Saturday , 30 May 2020
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Texas Property Tax Appraisal Methods Often Fail to Reflect Market Value

HOUSTON — The Harris County Appraisal District, and other agencies that appraise private properties for tax purposes, have increased property appraisals sharply using mass appraisal methodology that often fails to reflect actual market value for commercial properties, according to the Deal Sikes & Associates real estate valuation firm.

“HCAD’s mass appraisals tend to be inconsistent and we often see a disparity between the agency’s appraisals and market value,” said Matthew Deal, principal of Deal Sikes & Associates. “Recently, we have seen numerous commercial property values overstated by more than $10 million.”

The Houston Building Owners and Managers Association (BOMA) has expressed concern about significant increases in tax bills.

Across Harris County, the 2015 initial appraised values for multifamily properties were increased by HCAD by 22 percent over 2014 levels. HCAD increased office building values by 12 percent, retail property values by 21 percent and commercial land by 23 percent.

“These increases were the result of the appraisal district’s application of mass appraisal techniques. Such broad, sweeping statistical analyses, however, rarely match the values derived by a proper valuation of individual properties,” Deal said in a statement.

“The mass appraisal method often does not reflect market value,” said Mark Sikes,  a principal of Houston-based Deal Sikes. “Properties should be evaluated on an individual basis in order to determine the market value. This is particularly true with commercial properties that are impacted by many variables and changing market conditions.”

“The Texas Legislature is considering creating new laws regarding property taxes. An examination of appraisal methodology could lead to adjustments resulting in a more equitable property tax system in Texas,” Sikes said.

HCAD says rising property values in the Houston area are a function of the economy, which performed well in 2014 until oil prices collapse in the fall.

“The robust economy has residential and commercial properties increasing in value. Single-family homes, multi-family apartments, office buildings, warehouses and retail have all gone up in value,” HCAD said. “Companies moving to Houston have created a need for additional office space and spurred office construction.”


  1. John C. Osenbaugh, Sr. [Property Tax Consultant]

    HCAD is the largest CAD in Texas and 2nd or 3rd largest in the nation. They often intimidate and mislead uninformed tax payers/ protestors.

    Obviously the cost of District Court appeals quickly exceeds the benefit of a single year savings on value differences below $500,000, but then HCAD raises the value right back the next year. This has served as an example to other Texas CAD’s such as Ft. Bend & Montgomery which increasingly parrot HCAD’s antics.

    The legislature needs to be more pro-active in providing realistic and proportionate penalties for misconduct both by the CAD “appraisers” and ARB members. Alternately ARB’s could be replaced with “petit juries” similar to JP Courts. (required service for real estate licensees, attorneys & CPA’s?)

    The Binding Arbitration appeals need to be placed under local County Civil Courts rather than the Comptroller due obvious built-in “conflicts of interest”. If arbitrators are clearly predisposed to one side, their ruling can be over-turned & they be removed from the roster accordingly.

    District Court appeals should be redirected to the lower County Civil Courts, saving both time and expense for all parties. Either side could then appeal to District Court & beyond.

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