Real Estate Appraiser
01-05-2007, 04:52 AM
Mucking up an already murky appraisal system
EDITORIAL BOARD
Adraft report of the governor's task force on property appraisals includes an unfortunate half-step on the issue of disclosing the sale price of real estate.
Property appraisers have long complained about the fact that property sales prices are not public in Texas. That leaves appraisal districts guessing at the value of real estate, which some think costs local governments and school districts millions, even billions, of dollars in tax revenue.
Some legislators have proposed a law requiring disclosure of real estate sale prices, but that has attracted strong opposition from interests that see a benefit to the secrecy surround real estate transactions. The plain fact is that disclosing the sale price is fairer to everyone and ends the subterfuge involved when appraisers try to discover property values.
The task force appointed by Gov. Rick Perry last year to study the issue of property appraisals in Texas was lead by Dallas attorney Tom Pauken. The draft report's position on sale price disclosure is unwieldy, probably unworkable and unacceptable.
Pauken's report calls for those purchasing real estate to submit an estimate of its value and the justification for that estimate. If they fail to do so within a certain period, then they would have to disclose the sale price to the appraisal district.
That sounds like a process nightmare for local appraisers. It raises all manner of questions about how the estimated value is derived, the integrity of the supporting documents and opens up new avenues of appeal.
Purchasers of a major office building, for instance, could keep the issue tied up for a long time arguing about the justification for the estimate. So, why do that when the sale price is there for the appraiser to see, which would provide an honest base for taxing districts?
It looks like the task force was trying to please both sides of this contentious issue. The group wanted to allow appraisers to get closer to the actual sales price without requiring full disclosure. That strategy doesn't work, and the Legislature ought to reject it when they consider the report this session.
State Sen. Jeff Wentworth, R-San Antonio, said he likes the fact that the report recommends disclosure of property sales prices, but doesn't like that it wants to keep them confidential. Sales prices should be there for all to see, said Wentworth, who has authored a bill to add the price to the deed of sale.
What the report recommends, he noted, is another burden on the buyer to cite the property's evaluation. "I think there will be massive non-compliance with that," he said. That would mean appraisal districts would have more work chasing down those who don't comply. It would be much simpler, he said, to put the sale price in the deed.
There is no persuasive argument against disclosing the sale price of real estate. The only reason not to is the hope that the property will be appraised at less than it sold for, thus lowering the owner's tax bill. That cheats school districts, counties and cities out of their fair share of tax revenue.
By one estimate, public schools in Texas are losing $4 billion in tax revenue annually because appraisers are undervaluing property. That would buy a lot of school books.
As the lawmakers debate the Pauken report, they should ignore its suggestion on real estate sales and simply require that the sale price be disclosed. That is the fair and equitable thing to do, and it would benefit the schoolchildren of Texas.
EDITORIAL BOARD
Adraft report of the governor's task force on property appraisals includes an unfortunate half-step on the issue of disclosing the sale price of real estate.
Property appraisers have long complained about the fact that property sales prices are not public in Texas. That leaves appraisal districts guessing at the value of real estate, which some think costs local governments and school districts millions, even billions, of dollars in tax revenue.
Some legislators have proposed a law requiring disclosure of real estate sale prices, but that has attracted strong opposition from interests that see a benefit to the secrecy surround real estate transactions. The plain fact is that disclosing the sale price is fairer to everyone and ends the subterfuge involved when appraisers try to discover property values.
The task force appointed by Gov. Rick Perry last year to study the issue of property appraisals in Texas was lead by Dallas attorney Tom Pauken. The draft report's position on sale price disclosure is unwieldy, probably unworkable and unacceptable.
Pauken's report calls for those purchasing real estate to submit an estimate of its value and the justification for that estimate. If they fail to do so within a certain period, then they would have to disclose the sale price to the appraisal district.
That sounds like a process nightmare for local appraisers. It raises all manner of questions about how the estimated value is derived, the integrity of the supporting documents and opens up new avenues of appeal.
Purchasers of a major office building, for instance, could keep the issue tied up for a long time arguing about the justification for the estimate. So, why do that when the sale price is there for the appraiser to see, which would provide an honest base for taxing districts?
It looks like the task force was trying to please both sides of this contentious issue. The group wanted to allow appraisers to get closer to the actual sales price without requiring full disclosure. That strategy doesn't work, and the Legislature ought to reject it when they consider the report this session.
State Sen. Jeff Wentworth, R-San Antonio, said he likes the fact that the report recommends disclosure of property sales prices, but doesn't like that it wants to keep them confidential. Sales prices should be there for all to see, said Wentworth, who has authored a bill to add the price to the deed of sale.
What the report recommends, he noted, is another burden on the buyer to cite the property's evaluation. "I think there will be massive non-compliance with that," he said. That would mean appraisal districts would have more work chasing down those who don't comply. It would be much simpler, he said, to put the sale price in the deed.
There is no persuasive argument against disclosing the sale price of real estate. The only reason not to is the hope that the property will be appraised at less than it sold for, thus lowering the owner's tax bill. That cheats school districts, counties and cities out of their fair share of tax revenue.
By one estimate, public schools in Texas are losing $4 billion in tax revenue annually because appraisers are undervaluing property. That would buy a lot of school books.
As the lawmakers debate the Pauken report, they should ignore its suggestion on real estate sales and simply require that the sale price be disclosed. That is the fair and equitable thing to do, and it would benefit the schoolchildren of Texas.