With the recent surge in real estate prices comes a rise in property taxes, something prospective buyers and borrowers might not be considering as they look for their new home. Many may not realize property taxes are based on the current market value and what that means in today’s market. Something that’s made even easier to overlook with all the focus on inventory levels and bidding wars. In circumstances like this, it becomes your job as a real estate professional or mortgage professional to keep track of where property taxes might be too high for your buyers budget.

While homeowners will never be happy when property taxes are due, it may be beneficial to explain what exactly property tax revenue is paying for since many (especially younger buyers) may not fully understand what their money is going toward. Property taxes fund services like infrastructure, schools, libraries, parks, public transportation, and so much more.

Property taxes not only vary by state, but by county. For the sake of simplicity though, let’s look at which states have the highest property taxes, according to Nasdaq.

  1. New Jersey: 2.13%
  2. Illinois: 1.97%
  3. New Hampshire: 1.89%
  4. Vermont: 1.76%
  5. Connecticut: 1.73%
  6. Texas: 1.6%
  7. Nebraska: 1.54%
  8. Wisconsin: 1.53%
  9. Ohio: 1.52%
  10. Iowa: 1.43%

If your clients happen to be looking to buy a property in one of these states, you’ll definitely want to keep an eye on their budget and advise them accordingly.

Investopedia actually lists a few ways in which homeowners can minimize their tax bill for those that are more concerned and looking to do so. Owners can do things like focusing less on curb appeal and avoiding unnecessary additions. Since tax assessors will be basing much of their research on what the outside of a property looks like, it stands to reason that better looking homes are taxed more.

Telling your new buyers they may not want to make the outside of their new homes more visually attractive is not always realistic though, so what else can be done?

  • Property taxes are public record, so reviewing comparable homes in the area may give you better insight on whether or not your clients are paying a reasonable amount.
  • Suggest when the assessor shows up, they walk around with them. This allows the new homeowner to point out the negatives of a property and things that haven’t been fixed yet that the assessor may not notice. Better quality properties are taxed more so decreasing the value in their eyes will decrease payments.
  • Suggest possible exemptions for homeowners that fall into categories like senior, veteran, disabled, etc.

As a real estate professional, the more data you have, the higher value you’ll be to your clients. With property data sourced by The Warren Group you’ll be able to provide the most up-to-date details on property characteristics for more than 155 million properties across the country. For those clients thinking ahead about future tax payments, it will allow to you to provide historical tax information so they’ll have a better understanding of what they may end up paying.

While you’re at it, check out all of the other data solutions we provide, and talk to a data specialist, to see how you can utilize market and individual property intelligence to set yourself apart from the competition with higher quality services for prospective clients.