It's a bad deal to make real estate sales prices public
Proposal would infringe on all-important privacy

By DAVID M. LEWIS

The Texas Legislature is considering a proposal that will have an impact on anyone who owns property in the state.

A bill introduced by state Rep. Michael Villarreal, D-San Antonio, would require public disclosure of the sales price in private real estate transactions.

Villarreal's bill has two major flaws. First, enacting this into law would constitute an invasion of privacy. Secondly, it won't work.

Proponents of the new price disclosure legislation contend that such a law would make it easier for government appraisers to appraise property and obtain accurate appraisals for property taxes. Everyone is surely in favor of the best and fairest property tax system we can create.

A close look shows where the weakness of the proposed price disclosure legislation is exposed at its very core.

The disclosure of a sales price can be a misleading indicator. Using a sales price alone to calculate the value of surrounding properties does not provide a solid tool to measure the value of nearby properties.

Without a careful examination of the strengths and weaknesses of a property on an individual basis, getting an accurate appraisal is not possible. For example, two similar shopping centers with freeway frontage can vary in value substantially if one center is easily accessible from a freeway exit and the other center requires a U-turn and more driving for a consumer.

The value of leases and their expiration dates also has a great deal of bearing on the value of a commercial property. If a 40-story skyscraper in downtown sells for $100 million, it does not mean the 40-story tower in the next block is also worth $100 million. Perhaps the second tower is about to lose its major tenant and become 80 percent vacant. Perhaps the tower needs new heating and cooling systems or new high-speed elevators.

There are many variables in evaluating a commercial property. A simple template for determining value on the basis of sales prices alone cannot be developed.

Digging deep enough to obtain an accurate value on a property, particularly for a complex commercial appraisal, requires an appraiser with a great deal of training and experience. How can we be assured that the government appraisers won't take the shortcut and become overly reliant on sales prices data, rather than developing a more time-consuming, but more accurate appraisal based on the entire picture of a property's worth?

The sales price can also be significantly affected by the financing, the terms of the loan and the existence of seller-financing.

Disclosing the sales price is not an instant cure to getting an accurate appraisal. The information must be interpreted by experts.

Just as X-rays must be interpreted by physicians, sales-price information needs sophisticated evaluation. Just as our society needs to be careful with the public disclosure of medical data, we need to keep private the details of Texas real estate transactions.

Sales prices should remain undisclosed information and the Texas Legislature should continue to honor this tradition of respecting private business deals. In an era where more and more of personal data are being exposed over the Internet, the details of a private realty sale between two parties should remain just that private. The prying eyes of government are not required.

This bill is also potentially dangerous in this age of of terrorism and identity theft. Even the individual investors who make $1 million or less on a property sale can become targets.

When sales prices are reported, the information wouldn't become dusty trivia hidden away in the basement of a rural courthouse. The prices would be on the Internet, easily accessible from anywhere in the world. Texans would be exposed. Should the elderly widow have her real estate wealth advertised to crooks and con artists?

If we lift the veil on real estate sales prices, we would open the door to the criminal element to misuse this information. These instances may be rare, but even one tragic case is one victim too many.

This bill would create more problems than it would solve. Disclosing sales-price information is a violation of privacy and would result in misleading appraisals.

Lewis founded Houston-based Lewis Realty Advisors in 1962 and was the managing consultant for the city of Houston in reappraising all of the property in the city in the mid-1970s. He was a founding board member of the Harris County Appraisal District.