How Your Property is Appraised
What is Market Value?
Finding the market value of your property involves discovering the most likely price that unrelated individuals both acting with full knowledge of the facts and in their best interest would pay for it in its present condition. This is what is known as an ‘arm’s length transaction’. Finding this number is not always easy, however, because of the limited number of actual sales that occur each year and because the assessor has to find out what this value would be for every property, sold or not sold and no matter how big or small. It is exactly this ability to estimate value that is one of the strengths of the property tax system. But the assessor’s job doesn’t stop there. Each year the process has to be repeated all over again, because the market value of almost everything is constantly changing one year to the next.
Why Have a Property Tax?
The theory behind utilizing a system of Property Tax is that those members of the community who have the advantages of good schools, fire and police protection, and other public benefits can absorb their fair share of the cost. This share is in direct proportion to the amount of money our individual properties are worth. This is is known as the concept of ‘Ad Valorem’ or according to value.
The property tax is part of a well-balanced revenue system. It is a more stable source of money than sales and income taxes because it does not fluctuate when communities have recessions. When the community spends tax dollars on better schools, parks, and so on, your property values rise. Some of the windfall benefits you receive are recaptured by the property tax.
How Your Property is Appraised
The assessor’s office first reviews all the property to be assessed then values it. Accurate appraisals require constant searching and digging for significant facts to accumulate and analyze in order to estimate the fair market value of your property. Assessing offices in Illinois are required by statute to keep ‘an accurate record keeping system’. In addition to a great many paper files, Frankfort Township utilizes a state-of-the-art, computerized assessment tool for property record keeping and assessing.
To find the value of any piece of property the assessor must first know several factors such as: the current price of similar properties, the cost to replace it, the cost to appropriate and keep it in repair, what rent it may earn, and many other dollar facts affecting its value. Using these facts, the assessor can then go about finding the property’s value in three different ways:
- The Sales Comparison Approach
- The Cost Approach
- The Income Approach
The Sales Comparison Approach
This method compares your property to others that have sold recently. These prices, however, must be analyzed very carefully to get the true picture. One property may have sold for more than it was really worth because the buyer was in a hurry and would pay any price. Another may have sold for less money than it was actually worth because the owner needed cash right away and the property was sold to the first person that made an offer. When using the sales comparison approach, the assessor must always consider such overpricing or under pricing and analyze many sales to arrive at a fair valuation of your property. Size, quality, condition, location, and time of sale are also important factors to consider. The Sales Comparison Approach is considered to be the most reliable approach for valuing residential property.
The Cost Approach
This technique values your property based on how much money it would take, at current material and labor costs, to replace your property with one similar. Using this approach, the assessing official or appraiser essentially ‘re-builds’ the the property from the ground up utilizing every detail he or she can. If the property is not new, the assessor must also determine how much it has depreciated. This approach generally establishes the high end of what the fair market value would be for the simple reason that if two properties are considered identical but one is priced lower a buyer would choose the less-expensive property. Nonetheless, the Cost Approach can be an extremely accurate way to value property.
The Income Approach
This process evaluates how much income your property would produce if it were rented as an apartment house, store, or a factory. The assessor must consider operating expenses, taxes, insurance, maintenance costs, and the return most people would expect on your kind of property.
Why Assessed Values May Change From Year to Year
When market value changes, naturally so does assessed value. For instance, if you were to add a garage to your home, the assessed value would increase. However, if your property were in poor condition, the assessed value would decrease. The assessor does not create the value. People establish value by their transactions in the market place. The assessor simply has the legal responsibility to study those transactions, change the factual data, and appraise property accordingly.
Assessed Value and the Tax Rate
The assessor’s office has very little to do with the total amount of taxes collected. The assessor’s primary responsibility is to find the fair market value of your property, so that you may pay only your fair share of the taxes.
The amount of taxes you pay is determined by a tax rate applied to your property’s assessed value. The tax rate is determined by all the taxing agencies such as city, county, school districts, etc. and also depends on what is needed to provide all the services you enjoy.
What else does the assessor do?
The assessor’s office also keeps track of ownership changes, maintains maps of parcel boundaries, keeps descriptions of building and property characteristics up to date, and keeps track of individuals and properties eligible for exemptions and other forms of property tax relief. Most importantly, the assessor analyzes trends in sales prices, construction costs, and rents, to estimate the value of all assessable property. All this must be done economically, currently less than 1/10th the cost of hiring someone to appraise your property.
What Are Your Rights and Responsibilities?
In your opinion, if the value of your property differs from the assessor’s, by all means go to the office and discuss the matter. Staff will be glad to answer your questions about the appraisal and explain how to appeal if you cannot come to an agreement. The assessor’s office relies on the property owner for information. You can help by providing accurate information. If you feel taxes are too high, you should make your opinion known to the proper taxing authorities.
If after talking with your local assessor you still feel that your assessment is too high, you have the right to appeal. This right to appeal is part of the due process provided every property owner in Illinois and is a formal legal matter involving the property owner, Will Board of Review and very often the Township Assessor. The time to appeal has ended. The deadline was September 11, 2023.
Understanding the 2023 Quadrennial Assessment
Watch our full length video explaining the details behind the Quadrennial Assessment here.