Very Good? DCAD Ratings Show a Deep Divide Over Desirability

The Dallas Central Appraisal District and I have very different opinions on what is considered “desirable,” it seems.

Last year I began to notice a change in how DCAD valued certain multi-family and high-rise condo properties. Specifically, I noticed that The Warrington units of the same floor plan and judged as being in the same condition were almost always valued the same. On the surface, this seems logical, but is it?

First, a little background.

DCAD categorizes homes by what they call “desirability” but might as well be called “condition.” Unfortunately “desire” seems more in line with location than a structure’s physical repair. There are eight buckets of desirability ranging from undesirable to excellent. During this year’s annual property tax challenge, I was told that single-family homes utilize all eight while condos use fewer. For example, for my Athena floor plan, there are only four categories used – Average, Good, Very Good, and Excellent.

Think of desirability as a multiplier in the assessed valuation equation. If “average” equals one, then those properties rated lower get a base value multiplied by something less than one. The opposite math for those rated above “average” being multiplied by something more than one.

For example, an “average” property valued at $100,000 gets multiplied by 1 and remains $100,000. But the same home rated as “good” might be multiplied by 20 percent resulting in a $120,000 valuation. A cursory look makes me doubt that DCAD is using percentages, but rather flat dollar amounts between rating categories.

In a real example, the difference in value between same-sized end units at the Athena rated as “average” and “good” is $66,470. However, the difference between both “good/very good” and “very good/excellent” are the same $56,970 addition. This hints that a flat dollar amount is being used over a percentage gain.

Either way, there’s a standard calculation being used as units cross “desirability” categories. Make sense?

Time Breeds Inaccuracy

But here’s the thing: It’s one thing to rate all units as “excellent” when they are newly built, but over time, this assessment diverges. The longer the time, the more divergent.

DCAD can certainly use an algorithm that depreciates a property while at the same time balancing that against overall market dynamics. They can use building permits to move a property from “poor” to “excellent” after a major renovation. But they can’t accurately measure unit condition over the decades.

While DCAD sees building permits issued, they don’t see actual sales data (they bring up Zillow when you’re talking to them, not MLS data). They also can’t know about alterations done either without a building permit or work done not requiring a permit. They also don’t know the living habits of the owners – are they fastidious or slobs who let everything fall apart? Right now there’s a strong candidate for a total gut/renovation that’s rated as “very good” while a recent gut/renovation is only rated as “good” when it should be “excellent” (and whose square footage is 600 square feet off).

From the street, you can see which units inside the Athena have enclosed their balconies.

Size Matters

Another wrinkle in the current crop of DCAD appraisals is square footage accuracy. One might think that all units in a given floorplan are the same size – and maybe they once were – but time can change that, too.  For example, there are three high-rises I’m aware of that allowed residents to enclose all or part of their balconies – Athena, Park Towers, and Claridge. DCAD’s tracking of this phenomenon is shockingly poor considering Google Streetview is available in any browser. Without leaving your desk you can see which balconies are enclosed.

In fact, this is how I challenged my taxes this year. Of the 26 units of my floorplan that were rated “good,” only four still retained their open balconies, yet all were valued the same. My challenge was that I was valued unequally given my home was ~300 square feet smaller than the vast majority.

I was told that DCAD saw that the majority were enclosed and assumed the larger space for everyone. Whereas it used to be called out under “Additional Improvements” it was just assumed – although not generally reflective in the square footage reported by DCAD.

A nearby low-rise building had much the same complaint with patio space being taxed at the same rate as neighbors who’d enclosed theirs.

My walk-in appraiser told me that they wait for buildings to file amendments when square footage changes. The problem is that few/none do. I suggested being proactive and asking for the information from the buildings to set a bar … or in the case of balcony enclosures, fire up Google and have a look.

Another problem comes when parts of units are sold to neighbors. Some of these swaps are listed in condo documents that are filed with DCAD, others not. The Stoneleigh has many units who have purchased parts or all of adjoining units that messes up their measurements. But while these have been reported to DCAD as a new building, older buildings haven’t been so forthcoming.

For example, I’m aware of a combined unit that’s reflected by DCAD, but is not shown in the building’s own condo docs. The condo isn’t trying to hide anything, the docs don’t reflect it because the combination didn’t affect any of the common elements (they just blew a hole in a wall and joined two units).

Asking Price Lower Than Assessed Value

Another avenue of inaccuracy comes when homes are listed for sale. That “very good” gut-able unit listed above that’s now for sale? Its current list price is $35,000 less than its assessed value. I’m aware of another gut-able listing for $1.6m that’s been for sale forever that’s valued at $2.124m.

Of course, it more often works the other way.

The question being, why can’t DCAD keep track of listings? Surely it would be less time consuming to check new/changed listings daily than owners flooding their offices annually to protest.

Hey, I think simplifying a willy-nilly system is admirable. But I also think that such rigid buckets may only be slightly less inaccurate than before – and get more out of date as a building ages. As it is now, it certainly doesn’t present accurate data for valuation and wastes a lot of owners’ time protesting the obvious. It’s also caused some valuations to increase dramatically as units face a true-up to the new system.

A little homework on DCAD’s part before rolling out this new method for assessing multi-family properties would have saved some time and angst for everyone.


Remember:  High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. In 2016, 2017 and 2018, the National Association of Real Estate Editors recognized my writing with three Bronze (2016, 2017, 2018) and two Silver (2016, 2017) awards.  Have a story to tell or a marriage proposal to make?  Shoot me an email sharewithjon@candysdirt.com. Be sure to look for me on Facebook and Twitter. You won’t find me, but you’re welcome to look.