Can an appraisal reclassify large groups of homes to a higher CDU rating all at once?

[nhewitt11]

I’m in North Texas and reviewing how my local appraisal district is handling property valuations. I noticed that they appear to have moved en mass hundreds of homes in a CAD neighborhood from a lower CDU (Condition, Desirability, and Utility) rating to a higher CDU rating all at once, rather than reviewing each property individually.

From my understanding, Texas Property Tax Code §23.01 and USPAP requires each property to be appraised based on its individual characteristics. Mass reclassifications like this seem questionable, since not every home’s condition or desirability would reasonably improve in the same way at the same time.

Does anyone know if appraisal districts are actually allowed to do this? Has anyone challenged a similar practice before?

 

[TerryRohrer]

Reclassification is generally a regrouping due to usage (eg, commercial or residential). Your CDU, similar to the ECF here (economic condition factor), is basically a broad fudge factor. For example, say you have two groups of properties modeled together. Someone notices one group is, on average, being valued below the average of their sale prices while the other is, on average, being valued above the average of their sale prices. The fudge factor ensures that, on average, both groups are valued similarly relative to the market. This slight of hand ensures compliance with typical constitutional requirements for “equalization”. Here, the ECF is slight of hand to ensure that, on average, the valuations from the sales comparison and cost approaches are identical within a neighborhood or model area. These games are unrelated to valuation and generally satisfy legislative demands made to promote an appearance of equal treatment of property owners.

 

[nhewitt11]

Reclassification is generally a regrouping due to usage (eg, commercial or residential). Your CDU, similar to the ECF here (economic condition factor), is basically a broad fudge factor. For example, say you have two groups of properties modeled together. Someone notices one group is, on average, being valued below the average of their sale prices while the other is, on average, being valued above the average of their sale prices. The fudge factor ensures that, on average, both groups are valued similarly relative to the market. This slight of hand ensures compliance with typical constitutional requirements for “equalization”. Here, the ECF is slight of hand to ensure that, on average, the valuations from the sales comparison and cost approaches are identical within a neighborhood or model area. These games are unrelated to valuation and generally satisfy legislative demands made to promote an appearance of equal treatment of property owners.

Thanks for the explanations on how appraisal districts use CDU (or ECF in some states) as a kind of “fudge factor” to equalize values across neighborhoods. I understand this is intended to make sure groups of properties line up with sales ratios and satisfy equity requirements.

Here’s where I’m still struggling:

If CDU/ECF is just a broad equalization tool, doesn’t that bypass Texas Property Tax Code 23.01, which says each property must be appraised based on its individual characteristics? (I know you are not from Texas so this may not be a fair question.)

In my case, moving properties from Fair → Average increased taxable values ~10% (about $20K per property, $600/year in taxes). When I protested with photos and estimates, CAD refused to move mine back down.

Doesn’t this practice effectively sidestep USPAP’s requirement for appraisers to retain evidence supporting their classifications? Or are mass appraisal adjustments exempt from that?

If this is more about “appearance of equal treatment” than true market value, isn’t that potentially harmful to taxpayers who don’t protest or understand what changed?

I’d like to hear from appraisers: is this really considered compliant with USPAP and Texas law, or is it more of a gray area that’s tolerated because of mass appraisal limitations?

 

[Terrel L. Shields]

Not many mass appraisers on this forum - in particular,Texas ones. You might discuss this with the assessor or CAMA (mass appraiser contractor) for a deeper understanding of the issue.

 

[sputnam]

I think your talking about what we would call Tax Assessors where I live. Why couldn't they reclassify a group all at once? They are the government.

 

[JTip]

This is one of those situation were you need an attorney.

The funny (or unfunny) thing is, the savings (from potential reduced tax savings) is less than what you would spend on retaining an attorney, and that's what they are banking on.

Code is law, and we are not attorneys.

First two words of the code: Appraisals generally.....

 

[Zoe]

Thanks for the explanations on how appraisal districts use CDU (or ECF in some states) as a kind of “fudge factor” to equalize values across neighborhoods. I understand this is intended to make sure groups of properties line up with sales ratios and satisfy equity requirements.

Here’s where I’m still struggling:

If CDU/ECF is just a broad equalization tool, doesn’t that bypass Texas Property Tax Code 23.01, which says each property must be appraised based on its individual characteristics? (I know you are not from Texas so this may not be a fair question.)

In my case, moving properties from Fair → Average increased taxable values ~10% (about $20K per property, $600/year in taxes). When I protested with photos and estimates, CAD refused to move mine back down.

Doesn’t this practice effectively sidestep USPAP’s requirement for appraisers to retain evidence supporting their classifications? Or are mass appraisal adjustments exempt from that?

If this is more about “appearance of equal treatment” than true market value, isn’t that potentially harmful to taxpayers who don’t protest or understand what changed?

I’d like to hear from appraisers: is this really considered compliant with USPAP and Texas law, or is it more of a gray area that’s tolerated because of mass appraisal limitations?

I am not sure, but they are not putting a market value appraisal USPAP compliant on your individual property. Mass appraisal is different for tax assessment purposes.

People get tax assessments changed on their individual properties by going to tax assessor and saying this property is very similar to my property and I am paying more or less property taxes than they are. Their tax assessment don't get changed by the property tax assessor based on a market value appraisal of your individual property.

 

[Zoe]

Call this guy's office. He may not know in Texas but they do tax appeals in a few states for individuals or groups.

Bryan Reynolds is the appraiser. You'll find contact for him at this link.

Our Instructors - Appraiser eLearning

appraiserelearning.com

I feel pretty confident he can answer any general questions you might have. He would not be able to help you individually on your tax assessment without you paying him.