Posts Tagged: property taxes

How Much Does a Tax Agent Cost?

Great Agents are Always Free!

No Risk to You

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.

The Hidden Dangers of Fee Caps

The Hidden Dangers of Fee Caps

A Capped Agent Becomes a Complacent Agent

Cost vs Results

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.

agent with fee cap vs agent without fee 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. 

Be Unique

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.

Start Saving Now

Can a Tax Agent Really Get a Bigger Reduction Than I Can on my Own?

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.

Should I File A Protest?

Should I File A Noticed Value Protest?

Do Your Due Diligence

When taxpayers are deciding to file a protest of their noticed value, they must first come to an opinion of value. If the taxpayer’s opinion of value is less than the noticed value, it may be worth filing an appeal. However, taxpayers should be honest in their valuation approaches so as not to file a fruitless or even frivolous appeal. Examine market impacts and see if there are any sales of comparable properties near your own. You can also look at similarly situated properties and see if they are near your same value. If after you have done your due diligence and come to the unbiased opinion that your property is overvalued, you then need to consider the impact of an appeal.

Is the Reduction Significant?

After you have settled on a value for your property you believe the evidence supports, it is then important to analyze the impact your reduction will have on your tax liability. To roughly calculate the tax savings a successful appeal will yield, subtract your opinion of value from the noticed value. This number is the reduction to the value you believe you can secure. Multiply that number by the most current tax rate used in that county and you can estimate your tax savings following a successful protest. Is it enough for you to file the appeal and potentially go to an appraisal review board hearing? If so, file that appeal right away! Otherwise, maybe just keep one eye on the value in future years and file an appeal when the property does become significantly overvalued.

That’s all you need to do when deciding on filing a protest. Examine your market to see if an appeal can even be successful, and then review the tax savings of a successful appeal so as not to waste your time for nonconsequential savings. If you need any help deciding on the success probability of an appeal or calculating your savings, please contact one of our Texas multifamily specialists today.

Contact a multifamily specialist

Start Saving Now

How Much of My Time Will a Protest Take?

How Much of My Time Will a Protest Take?

The answer depends on the course you take

A Fork in the Road

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.

Take the Easy Course

Schedule a Call

Helpful Hints when Protesting To The Appraisal Review Board

Know Your Rights

As a taxpayer that has decided to appeal the noticed value of your property to your local Appraisal Review Board (ARB), you need to know some of your rights to have a successful appeal. First, you have the right to inspect the Central Appraisal District’s (CAD) evidence before your hearing. As long as you made a request, Texas law requires that the CAD send you their evidence fourteen days before your hearing. Use this right to examine the CAD’s evidence. Additionally, there are several ways to reschedule your hearing. Arguably the most common way to reschedule a hearing for an owner with multiple properties across multiple counties is if the owner has hearings scheduled on the same day in different counties. Whichever county notified the taxpayer last on those same day hearings must reschedule their hearing. And finally, you have the right to appeal any ARB decision to litigation (or arbitration if your properties qualify) following your ARB hearing. In most cases, you will have sixty days after the ARB hearing decision was issued to file to court or an arbitrator.

Tips when in an ARB hearing

There are also things you should do in your ARB hearing that will help your appeal chances and your reputation with the county. First and foremost, prepare your case, and have evidence. If you show up at an ARB hearing without doing your homework on the property or market, you most likely will not find a sympathetic board. You need to have evidence supporting your requested value, and it should make sense. You also need to review the CAD’s evidence and come prepared to rebuff or correct their support. Second, be respectful. These hearings can get heated for taxpayers especially when their outcome may impact peoples’ jobs or livelihoods, but remember, these board members and the CAD representative are just doing the job required of them by Texas law. Stay calm and respectful at all times while still vehemently stating your case. It will help you when the board deliberates and protect your reputation in that county.

After the Hearing

After the hearing has concluded, it’s time to review your appeal. Yes, you need to examine the possibility of pursuing litigation or arbitration like we covered earlier, but you also need to evaluate what evidence worked and what did not. This is extremely helpful because you may have another hearing before this board this same year for a different property and need to rethink your strategy/valuation methods. Moreover, the members on these boards can stay around for years so you could have the same board members for several years in the future. You need to be thinking about how you can improve your appeals and make them more persuasive to those specific members.

If you have any questions about how to handle an ARB hearing successfully, please contact one of our Texas multifamily specialists today.

See How Wayfinder Can Help

What is A Central Appraisal District?

What is A Central Appraisal District?

The Central Appraisal District’s Role

In Texas, Central Appraisal Districts (CADs) are in charge of determining market value for both real and personal property within their jurisdictions. They generally release these values to the public and their taxpayers at some point around May each year. These values are pivotal in the functioning of a county because they will be the basis for establishing the upcoming year’s tax rates that will help fund county and municipal functions for the next year. Despite the appearance of this role, it is important for taxpayers to understand that their local CAD does not set or control tax rates. Moreover, the CAD does not collect taxes or issue tax bills. Their sole job in the taxing process of a county is to set taxable values on taxpayers’ properties.

CAD’s Role in the Appeal Process

An important part of the CAD’s function in government is working with taxpayers each year to establish accurate values for property taxation. This is achieved when taxpayers appeal their noticed value sent by their local CAD. Once filed, these appeals can primarily end in one of three different ways; 1) the taxpayer ultimately withdraws their protest, 2) the CAD and taxpayer settle on a value for the property, or 3) the CAD and taxpayer can not agree on a value and must go to an appraisal review board to determine the value of the property. Following these appeals, the CAD will finalize any changed values into the tax roll.

