It's probably also worth reiterating here that the nondisclosure law forces your goverment to spend some your county's tax dollars to get the value for your house just to figure out your share of the tax. It's an inefficiency that need not exist that Texas taxpayers are paying for every year in the form of a free subsidy to data brokers who are in effect sitting on a government enforced data monopoly. If this rule didn't exist, each county would likely save thousands of dollars per year.
This matters for rural buyers too. In the non-disclosure states we screen, an asking price on a vacant parcel is often the only price signal, and the assessor can't check it against what lots actually sell for. The practical result is that buyers can't tell whether a $4k/acre ask is cheap or just aspirational. Does the same disclosure gap show up much in raw land, or mostly in commercial and luxury sales?
There’s isolated examples and anecdotes, but because most sales are undisclosed there’s no easy way to study it systematically. There have been recorded anecdotes of e.g. ranches selling for more than 2x what they were assessed at.
Thanks, that's useful. It matches the view from the listing side: asking prices are the only thing we can see, so a ranch ask and a ranch sale can be very different numbers and there's no way to check. The 2x anecdotes are a good reminder not to treat an assessed value as a floor or a ceiling.
Strong arguments and a very interesting read. Really there are two benefits that we're trying to unlock with sales price disclosure: accurate CAD assessments, and market efficiencies from price signaling.
I'm guessing you can't solve the first problem by legislating the sharing of the data from MLS services? If the privacy people don't care about sharing with CAD so long as it wasn't exposed publicly, then maybe that would work.
Or maybe privacy is a pretense for the financial motive at play here: i.e. believing you can get a better deal with the CAD if they don't know the sale of your home.
When I bought my house, my real estate agent pointedly suggested that when I get the disclosure form in the mail, I should throw it in the trash. She heavily hinted that if I told them what I paid, I'd get taxed more. I do think there's some sense of you're "getting away with something" by not telling them.
In the end, it didn't matter. When I got my first assessment in the mail, it was almost exactly what I had paid. They just bought my loan info from a broker. My tossing it in the trash did nothing but make a little money for a data vendor.
I understand that assessors offices in states with non-disclosure laws sometimes purchase access to private databases from real estate boards, which help generate more accurate assessments.
The operative word is "sometimes"; based on my own experience working with Texas CADs, it's quite inconsistent, and the vendor will often cancel on them with little warning and leave them in the lurch. And even when they can get the sales, they usually don't get all of the ones which would normally be disclosed in a full-disclosure state.
Why don't CADs in this situation try to systematically overvalue newly sold properties? In this case most owners would freely protest by providing them with correct information, and in case they don't protest the CAD at least knows that their valuation probably is too low. So in general, doesn't this create an incentive for appraisers to overvalue?
If anything, most jurisdictions have an observed tendency to undervalue. Overvaluing routinely leads to protests -- very angry ones -- and each protest has a cost. They take staffing time and energy and can escalate, all the way to lawsuit. A chief appraiser who generates a lot of protests is going to look bad to their board, who will fire them if the public gets too upset.
It's probably also worth reiterating here that the nondisclosure law forces your goverment to spend some your county's tax dollars to get the value for your house just to figure out your share of the tax. It's an inefficiency that need not exist that Texas taxpayers are paying for every year in the form of a free subsidy to data brokers who are in effect sitting on a government enforced data monopoly. If this rule didn't exist, each county would likely save thousands of dollars per year.
This matters for rural buyers too. In the non-disclosure states we screen, an asking price on a vacant parcel is often the only price signal, and the assessor can't check it against what lots actually sell for. The practical result is that buyers can't tell whether a $4k/acre ask is cheap or just aspirational. Does the same disclosure gap show up much in raw land, or mostly in commercial and luxury sales?
There’s isolated examples and anecdotes, but because most sales are undisclosed there’s no easy way to study it systematically. There have been recorded anecdotes of e.g. ranches selling for more than 2x what they were assessed at.
Thanks, that's useful. It matches the view from the listing side: asking prices are the only thing we can see, so a ranch ask and a ranch sale can be very different numbers and there's no way to check. The 2x anecdotes are a good reminder not to treat an assessed value as a floor or a ceiling.
Strong arguments and a very interesting read. Really there are two benefits that we're trying to unlock with sales price disclosure: accurate CAD assessments, and market efficiencies from price signaling.
I'm guessing you can't solve the first problem by legislating the sharing of the data from MLS services? If the privacy people don't care about sharing with CAD so long as it wasn't exposed publicly, then maybe that would work.
Or maybe privacy is a pretense for the financial motive at play here: i.e. believing you can get a better deal with the CAD if they don't know the sale of your home.
I mean most states have solved this problem: you just legislate disclosure. Buyer and seller must file the disclosure form with penalties for lying.
When I bought my house, my real estate agent pointedly suggested that when I get the disclosure form in the mail, I should throw it in the trash. She heavily hinted that if I told them what I paid, I'd get taxed more. I do think there's some sense of you're "getting away with something" by not telling them.
In the end, it didn't matter. When I got my first assessment in the mail, it was almost exactly what I had paid. They just bought my loan info from a broker. My tossing it in the trash did nothing but make a little money for a data vendor.
Another very informative read, thank you.
I understand that assessors offices in states with non-disclosure laws sometimes purchase access to private databases from real estate boards, which help generate more accurate assessments.
The operative word is "sometimes"; based on my own experience working with Texas CADs, it's quite inconsistent, and the vendor will often cancel on them with little warning and leave them in the lurch. And even when they can get the sales, they usually don't get all of the ones which would normally be disclosed in a full-disclosure state.
Why don't CADs in this situation try to systematically overvalue newly sold properties? In this case most owners would freely protest by providing them with correct information, and in case they don't protest the CAD at least knows that their valuation probably is too low. So in general, doesn't this create an incentive for appraisers to overvalue?
If anything, most jurisdictions have an observed tendency to undervalue. Overvaluing routinely leads to protests -- very angry ones -- and each protest has a cost. They take staffing time and energy and can escalate, all the way to lawsuit. A chief appraiser who generates a lot of protests is going to look bad to their board, who will fire them if the public gets too upset.
Well researched and thoughtfully put out article. It's time for Texas to repeal the non-disclosure law.
Can states like Texas give voucher or cash for helping to pay for there house? Or is that best left for the federal government?
The comps that the appraisal boards use are Calvinball. It's like doing a price comparison of a hammer, a saw, and a screwdriver.