Your neighbor’s home sale generates valuable information that can help determine your home’s value, even your property tax bill. But what happens when that home is sold in secret?
It’s an overlooked question inside the national fight over private listings—a debate that has inspired laws restricting the practice in Washington, Connecticut, and Wisconsin, as well as a recently passed proposal in New York that now awaits Gov. Kathy Hochul’s signature.
So far, that fight has centered on fairness and market factors: whether sellers deserve more privacy, whether buyers are being shut out, and whether homes sold off-market really get the best price.
But in nondisclosure states, where sale prices are already withheld from public records, private listings raise a bigger question: What happens when the data used to value and tax homes disappears behind a second layer of secrecy?
In the places where private listings and nondisclosure laws overlap, the people best positioned to hide or selectively reveal sale information may also be the ones best positioned to lower their tax bills.
Secrecy by design
Sergio Gárate first ran into the problem as a homebuyer.
After moving to Mississippi, a nondisclosure state, he asked his agent for comparable sales in a neighborhood he was considering. As a newcomer, he wanted to get a sense of the local market, but he estimates that as much as 80% of the prices he requested were not disclosed.
For Gárate, a real estate researcher at Emory University, the experience inspired a line of inquiry into a deceptively simple question: When housing data is hidden—who benefits, and who pays the price?
The answer, he found, begins with information asymmetry—the economic term for when one side of a financial transaction knows more than the other.
In Gárate’s case, longtime locals may have known nearby sale prices through agents, neighbors, or word of mouth. Meanwhile, a newcomer like him could see only what was in the public record or what his agent could access through the multiple listing service.
His research has shown that this type of imbalance has real, measurable consequences. Nondisclosure states have stronger rates of appraisal bias and a higher mortgage default probability for the most financially constrained borrowers, according to a study he published with colleagues in 2025.
The consequences amplify when considering other stakeholders who are also left in the dark, like appraisal districts.
In Texas, another nondisclosure state, “State law requires that we appraise property using sales data,” Leana Mann, chief appraiser of the Travis Central Appraisal District, told Realtor.com®. “All we can do is work with the data we have.”
But that data is often an imperfect patchwork, according to John Brusniak, a Texas property tax attorney.
He says appraisal districts piece together values from voluntary sales surveys, listing histories, mortgage records, mass-appraisal models, and closing documents homeowners provide when they protest.
“Let them guess what it’s sold for,” Brusniak says of the calculation some homeowners make when deciding what information, if any, to provide local appraisal districts. “If they guess too low, then we’re fine; if they get too high, we have a closing statement” that proves otherwise.
In this case, the homeowner has the information advantage, which they can treat as a cudgel or shield—wield it when it helps lower the bill, or hide behind it when it works in their favor.
How missing sale prices can become ‘revenue leakage’
But New Mexico offers a rare glimpse at what that shield may be hiding.
Until 2004, New Mexico was a full nondisclosure state. That meant assessors had no guaranteed access to sale prices. Then, the state enacted a partial disclosure law, requiring key sale data to be shared with local officials for use in property assessments.
The shift gave assessors the data they needed, and researchers a natural experiment.
By comparing property valuations before and after the law took effect, a 2021 study “found strong evidence that nondisclosure laws put downward pressure on property tax revenue.”
Following the transition to partial disclosure, the state saw a roughly 4% increase in annual tax revenue, the equivalent of $1.09 million.
Another study concluded that in the years leading up to the transition to partial disclosure, the Land of Enchantment had collected significantly less property tax revenue than it should have, in part because high-value homes weren’t taxed effectively.
And while that may have represented savings to underassessed owners, it raises a bigger question: If some homes are taxed below their value, who pays the difference?
The problem of taxing high-value homes
Political scientist Christopher Berry tries to answer this question in his seminal paper “Reassessing the Property Tax.” In it, he finds that lower-priced homes are often assessed at a higher share of their sale price than higher-priced homes, leaving owners of less valuable properties with higher effective tax burdens.
“Because a property’s assessed value is the basis for determining its tax bill, inequities in assessments translate into inequities in taxation,” Berry writes.
That inequity is especially important at the very place the New Mexico study also points to: the top of the market.
High-value homes are already difficult to price and are generally assessed at a lower percentage of their market value than more modest homes—a documented phenomenon present across the country, even in states with partial or full disclosure.
One reason is that assessors rely on sales data to determine value, but luxury homes often have few or no true peers.
“Very unique properties are inherently harder to price because they have fewer comparable sales,” explains Danielle Hale, chief economist at Realtor.com. “If private or off-MLS listings are more common for these types of homes, the challenge of valuing them is only magnified.”
In Austin, TX, for example, the least expensive homes were taxed at 1.31 times the rate of the most expensive homes from 2014 to 2023, according to Berry’s research.
In 2022, the owner of a $1 million home paid an average of $11,600 in property taxes. But a fair bill would have been closer to $13,000, translating into an average annual savings of about $1,400 for owners.
It’s a difference that has especially high stakes in revenue-controlled systems, like Texas’, where local governments set tax rates against the taxable value on the appraisal roll.
“When property appraisers don’t have adequate or accurate information to go off of, that necessarily passes the buck, so to speak, to all of the other residents in the state,” Chad Cummings, a corporate, tax, and real estate attorney and CPA operating in Texas and Florida, told Realtor.com last year.
“It’s a zero-sum game. [Local governments] take the amount of money they need, they divide by the number of properties,” he added. “So when somebody’s underpaying, that necessarily means that somebody else is overpaying.”
It’s a different side of the same problem that New Mexico illustrates. While the Land of Enchantment shows how missing sale prices can mean leaky revenue, Texas shows how, when a revenue target still has to be met, it can change who is paying the bill.
Who’s pocketing the lost revenue?
Interestingly, it’s also high-value homeowners who may be the most likely to use off-market home sales.
By nature of these types of listings, they are difficult, even impossible, to accurately track. But one analysis from a real estate group in Austin that offers exclusive listings suggests that off-market listings rise with the list price of the neighborhood—increasing from 15% of sales in neighborhoods near the median list price to 30% and above in luxury and ultraluxury price points at or above $750,000.
These homeowners then double their asymmetrical advantage—their home sale data never hits the MLS, and it doesn’t have to be reported to local governments.
“There’s no question that skews the market,” Austin Mayor Kirk Watson said of private listings at a SXSW event in early 2026. “It’s succeeding in what its intent is, which is to skew the market for that person, and that makes a difference.”
The New Mexico study also suggests that matters for tax rolls.
In some nondisclosure jurisdictions, assessors rely on MLS data as a workaround for missing public sale-price information. But that access is incomplete and imperfect, often leaving out the higher-end sales that are already hardest to value. As a result, relying on MLS data was associated with lower overall tax revenue when compared to mandatory disclosure.
It’s a small but important window into what this double layer of secrecy is costing the public, and why the people best positioned to use the gaps may also be the ones most likely to benefit.
One recent study of homeowners in Dallas County, TX, found that wealthier households and those facing higher tax burdens were significantly more likely to protest their property taxes—primarily because they have more to gain financially from doing so.
Of those who filed formal appeals in 2020, almost 70% were successful, resulting in an average savings of $485 in the first year alone. And for every $100 increase in expected tax savings, a household’s probability of protesting increases by 2.14 percentage points.
This is where the information advantage comes full circle. By leveraging secrecy, the wealthiest households pocket the savings.
