How to Use Comparable Properties to Your Advantage

Texas is a non-disclosure State. That simply means that home sales and amounts that were paid are not public information and may not be known. A property owner has no obligation to tell anyone what was paid for their property or what they sold it for. Only the property owner (and perhaps the Title Company) will know. This means that finding sales information is not easy. Most Texas Realtors and sales agents subscribe to a multiple listing service (MLS) that requires participants to disclose sales information. Without adequate and accurate sales information, most property evaluations are mere guesses. Costs may be used to show what a "duplicate" property might cost to build, but cost does not always equal value. An extreme example might be a hotel built at the north pole... it cost plenty to build, but what is it worth if no one visits? Commercial properties might be effectively valued using their income to justify and support their value... but a home does not usually generate income, just the use and pleasure of home ownership, plus some intangible future benefit when sold. So how do you determine the value?

What is a comparable property?

The best comparable is the house next door, similar in construction and condition, that sold and closed yesterday. If the sale was arms-length, with both buyer and seller acting in their own best interests, this sale should help define the "market value" of your home. A "good" comparable is a similar home in your neighborhood that closed recently. No homes are identical to yours, but a comparable is a home similar enough to be compared with yours.

How do you find comparable properties?

By researching recent sales of similar properties. In a tax protest, the effective date of valuation is January 1st, so similar properties that sold and closed in December would most accurately predict the value on January 1st. Sales that closed after January 1st would also be appropriate if the contract was made in December, since that is when the "market value" of the comparable was established. Properties that sold and closed after January 1st can be used to show continuing value trends, but the idea of a comparable sale is one where the value is known before the effective date of valuation.

How do you find recent sales of similar properties?

There might be a number of sources. A nearby neighbor might have recently sold and moved, or a new neighbor might have recently bought and moved in. The appraisal district may be able to provide recent neighborhood sales. If you have ever bought or sold a home in Texas, it is likely the appraisal district