In the State of Illinois, the law dictates that each property, other than farmland, must be viewed, inspected, and revalued once every four years (every three years in Cook County). Farmland is reassessed each year. This four-year cycle of assessments is referred to as the Quadrennial Reassessment. The year 2023 is presently in the fourth year of the cycle, and assessors across Illinois are in the process of reassessing properties.
The most obvious and direct impact of the quadrennial reassessment to property owners is the likelihood that taxes will increase. A property’s value is determined by many factors and can increase for several reasons, such as an overall improvement of the local neighborhood, increased sale prices of nearby properties, and inflation. While sale prices of comparable properties may be an indicator of value at the time of sale, economics shift and markets change, especially in the world of commercial real estate. Assessments also do not take into account demand for certain property types, industrial versus office, for example. Four years is a large gap in time, and what was a highly sought after 5,000 SF industrial office building with an acre of truck parking in 2020 might not retain the same market value in the fourth quarter of 2023.
The Difference Between an Assessor and an Appraiser
In comparing the two, a general rule would allow that a good assessor and a good appraiser will both use three approaches to value to determine a property’s value. The Cost Approach is performed by calculating the cost of replacing the improvements, subtracting all depreciation, and adding the land value. The Sales Comparison Approach (or Market Approach) is performed by calculating the value of property by analyzing the selling prices of comparable sales. The Income Approach is performed by calculating the present value of the property by analyzing the income from similar income-producing properties.
Here’s where the primary difference between an assessor an independent appraiser can potentially impact a property owner’s tax bill. Unlike an independent appraiser, who has the time to carefully analyze the various approaches to value before arriving at an estimate of value for one property, the assessor must estimate values within a relatively short period of time. The assessor is essentially a mass appraiser.
How an MAI Certified Appraiser Can Help
The highest level of appraisers earned the MAI designation and are experienced in the valuation and evaluation of residential, commercial, and industrial properties. In partnership with an experienced commercial real estate broker and attorney, they can also advise clients on real estate investment decisions. MAI appraisers have met rigorous requirements surrounding their education, testing, and experience and possess an elevated understanding of commercial property valuation laws.
Assessments apportion the tax burden among property owners so that the tax burden is fair and equitable among all property owners. This means that all property owners should be paying their fair share of taxes according to the value of their property. However, if you believe your property is not assessed correctly or your assessment is not equitable (fair) in relationship to other properties, you can and should request a reassessment of your property by your assessor for the next tax bill. Because the appeal process can be complicated and can require evidence to support your request, it is often more effective to involve the help of an expert appraiser to support or lead the process.
About Cornerstone Realty Valuation Services
St. Charles, IL – Cornerstone Realty Valuation Services is a full-service commercial real estate appraisal group specializing in standard and non-standard commercial property valuation — from industrial developments and multi-tenant office space, to airports, gas stations and farmland.
Our appraisal team consists of MAI-designated, certified appraisers, with an average of 35 years of experience. Working with property owners, their attorneys and local assessors, the appraisers at Cornerstone are committed to accurate, timely appraisals with their client’s best interest in mind.