Talkin Waukesha Real Estate Weblog

Now that the dust has settled and the rainy season is upon us, we can look a little closer at the recent City-wide reassessment.  It’s always an event when this happens.  People wait with baited breath…. they can’t sleep…. the anticipation is almost overwhelming!  How much will my property value go up and what does that mean for my tax bill??????

It’s no secret, property values have dropped.  Will your property taxes drop accordingly?  This is just an educated guess….. NO !!!   With the slumping real estate market, the City Fathers had to devise a formula that would be palatable and yet serve the purpose of equalizing values*.

*Just a quick lesson – every 5 years or so, municipalities are required to assess properties at 100% of their fair market value.  Then as property values rise and fall, the “assessed value” stays the same and they assign a ratio of assessed value vs. fair market value.  The first year it’s 100%.  If property values go up by 5%, then the Assessed Value = 95% of Fair Market Value.  After about 5 years the ratio gets pretty wacked from reality and they do a re-assessment.

Back to the City Fathers:  It would be impossible to RAISE assessed values in a slumping market.  The outcry would be horrendous.  The panel that reviews contested assessments would be meeting until after the budget season.  It just would never do.  I would like to give great kudos for their strategy:  raise the price of the dirt!!

In a down market, it’s hard to substantiate increased values.  The price of the “improvements” hasn’t appreciated.  Their strategy?  They took the one part of the assessed value that’s hard to argue:  the price of the land.  Without 3 years of appraisal school, who can argue if your lot is worth $30,000 or $50,000.  Who knows?  Is it worth more or less, with or without a house on it?  What do City lots sell for anyway?  What compensating variables affect the value of the land alone?  Your improvements, your neighbor’s improvements?  The subdivision?  There are very few vacant lot sales in established neighborhoods.  Would they really set the  standard for the value of  land all over the City?  The bottom line then – whatever number they assigned to your dirt is a slam-dunk for sticking.  How can you contest it??  Brilliant!