This article is to update you on assessments as they relate to what everyone feels is a sinking real estate market. First, the statutory level of assessments in Illinois is one-third market value as of January 1st of the tax year. What that means in plain English is that – for 2008 we will be valuing (assessing) property as of January 1, 2008 – considering sales that took place during 2007 – not 2008. The 2008 sales would be applicable for the 2009 assessment year.
McHenry Township is divided into over 100 different ‘neighborhoods’ for assessment purposes. That is, areas of similar development with similar features such as septic, community water, sewers, year built, etc. We are in the process of conducting sales ratio studies within each of these neighborhoods. A State of Illinois, Department of Revenue sales ratio is calculated by using the prior year assessed valuation divided by the current year selling price. For this study 2007 sales should be reviewed against the 2006 assessments. However, to get a more realistic picture of the assessments vs. the market I am using the 2007 sales against the 2007 assessments. This takes into consideration the 2007 equalization factor and the areas that were reassessed for 2007.
While there may be fewer sales during 2007 we are more interested in – when the sale does take place, what is the sales ratio of the sale? How close was the assessment to the selling price? Was the market value by the assessment higher or lower than the actual selling price? That is the true measure of assessments; not generalities extracted from national news reports.
So, what are we doing about it here? After completion of the township-wide sales ratio study I will be able to identify if individual neighborhoods are either under or over assessed. This is what I do every year. Since I’ve been the assessor the sales ratio study by neighborhood has been the dictating fact of where I reassess. If an area is under assessed they must be increased. If an area is over assessed they must be decreased.
A reassessment does not always mean an assessment increase. During 2007 several areas were increased but there were at least two whole neighborhoods that were decreased. Three areas are absolutely up for revaluation during 2008. They are Route 120 properties, McCullom Lake waterfront and Wonder Lake waterfront properties. I’m hoping we don’t have to do any more wide-area revaluation than that but I will be watching what is going on in the market for additional direction.
In summary, if your house has been on the market for at least three months with an asking price less than what the assessment indicates call the office and set up an appointment or stop by with copies of the listing sheets. I’d like to document the original listing price and any price reductions that may have taken place during the listing. I’d also like to know the feedback that ‘lookers’ have said about your property. Is there an assessable building characteristic or condition factor that is detracting from the market value? Don’t ask for an assessment reduction if your asking price is higher than the assessed value indicates simply because it’s been on the market for a while. It’s easier to work through these issues during the course of the year instead of waiting until the appeal period.