CAD’s Role after Appeal Process

After the appeal season concludes, the CAD’s valuation cycle begins again for the following year. The CAD office will start collecting data on the market and start to shape its mass appraisal methodology. If you have any questions about the CAD’s role in determining your multifamily property value, please reach out to one of our Texas multifamily specialists for answers and guidance.

See How Wayfinder Can Help

Should I file a protest?

Should I File A Noticed Value Protest?

Do Your Due Diligence

When taxpayers are deciding to file a protest of their noticed value, they must first come to an opinion of value. If the taxpayer’s opinion of value is less than the noticed value, it may be worth filing an appeal. However, taxpayers should be honest in their valuation approaches so as not to file a fruitless or even frivolous appeal. Examine market impacts and see if there are any sales of comparable properties near your own. You can also look at similarly situated properties and see if they are near your same value. If after you have done your due diligence and come to the unbiased opinion that your property is overvalued, you then need to consider the impact of an appeal.

Is the Reduction Significant

After you have settled on a value for your property you believe evidence supports, it is then important to analyze the impact your reduction will have on your tax liability. To roughly calculate the tax savings a successful appeal will yield, subtract your opinion of value from the noticed value. This number is the reduction to value you believe you can secure. Multiply that number by the most current tax rate used for your property and you can estimate your tax savings following a successful protest. Is it enough for you to file the appeal and potentially go to an appraisal review board hearing? If so, file that appeal right away! Otherwise, maybe just keep an eye on the value in future years and file an appeal when the property does become significantly overvalued.

That’s really all you need to do when deciding on filing a protest. Examine your market to see if an appeal can be successful, and then review the tax savings of a successful appeal so as not to waste your time for nonconsequential savings. If you need any help deciding on the success probability of an appeal or calculating your savings, please contact one of our Texas multifamily specialists today.

See How Wayfinder Can Help

Start Saving Now

Will Filing a Property Tax Protest Affect My Sale Price

Protest of Taxable Value and The Impact on A Property’s Sale Price

Will filing a protest affect the sale price of a property?

Some property owners worry that reducing the taxable value of their property will ultimately hurt the potential sale price of an asset in the future. Their concern is that the taxable value of the property is evidence of the true value of the property and will result in a lower sale price following a reduction. This is not the case, and these concerns should not stop a property owner from filing an appeal of their property’s noticed value. If anything, a successful appeal will actually increase a property’s future sale price since the tax burden of the property decreased.

Independent Appraisals

When a county appraisal district (or an appraisal review board) works with a taxpayer to set the market value for a property, it is with the intent of finding the value that all sides believe to be reflective of the value the asset would exchange hands on an open and free market. However, appraisal districts and appraisal review boards are often burdened with so many other properties to value that this type of appraisal is often not terribly deep or encompassing. Moreover, negotiations between taxing districts and taxpayers can skew values one way or another for the sake of settling appeals. The appraisal communities recognize and understand these types of appraisals and generally take them with a grain of salt.

Appraisals done by parties looking to sell/buy assets perform appraisals independent of appraisals done by taxing jurisdictions. The main reason for this is that these parties will typically have more information than the appraisal districts and much more time to value the individual asset. As such, they can take the appraisal to a much deeper (and in their opinion), accurate level. These separate appraisals often result in much different values.

What does this mean for owners wanting to sell their assets and appeal their property value?

Ultimately, because appraisals for taxing purposes are independent of appraisals for sales/loans, taxpayers can work to reduce their tax liability without much concern of boxing themselves into a lower sale price for an asset. If you are looking to pursue a reduction to your taxable value, please reach out to our Texas, multifamily specialists.

How are Appraisal Review Board members appointed?

How are Appraisal Review Board Members Appointed?

Appraisal Review Boards

If you own property in Texas and have ever appealed the noticed value, you most likely have dealt with an Appraisal Review Board (ARB). These ARBs handle valuation disputes between taxpayers and Central Appraisal Districts (CADs) by holding hearings where both parties present evidence and support for their valuation. At the conclusion of these hearings, ARB board members issue a decision and can change the market value of a property if they find it appropriate. Typically, an ARB hearing will consist of three to five board members from a larger pool of active members that varies in size depending on the size of the county.

Selection of ARB Members

Now that we understand the role an ARB plays in setting property values, the question that often seems to pop up in peoples’ minds is “who are these ARB members and how are they chosen to sit on the board”? This is an important question which is easily answered. For starters, there are no special requirements for ARB members to be on the board other than they must be a resident of the appraisal district for two or more years before taking office. This requirement is universal throughout all of Texas. While there are certain rules that restrict an individual serving on the ARB panel, they primarily depend upon conflicts of interests from serving rather than the potential board member’s knowledge or experience in appraisal work. However, who gets to choose and approve these members depends on the population of a county. If a county has a population of 120,000 or more, ARB members are appointed by the local administrative district judge. Alternatively, if a county has a population of less than 120,000, the board of directors for that county appoints the ARB members.

If you have any more questions about your local ARB board and its operations, please contact one of our Texas multifamily property specialists today for information.

See How Wayfinder Can Help

Arrow Icon