Disputing EPCAD values and Good new for People using their Homestead exemption
Everybody’s heard and is talking about skyrocketing residential CAD values, so I wanted to give you guys a break down on how they work, the main variables affecting those values and what can do about it.
Well to begin, EPCAD runs what we call a radial comparable market analysis, which I’ll just refer to as CMA for simplification. They drop a pin, draw a 1 mile radius around that pin and then they average the home prices in that area to come up with a value. Let me explain the problem with this method. We’ve all heard the term “the other side of the train tracks” or maybe not if you’re a little younger, but what it means is the other side is not as nice. So homes on this side no bueno, homes on that side bueno. But they’re being compared to as similar in value regardless, causing discrepancies in the true market value. Now this line doesn’t necessarily need to represent a set of train tracks, it can be a street. That being said it doesn’t even need to be a line, it can be contoured like a street or even stop to follow another. Only a seasoned and competent agent will know where these borders are and how to stay in an equally comparable area. This is one of the reason’s why an intimate understanding of local geography is so important when choosing the right Realtor to price out your home. Then of course, we can make adjustments for pools, large lots or even refrigerated air units, but I don’t want to keep you too long, so we won’t get into that just yet.
Now that there’s a little insight as to how EPCAD comes up with these values, let me give you some pointers on how to combat them and minimize the hurt.
To begin, look at the small spreadsheet on the first page of the Notice of Appraised Value you received. If you notice in the far-right column 5 rows down in the spreadsheet there is a number for Market Value and 2 more rows down in bold numbers is your Appraised Value. This is the number the county uses for taxing purposes. If you have a homestead exemption there should be a gap in between these two, sorry investors, not exemptions for you. So, let me go ahead and explain the gap. Starting with the baseline of last years settled valuation, market conditions, corroborated by the Texas index have increased by 19.6% and have exceeded the 10% cap rate. Homestead exemptions come with a 10% cap, meaning they cannot exceed a 10% increase from previous years value, the baseline. One of the few laws that succeed in protecting consumers.
All of this being said, one of the main ways you can minimize your taxes is by applying all of your exemptions. If you look at the very last row in that same spreadsheet you’ll notice a bar with 4 types of exemptions, disabled vet, disabled person, homestead and over 65. Verify the acronyms on the last row under this years column to make sure all your applicable exemptions are applied. If you’d like further explanation of the exemptions, on the back of page one are some brief descriptions.
Ok moving on, our appraised value, the one in bold, is the value under contestation, not the market value. So pay attention to the right one and don’t let the market value scare you. In order for us to gain anything out of the appraisal dispute, we have to not only close the gap between the two, but we have to exceed it. As I mentioned earlier only a direct analysis on the home will be able to determine if we’re able to do that.
This is one of the reasons I’m offering help, but I’m going to be honest, I’ve been running a lot of CMA’s for prior clients recently and I’m noticing there are a few places where the cap did it’s job at consumer protection and even the lowest priced comps I was able to produce still exceeded the appraised value. Meaning we couldn’t impact the appraised value, but I believe that every home deserves a chance at being looked at.
Another method that can help at reducing the proposed value is by accompanying your dispute with a licensed contractor’s quote on how much it would cost to bring your property up to a median price per your local. But let me warn you, contractors are aware this is the season, so they are not conducting free estimates at the moment and will most likely charge you.
Let’s change the atmosphere a little bit because who likes talking about taxes right? Unless of course it’s about paying less. Soooo, on a bright note I want to congratulate Texas on voting to amend the state constitution, with an overwhelming majority of 85% passing proposition 2, which increases the homestead exemption from 25 to 40 k. Who was that other 15%? Really? And it’s being retroactively put into place, so it’s in affect as of on January 1st and will impact this years taxes! When tax bills come out in October be on the look out for that.
By: Isaac Olmos
El Paso thank you again for watching, if there is absolutely anything I can do to help please don’t hesitate to reach out rain or shine. Once again I’m Isaac Olmos on the Olmos Real Estate Group powered by MAREG, I look forward to hearing from you and have a great week.