Have you recently purchased a new home? It seems like everyone wants to know if you got a good deal, including the Central Appraisal District. Don’t be surprised when you get a letter from the Central Appraisal District requesting your home’s sales price. They are nicely asking you to divulge plenty of personal information. Sure they have legitimate reasons for doing so but you may have legitimate reasons for protecting your privacy.
Obviously, they want to determine your homes value for taxing purposes. If you have no problem letting them know, then it’s fine. In many states home sales prices are published in the newspaper and counties charge a transfer tax for the pleasure of selling your own property. However, in Texas we value our privacy and get concerned when people start questioning our business.
If you get a letter requesting your homes sales price, you are perfectly within your rights to just throw the CAD letter in the trash. Don’t feel the least bit guilty because Texas is one of the few non-disclosure states. There is no requirement to provide sales information to the taxing authority in Texas.
At home value evaluation time, the tax man will throw all the sales prices in a big hat & sort them by appraisal criteria like sf., location, amenities, etc and determine your home value which may or may not be reality. You have the opportunity to challenge the appraisal if you think it’s out of whack. Realistically, they are pretty darn good at it! They get their information from a variety of sources so it is not much of a hardship if you want to keep a secret.
What the Central Appraisal District Letter is Requesting
1) Confirmation of when you purchased your home
Value can definitely change as real estate prices vary based on the season. The appraisal district is required to re-evaluate your property no later than every three years & to determine its value as of Jan 1st. They already know when you purchased it because a deed was filed, you are simply confirming it.
2) What did you pay for your home?
What you paid may or may not have anything to do with a homes market value. Perhaps you got a smoking hot deal or maybe you considerably overpaid. If you did get your low ball offer accepted or got into a bidding war at a real estate auction, the values even out over time because they are looking at an entire counties worth of properties.
Taxing authorities use what is called a mass appraisal process. Over time, out of range values are evened out due to the sheer number of properties. Do you want your home sales price information ending up in yet another database? A fun response would be right off the deed, “$10 dollars and other valuable consideration”.
3) How did you finance it, the interest rate & loan length?
Ask yourself, do they really need to know how you financed your home? Other than appraising for or above the sales price and meeting other property underwriting guidelines, the lender is basing the type of loan, length and rate on your credit worthiness, not the house. What business is it of the tax man if you are paying for your home over 15 or 30 years and what you are paying for the rate?
4) What was the down payment?
In most cases, they already know when you purchased, how long the term and the mortgage interest rate from the deed of trust. They can make a pretty good guess on what you paid because they know the normal methods of financing. If it’s a government loan it may be something like 0 or 3% down vs. a conventional loan where it may be closer to 20% or more.
Once you tell them how much you put down and they know how much you financed & type of loan, determining the home sales price is simple addition. It’s just another method of confirming that their home value algorithms are working.
5) Was any personal property included?
Obviously, if you ended up with a 40 thousand dollar tractor thrown in on the home purchase it skews the value. If it was the refrigerator it won’t make a hill of beans difference. BTW – Most lenders won’t let you do that because they like to loan based on home value, not tractor or refrigerator value. The question should again be a personal one. Do you want others to know about your personal property?
6) Did you buy your home from a relative?
Why should that matter? If the actual market value of your new home is $250,000 and you bought it from your rich uncle for $100,000 because he likes you, the house still has an actual market value of $250,000. If you are trying to fight your tax appraisal by saying it’s only worth what you paid Uncle John, they know what you paid is an unrealistic number. They are not magically going to lower the market value to what you paid your uncle.
The Take Away
The appraisal district has a variety of ways to determine market value including making an actual on site home inspection. We all want good roads and the other things that government provides us & taxes pay for that. We may not like taxes but we understand them.
It costs our money to send out these sales survey letters and it helps them considerably. If you want to help the CAD out, by all means give them the information. There is no sinister reason they would like to have this information, they are just trying to confirm what they already know and improve their mass evaluations to tax fairly.
It’s not a big conspiracy but it can be an invasion of your privacy. Your loan interest rate information, who you purchased real estate from, when, what was thrown in, what you paid down and how much in total you paid is your business. Some good Texans made sure you have the right to keep your business, your business.
It’s up to you if you would like to exercise that right but if someday you hear a politician wants to make home sales price reporting mandatory, hang on to your wallet because transfer taxes & increased home sale costs won’t be far behind. I hope you say, “Don’t mess with Texas”.
Contact Keith Laursen when you are ready to buy or sell a home in North Texas or simply to ask a real estate question. The opinions expressed in this article are my own.
