As a homeowner, you may think that protesting your property taxes is unnecessary if you're planning to sell your property. However, that mindset could be costing you potential buyers and even delaying the sale of your home. Protesting your property taxes is not only a smart financial decision for you but also a strategic move to make your home more appealing to buyers. Here’s why it’s crucial to protest your property taxes even when selling your property.
1. Lower Taxes = Lower Monthly Payments for Buyers
When buyers evaluate a home, they’re not just looking at the purchase price. Lenders calculate their monthly payments based on four key components: principal, interest, taxes, and insurance (commonly referred to as PITI).
If your property taxes are high, the "taxes" portion of their payment will also be high, increasing their overall monthly payment. For many buyers, this could be the deciding factor between your home and another similar property with lower taxes. By protesting and lowering your property’s assessed value, you make the monthly payment more affordable for buyers, giving them more confidence in purchasing your home.
2. Higher Chance of Buyer Affordability Approval
Lenders use the most recent assessed value of your home to calculate property taxes during the underwriting process. A high assessed value could cause a buyer to fail the lender’s debt-to-income (DTI) ratio requirements, particularly in cases where affordability is already tight. This can limit the pool of buyers who qualify to purchase your home.
Lowering the assessed value through a property tax protest helps potential buyers meet affordability requirements more easily, increasing the likelihood of a successful sale.
3. Boosting Your Home’s Marketability
In a competitive housing market, buyers are looking for homes that provide the best overall value. A home with lower taxes has a clear advantage over a comparable property with higher taxes. By reducing your property’s tax burden, you give buyers one more reason to choose your home over the competition. Lower carrying costs make your property more attractive, even if the listing price is similar to other homes.
4. Minimizing Last-Minute Negotiations
If buyers discover during the purchasing process that the property taxes are excessively high, they may ask for concessions or a reduction in the sale price to offset their increased costs. This could derail negotiations or force you to make financial compromises that you hadn’t anticipated. Protesting your taxes beforehand helps avoid these scenarios, leading to smoother and faster transactions.
5. Keeping Your Sale Timeline on Track
When buyers can’t meet affordability requirements or hesitate due to high taxes, the sale process can drag on longer than expected. A prolonged time on the market can negatively impact your home’s perceived value, and you may need to lower the asking price to generate new interest. By reducing the tax burden upfront, you eliminate one of the common barriers to closing a deal quickly.
6. Cash Buyers Benefit Too
Even cash buyers appreciate lower property taxes, as it reduces their annual carrying costs for the home. Whether they plan to live in the property or use it as an investment, lower taxes make the property more appealing and financially beneficial.
7. The Protest Process is Simple and Free
Filing a property tax protest is a straightforward process in Texas, and it’s free. Most counties allow homeowners to file online, and many even provide tools to help you build your case. If you’re busy preparing your home for sale, you can hire a property tax consultant to handle the protest for you, often charging a percentage of the tax savings as their fee. Either way, the potential return on investment is well worth the effort.
How to Protest Your Property Taxes
- Review Your Appraisal Notice: Pay close attention to the assessed value and compare it to recent sales of similar properties in your area.
- Gather Evidence: Collect data on comparable sales, photos of needed repairs, or any factors that could lower your property’s value.
- File Your Protest: Submit your protest to the county appraisal district by the deadline (typically May 15 or 30 days after receiving your appraisal notice).
- Attend the Hearing: Present your evidence at the informal meeting or formal Appraisal Review Board (ARB) hearing.
Conclusion: A Win-Win for Sellers and Buyers
Protesting your property taxes isn’t just about saving money while you own the property; it’s also about creating a more compelling offer for buyers. Lower taxes lead to lower monthly payments, easier affordability approval, and a stronger market position. By taking the time to protest your property taxes, you’re setting the stage for a smoother, faster, and potentially more profitable home sale.
If you’re thinking about selling your home and want advice on how to maximize its value, feel free to reach out. Protesting your property taxes is just one of the many ways you can make your property stand out in today’s market.
