisals” on the left-hand column. Then you can search for your property by owner name, account number, street address, etc. Once you have located your property, you can scroll down to the Estimated Taxes section, which lists the taxing entities and their tax rates. It is stated that those rates are estimates, so you should further confirm those tax rates.
Is there a second way to confirm my tax rates?
The Tax Assessor/Collector is responsible for issuing property tax statements. Their websites should have a list available for each jurisdiction and the associated property tax rate. The Dallas County Tax Assessor/Collector (dallascounty.org/departments/tax) has a link on the left-hand side titled “Tax Rates.” Click there to see the rates that are available, and you can even see the rates from a few previous years. If the current year tax rate is not yet available, then it likely has not been set or published yet. Continue to check back periodically during the fall until it is published.
What if I still need help?
Each Texas county uses a different process to find property tax rates. This article provides general information that has worked in many counties and is a great starting point when searching for your tax rates. If you need more specific help, or have detailed questions, please reach out to the experts at Wayfinder today.
Tax Bills are Made up from Many Taxing Jurisdictions
Should I Blame the Central Appraisal District?
When Texas property tax bills come out in October, your first response may be that they are too high. Property owners want to blame the Central Appraisal District (CAD), the entity that sets their property values. In this case, the CAD is innocent of the blame. While the CAD does set property values, they are not part of setting the tax rates, nor do they determine the ultimate tax bill. In fact, it is usually the Tax Assessor/Collector who issues the property tax bill.
Who Determines the Property Tax Rates?
Local jurisdictions such as independent school districts, colleges, hospitals, cities, and the county all need tax revenue to operate. Each year they submit their budgets for review and approval. Based on their budget, and the values of properties in their taxable areas, tax rates are determined so they can collect the amounts needed for their budgets. While the actual process can be more complicated, this can be illustrated quite simply using the following formula:
If a jurisdiction needs $1,000,000 and your taxable value is $250,000,000, then your tax rate would be $1,000,000 ÷ $250,000,000 = 0.4%.
Can I Do Anything About the Tax Rates?
Truth-in-Taxation requires that notices are published regarding public hearings about proposed budgets and tax rates. It is at these meetings that taxpayers can voice their concerns and seek that the proposed budget be denied. In cases where the tax rate increase is excessive, the increase will be placed on the ballot for voters to approve or deny. By exercising your right to vote, you can have an impact on whether certain tax rate increases are approved or denied.
I’ve Done Everything Right but the Taxes Still Went Up!
Sometimes you do all that you can to be heard, but the result is that tax rates–and your value!–still increases. This will cause your property tax bill to increase. Once valuations and tax rates are set, the tax bill needs to be paid. Each year you are given an opportunity to protest the noticed value of your property. If you are not reviewing your valuation and protesting when appropriate, you are missing at least one way of keeping your property tax bill lower.
The Institute for Professionals in Taxation (IPT) has been around since 1976 and is a not-for-profit education association serving more than 6,000 members. As noted by the Institute itself, it is the only professional organization that educates, certifies and establishes strict codes of conduct for property tax professionals who represent taxpayers.
The IPT organization continually educates on property tax matters through various programs and classes. The CMI designation means Certified Member of the Institute, and it has been attainable since 1979. This certification is difficult to obtain and is more than a mere credential; it is a demonstration of expertise in business property taxation.
[H3] What the CMI Designation is NOT
To be very clear about what the CMI-Property Tax designation is NOT, it is not an endorsement from the Institute for Professionals in Taxation for any individual or firm. Just like a CPA designation, holding this certification does not mean that the individual or firm is endorsed by the state agency that issued the designation. It means the individual has been recognized for dedicating numerous hours of study to the field of property taxation.
Requirements for CMI Designation Qualification
In order to qualify for the CMI, an individual must:
Maintain membership in the IPT
Document many years of property tax experience
Complete several educational schools provided by IPT
Successfully complete both the comprehensive and oral examinations given by the IPT
After attaining the CMI professional designation, certified members must maintain continuing education hours with the IPT. This is comparable to other professional designations such as CPA, JD, etc.
Why it Matters
Not all who attempt to attain CMI certification are successful. In fact, only about 1,000 property tax professionals nationwide have ever earned this coveted certification.
The process is arduous and long. The tests are difficult and taxing, and it takes a dedicated individual to complete the requirements. As of the time of this writing, there are only about 480 active CMI-Property Tax holders in the United States and Canada.
Individuals with the CMI-Property Tax designation show a commitment to the property tax industry. It is not an endorsement from IPT, but it does indicate experience and knowledge on behalf of the individual.
Why we are passionate about knowing your properties
Appeals in a Big Firm
Everyone has reasons for doing what they do, and I am no exception. I used to be a partner at a national firm with properties all over the country. I took pride in my work and in our team, and I loved helping clients reduce their property tax burdens. After many years and thousands of hearings, I was given the assignment to handle our firm’s protests in Louisville, Kentucky. I eagerly prepared to go and attend the hearings, but as busy as we were, I was only able to review the properties from CoStar and the internet. I found comparable property sales and put together my evidence, sure that my workup was bulletproof.
Shocking Reality Check
When I arrived at the hearing, I began to present my case with full confidence in my work product. The board respectfully listened, and then when I finished they began to ask me some tough questions. They asked me about the neighborhoods and areas of town, and which adjustments were made and why. They asked about the condition of the subject and the comparables. I did not know the answers. Finally, I was asked a life-changing question: had I ever seen or visited any of the properties in person?
Under oath, I had to admit that I had not seen them. Their response shook me: “No one who knows anything about this part of town and these properties would ever consider them comparable.” That was it–the nail in the coffin. I did not secure a single reduction for my client that day, but I did walk out of that hearing with a firm conviction that I would NEVER be in that situation again. I vowed that I would represent my clients as if I owned the properties myself. I would visit every property and I would do my best to visit every equity or sale comparable we would use. At the end of the day, no one in the hearing room would know more about the subject property and the comparables than I would.
Upon seeing that I could not make that change in my national firm, I set out to create my own firm. I noticed that at national firms, agents are often overburdened and don’t have time to visit every property. The reason I founded Wayfinder is to be different from the busy national firms and to provide personalized expertise and representation. We are founded on the principles of integrity, accountability, and excellence. I have never forgotten the shame I felt in Louisville, Kentucky, and I never want to feel it again. When a client entrusts you with their appeal, agents should never take that responsibility lightly. They should do more than you can on your own because they are fully dedicated to representing properties in the appeal process.
Giving the Best to Our Clients
This monumental change in my perspective has caused us to spend countless hours visiting properties all over the markets where we represent our clients. The results have been profound. We have spent time learning the markets, asking questions, and becoming experts in the properties, knowing we are doing everything in our power to truly represent our clients.