Talking with a Municipal Appraiser
Normally I try to write about something entertaining on Wednesday, but today I want to get my thoughts down immediately. I got to have an uninterrupted hour with a municipal appraiser. We talked about how appraisals for tax purposes are done, went through common questions, and discussed misunderstandings and urban myths about the tax appraisal process. Here’s what this person* had to say!
*To protect their privacy, I will not give their name or any details about where they work in Southeastern Wisconsin.
This post only speaks to Wisconsin. Laws and practices outside of Wisconsin will be different.
Mass Appraisals vs. Broker Market Analysis or Fee Appraisals
The purpose of property assessments is to assign an estimation of value used to distribute the municipal tax burden fairly across all classes of property. Assessments are done utilizing the concept of mass appraisal.
Mass appraisal means that homes are compared against other homes throughout the municipality over the last two years. In a real estate broker’s world, we compare similar homes within a tight radius (we start at 0.25 miles and widen our search as necessary) and within a much tighter timeframe (newer than 6 months preferred but never more than 12 months). As you can imagine, a real estate broker’s analysis for one property can be far more accurate than a mass appraisal for multiple properties!
This is also true with fee appraisals, where the homeowner or a bank pays a fee to do an appraisal. Fee appraisals compare similar homes within a tight radius (0.25 miles and widen as necessary) and within an even tighter timeframe (newer than 6 months without very specific reasons).
Outsourcing of Appraisals
Most municipal assessments are outsourced. The municipality saves by not having an in-house appraiser. Unfortunately, this also means that reaching the appraiser may be difficult; remember, the same appraiser may work for many municipalities scattered across different counties!
This is why we see hours of 7-8:15 AM every second Tuesday!
What is Appraised?
Appraisers appraise the land itself, all buildings, and all improvements. This includes all fixtures, rights, and privileges that run with the land. (Deeded lake access, easements, gazebos, garages, etc.)
Are Sales Ever Ignored?
Yes! Assessments are based on arms-length transactions only. Sales between family members, short sales, foreclosures, etc., are never considered by municipal appraisers when assigning value.
When are Assessments Made?
Assessments are made on January 1 of each year. How a property is described on January 1 is how it will be assessed for the entire year.
New construction may be taxed as raw land for up to a year! Remember, assessments change on January 1. If property begins as raw land on Jan 1, a house is built in March, and the house is completed and sold in July, it will be taxed as raw land that year! The new owners will receive a much larger tax bill the next year.
When are Notices of Property Tax Assessment Changes Mailed?
Notices of changes in assessed value are mailed in April and May.
When do Property Tax Appeal Boards Convene?
The first hearings are generally set within 30 days of the second Monday in May.
What to Do if the Appraisal Seems Grossly Off?
Call the appraiser and ask, “When is the last time you did a re-valuation?” If one was done in a year or two, you may want to request a review. If it has been a while, perhaps it’s time to request an updated valuation.
What Changes Affect Assessed Value?
Adding a deck, shed, patio, central air unit, outbuildings, rehab projects, additions, etc., should all affect assessed value. Furthermore, the property’s exterior condition (updates and renovations, neglect or damage, structural issues, etc.) will be taken into account. Finished basements and the level of finish is also important- you will be judged differently for a walk-out basement with two bedrooms and a bathroom versus a standard basement with an old hunk of carpet surrounded by 1970s fake wood paneling!
What are the Most Common Myths about Tax Assessment?
Myth #1: Corner lots are assessed higher. False! Residential corner lots are assessed the same amount as regular lots. They may be higher if they have more land, but the value per acre is still the same. Corner commercial lots may be assessed higher.
Myth #2: Concrete driveways are assessed higher than asphalt driveways. False! A driveway is a driveway to an assessor. Shared/joint driveways and easements may raise or lower valuations, though.
Myth #3: Decks, gazebos, and anything not attached to the house can’t be assessed because they are not attached to the house. False! Any improvements on the property may be assessed.
Myth #4: All sales are reported and should adjust the assessment. Partially false! While all sales are reported, sales that are not arms-length (short sales, foreclosures, sales between family members, etc.) are not valid for tax appraisal purposes.
Myth #5: Buyers pay more when they see a higher tax value. False! This appraiser laughed as they recounted how prospective sellers come into their office asking for a higher appraised value just before trying to sell. Tax value is not directly connected to actual market value; these sellers only succeed in raising their own taxes and making life more expensive for their buyers. In some cases, the increased assessment and higher taxes actually make their home less saleable!
While I am not a tax appraiser, I’ll be happy to help you learn your property’s real market value. Please don’t hesitate to call or email me if I can be of assistance!