The Cheapest Tax Agent Usually Costs the Most Money
Are You Getting What You Paid For?
Searching for the right Texas tax agent can be overwhelming. There are so many options, and everyone seems to have something unique. The most common criteria used to compare agents is the contingency fee they charge, and agents are typically paid based on the tax savings they achieve for their client. The major benefit to contingency is that the agent carries the risk and the client always comes out ahead by pocketing the difference from the original taxes less the agent’s fee.
Lower Fee or Better Results?
The property owner’s dilemma is whether to hire the agent with the lowest fee or the one with the best results. If Agent A charges 30% and Agent B charges 20%, it is logical that the owner would see the net 80% as a better deal. Unfortunately, experience shows that the cheapest agent usually is the most expensive.
Low cost service usually indicates:
- You are just another volume client
- Agents are typically overburdened and can’t provide you with specialized service
- Agents don’t have the time or the drive to visit your property and gain critical first-hand knowledge
On the other hand, agents who specialize may charge a higher contingency fee, but some of the benefits are they:
- Have time to know your properties individually
- Perform annual site-visits to help them see the property over time
- Perform deeper market research to help them achieve greater tax savings
To illustrate the difference, let’s look at some real-life 2020 multifamily examples (with names redacted) in Midland, TX:
|Agent A – 30%||Agent B – 20%|
|Net to Client||$251,698||$0|
Agent B did not achieve any tax savings for their client. The fact that their fee was lower did nothing to help their client lower their property taxes. However, Agent A’s expertise and focus produced results that put money back into the client’s pocket. Remember, if you aren’t paying your tax agent, then they aren’t saving you money. The age-old adage rings true, you get what you pay for. The cheapest agent usually costs you the most in lost tax savings.
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