Are you a property owner in Texas who wants to know the market value of your home? Well, you’ve come to the right place. To start off, let’s understand the W3H: Why, What, Who and How.
Why is the value of a home important? This amount helps property owners sell their property and buyers invest in the property, while also aiding in the calculation of yearly property tax.
What is the value of a home? The valuation of a home can be divided into two categories: the assessed value of a home—as decided by an assessor from your local county—and the market value of a home—decided by the seller of the property.
Who does this affect? Of course, property owners are the primary individuals affected by the value of their property. Secondarily, prospective buyers of the house will also want to know the valuation of a property.
How to find the value of a home? This is the most important question. As a property owner, you need to know how to calculate the value of your home for a variety of reasons, including paying your fair share of property taxes. If you are unhappy with the valuation of your home, you can file a protest and may end up paying lower taxes if you win!
How do assessors decide on the property value?
In Texas, the responsibility of assessing properties and assigning taxes lies with the county or local government. Texas law states that the county needs to assess properties within its jurisdiction at least once every 3 years. This assessment must be done in a fair manner, where similar properties are judged on similar grounds.
How to find the value of a home in Texas?
The three methods used by assessors to evaluate a property are the Market Approach, the Income Approach, and the Cost Approach. Let’s take a closer look.
- Market Approach:
Using this method, assessors are able to determine the value of a property based on a comparison to the sales prices of similar properties within a defined area. The appraisers usually account for properties that have been recently sold and have similar features, as well as the property condition, size or location. This can be helpful when trying to understand the value of residential properties. The premise of this method lies in the assumption that comparable properties available in the market can help assess and establish the current value of a property. - Income Approach:
As the name suggests, the Income Approach focuses on the kind of predicted income a property can generate. Basically, assessors look at information about the expenses and income of a property, and then make an educated guess about what the future value of a property may be. This is a method commonly used for those properties that produce an income, like a rental space or commercial real estate. The worth or value of the property is then set based on how much income the property will eventually generate. - Cost Approach:
The final approach calculates the value of a home by gauging how much it would cost to replicate the property with one of equal utility. What does that mean? Basically, if the property being assessed were replaced with another property of similar usage, what would be the cost involved? Factors like cost of construction, land value, and projected depreciation dictate the current value of the property. The Cost Approach is mostly used when first establishing the value of a new property, or in a situation where there are limited comparable sales. In a non-disclosure state like Texas, this method is a good way to understand the value of a property, since there isn’t a great deal of market data available.
Can I find out the exact value of a home in Texas?
It’s difficult to pinpoint the exact value of homes in Texas because in different counties, property assessments are done differently. Moreover, Texas is a non-disclosure state, meaning that property owners do not have to reveal the sales price of their property as a matter of public record. However, an approximate figure of $300,000 is what the average would be across the state. Getting in touch with real estate experts from Texas will help you get a better idea of the property prices.
If you’re planning to invest in property in Texas or already own property in the state, understanding how to find the value of a home is very important. However, given the nature of Texas laws, it’s best to do so with the help of real estate professionals.