How Does the Appraisal District Determine Your Property Valuation?

Published On: October 2nd, 2023Categories: EducationLast Updated: October 31st, 202315.2 min read

About the Author: Nicole Schnell

Avatar photo
a professional reviewing financial data at a table with a calculator and house figurine, text reads How Does the Appraisal District Determine Your Property Valuation?

 Here’s what you need to know about property valuations by appraisal districts:

  • County appraisal districts frequently value properties through mass appraisal methods, leading to significant errors in property valuations.
  • Your property tax bill is determined by multiplying the property’s assessed value by the county tax rate.
  • Gill, Denson, & Company had a 83% success rate in 2022 helping clients reduce their tax bills by protesting property valuations.

How Is Your Property Valued?

County appraisal districts frequently value properties through mass appraisal methods, often relying on inaccurate or outdated data without visiting in person. Unfortunately, this approach often leads to significant errors and issues. It’s crucial to protest your property valuation to correct an overvalued property and lower your tax bill. Even if you do not believe your tax appraisal is higher than what the property is worth, Gill, Denson, & Company commonly protests valuations using the “equity method.” It basically means a property owner has been unfairly taxed in comparison to similar properties in your area. This argument is often a successful alternative to protesting a property value when there is not an argument to lower a valuation based on the 3 common valuation approaches explained below.

3 Common Appraisal Methods
Sales Comparison (Market) Approach This method assesses a property’s value by comparing it to recently sold similar properties, making adjustments for value-affecting differences. It’s widely used for single-family homes and vacant land. Appraisal districts often pick the most favorable comps and ignore less favorable ones, leading to an over-valued tax appraisal.
Income Approach The income approach considers a property’s income and expenses to determine the present value of its possible future worth. It’s most commonly used for assessing commercial or income-producing properties. However, most appraisal districts commonly just use their own estimates of your income and expenses (often over inflating your net income) while missing key data that could affect the property’s value.
Cost Approach The cost approach values a property by estimating the cost of replacing it, factoring in depreciation, and necessary adjustments. It’s often used when there are limited comparable sales or for special-purpose properties. Appraisal districts attempt to estimate the cost of the property, but they often rely on inaccurate construction cost data.

When Is Your Property Appraised?

Texas law (Tax Code Section 23.01) states that property must be appraised at its market value as of January 1st of that year. Properties must be reappraised at least once every three years (Tax Code Section 25.18), although most districts re-appraise properties every year.

How Do You Find Out Your Appraised Value?

The chief appraiser is required to send a Notice of Appraised Value by April 1 for residence homesteads and May 1 for any other property. Or “as soon thereafter as possible,” which means they often take their time and notices tend to be late. You’ll receive a Notice if the value increased from the prior year, exceeded your rendered value, if the property wasn’t in the records last year, or if an approved exemption was reduced or canceled for the current year. If you’re a client of Gill, Denson, & Company, we will send you the Notice of Appraised Value.

How Is Your Tax Bill Calculated?

Your tax bill is calculated by taking the property’s assessed value and multiplying is by the county tax rate. The appraisal district generates an initial assessed value and you have the right to protest this value in order to get it lowered.  By lowering the assessed value of the property, the taxes owed is directly reduced.

Why & How to Protest Your Property Value

The mass appraisal methods used by appraisal districts often result in errors in property valuations.  Even if you feel like your tax appraisal value is less than or equal to what the property is worth, there are strategies such as the equity method to reduce your tax bill during the protest process.  You may challenge your county’s property valuation on your own by submitting a protest form to the Appraisal Review Board. This is due no later than May 15 or within 30 days of receiving the Notice (whichever is later).  Otherwise, you can hire a company like Gill, Denson & Company to handle the entire process on your behalf.  Our fees are based on performance, so our interests are aligned with yours.

If you suspect an inaccurate residential or commercial property valuation, don’t hesitate to reach out today and make sure you’re only paying your fair share of the tax burden. Gill, Denson, & Company have successfully secured reductions for over 83% of our clients!

What Is Business Personal Property (BPP)?
Get to Know the Details: Texas Homestead Exemptions, 2023 Updates