Housing News

Should Property Prices Be Made Public?

HB 133 may soon be dead.

Should prices of sold properties be made public?… Obviously, real estate companies would resist such proposal or they’ll lose more income. When prices are undisclosed, they have the opportunity to undervalue the property and thus, pay only a small portion of their taxes. But one research found that social services are greatly affected by this practice. According to The Dallas Morning News, “A study by the Texas Association of Appraisal Districts a few years ago estimated that Texas public schools were losing $4 billion a year in revenue because property appraisers were often unable to judge the true market value of a property, particularly business and commercial buildings. The study found that lack of sales price information caused appraisers in urban areas to undervalue commercial property by an average of 40 percent and residential property by 15 percent.”

Undoubtedly, Texas has been at the forefront in changing the current system. In fact, leaderslisten.org reveals that in Texas “Data collected from 49 appraisal districts around the state showed that mid-range homes paid taxes on 93 percent of their sales prices. High-end homes paid taxes on just 73 percent of their sales prices. The La Mansion Hotel in San Antonio pays taxes on 25 percent of its reported sales price of $100 million. The sales price of commercial property may be higher than the true value of the property, but these properties are still dramatically undervalued in our system.” Perhaps the most vocal about their disapproval of the current price concealment are Texas Representative Mike Villarreal and Senator Jeff Wentworth who have filed House Bill 133 to require home buyers to file a sales price declaration. It must be remembered that Villarreal also supported a mechanism last January that would tie down a homeowner’s property burden to his income. Tax credits will be given but this diminishes as an individual’s income increases.

On the other hand, one of the strongest oppositionists is The Building Owners and Managers Association of Austin, Inc. (BOMA Austin). It prides itself in its website by declaring that HB 133 “died in committee, before reaching the floor of the House. Texas BOMA testified in opposition to this bill, and worked diligently to kill sales price disclosure.” As of April 1, 2009, the bill was left pending in the Ways and Means Committee.

In 2006, the Texas Conservative Coalition Research Institute tried to compromise in its paper entitled, “Sales Price Disclosure: A $250 Million Tax Hike on Homeowners”. The paper concludes, “Therefore, mandatory sales price disclosure as a reform of the appraisal process should be rejected. Without a commensurate lowering of property tax rates, sales price disclosure would result in a large property tax increase. It would also be administratively costly, and of extremely limited use to the appraisal process. However, if sales price disclosure is made mandatory, it should replace the appraisal process. The sale price of a property would determine its tax liability, which should be “locked-in” and not be allowed to increase until the property is next sold. This approach would create an entirely transparent system of property valuation, and would eliminate the administratively costly appraisal process.”

If lobbying against a proposal that would effectively raise state budget out of getting the complete and true value of sold properties in Texas seems getting nowhere, then we don’t see the other four states with the same situation to be nearer the disclosure plan then. It’s a shame that such illegal practice pervades the property market today and corrupts society of the social services that it needs.

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