One of the perennial issues facing the Texas Legislature is whether to publically disclose final property sale prices.
On its face, sales prices disclosure is simple. Texas is one of 12 states that don’t require folks to record the final sales price of properties for public view.
On one hand, many county appraisers and consumer advocates say that disclosure would make property valuations for taxing purposes more accurate and reflective of the actual market value.
For example, some large downtown properties have been valued relatively low compared to their reported sale cost, leading consumer advocates to suggest those big properties may not be paying their fair share.
Real Values for Texas, a group that advocates for price disclosure, puts it this way:
“Commercial properties can be valued far below their purchase price – or well under the price for which an owner would be willing to sell – and appraisers, let alone the public, might never know. Most large commercial property owners take advantage of the lack of information around the real value of properties and appeal appraisals each and every year.”
On the other hand, the Texas Association of Realtors and several other major business groups say disclosure would hurt consumers because those actual sales prices may be significantly skewed by seller concessions and other aspects of real estate transactions — artificially inflating the sales price and, therefore, property taxes.
“There is also a problem with subdivisions that feature unequally sized lots or custom-built homes,” the Association wrote in its 2015 public policy statement. “Another issue concerns farm and ranch properties where improvements like trade fixtures and livestock are included in the sales price.”
Here’s another opposing view from the Texas Self-Storage Association.
Finding Comparables for Home Buyers and Sellers
Knowing actual sales prices empowers home buyers and sellers — and their real estate agents — by making available all sales information. That equips homeowners with more sales information that could yield a better list of comparable properties.
That said, expert agents are equipped to tap into a broad array of information to ensure they have the best possible group of comparable properties to analyze when setting a listing price before putting it on the market.
Quality agents and their professional contractors look at MLS data, listing prices and, in some cases, tap into court records and inquire with fellow real estate agents to find actual sales prices.
Accurate comparable properties is a key factor in ensuring you get the most for your property.
A home in any real estate market — especially in a hot market like Austin’s — has an elastic price. That means there’s a 10-15 percent price range in which it could sell. Those who properly price their properties — as well as maximize their home’s value with key improvements and target marketing — can find buyers willing to pay at the top of that range.
But sellers can make costly mistakes if they don’t have proper comparable properties and price the home too low.
Sure, a low priced place may sell faster. But a well-trained real estate agent should have better prepared the homeowners with accurate comparisons to set a price that better reflects the many unique aspects of their home.
That brings us back to sales price disclosure. A change in state law isn’t getting any serious consideration early in the legislative session this year. If such a law does pass, it could shake out differently for homeowners.
Those who own highly unique properties that are currently undervalued because appraisers don’t have all the information they need could see higher property taxes if disclosure of nearby sales proves their home is more valuable.
But, if large commercial properties are faced with significantly higher tax bills, they could begin funding a larger share of local government expenses and reduce the pressure for more income from residential property taxes.