Abstract: Property Assessments and Information Asymmetry in Residential Real Estate

Volume 28, Number 3, 2006 of the Journal of Real Estate Research

Property Assessments and Information Asymmetry in Residential Real Estate

Fathali Firoozi Department of Economics University of Texas at San Antonio 6900 North Loop 1604 West, San Antonio, Texas, 78249-0633 Email: ffiroozi@utsa.edu	Daniel R. Hollas Department of Economics University of Texas at San Antonio 6900 North Loop 1604 West San Antonio, Texas, 78249-0633 Email: dhollas@utsa.edu
Ronald C. Rutherford Department of Finance University of Texas San Antonio 6900 North Loop 1604 West, San Antonio, Texas, 78249-0637 Email: rrutherford@utsa.edu	Professor Thomas A. Thomson Department of Finance University of Texas San Antonio 6900 North Loop 1604 West San Antonio, Texas, 78249-0637 Email: tthomson@utsa.edu

Abstract: We present a game theoretic model of property tax assessment that allows a tax appraiser to either choose a high a low assessment. The owner either accepts or challenges this assessment. We then use a “fixed effects” regression model to evaluate the differences in assessed values of a sample of houses from Bexar County, Texas during 2000 and 2001. Where the owner of the house is identified as a state licensed property tax consultant, the assessed value, after adjusting for size, age, and other economic characteristics, ranged from a statistically robust 2.5% to 6.2% lower than neighboring houses.