From left: Megan Lukens, business systems manager, and Michelle
From left: Megan Lukens, business systems manager, and Michelle Drea, city assessor.
What Madison homeowner doesn’t have questions after receiving their latest property assessment from the city? A $50,000 increase on a one-bathroom house? What????
City assessors mailed property assessments on May 16; appeals were due June 2. Isthmus sat down over a video call with City Assessor Michelle Drea and Megan Lukens, business systems manager, to answer frequently asked questions, some submitted by readers.
This interview has been edited for clarity and space.
How does Madison’s property assessment process work?
Lukens: During discovery, we’re finding what data is out there. We rely on permits that are pulled for new construction, we look at sales that have occurred. We can look at [real estate listing services] for information, or just other general searching online.
[The] listing [process] is really just taking that data that we’ve discovered and applying it to the [property] record. Then we apply that data and come up with valuation outcomes. I would say that sales are our primary source of data.
When we’re setting values, we do a trending process — we look at the sales compared to their assessments, and we figure out what that difference is. We’re usually under sale prices. The market is moving faster, and we’re always looking backwards in time — we assess as of Jan. 1 every year, and we rely on sales that occurred during the previous calendar year. We apply a trend to those unsold properties based on that analysis of the prior year’s market.
When a homeowner appeals an assessment, how long does it take for assessors to inspect a home?
Lukens: Typically, 20-30 minutes. During the appeal process, property owners have to indicate whether or not they want us to come out and take a look at that property. We’re not looking at people’s personal property — we’re taking a look at architectural details, the overall condition of the property. If there’s specific concerns that a property owner has that they want to flag, [appraisers] would spend time looking at that.
Drea: The one unexpected benefit of COVID was we had to really pivot and start relying heavily on online resources. And what we found is it didn’t impact the quality of our data at all.
How do assessors handle an appeal if they’re not allowed into a home?
Lukens: [Homeowners] are welcome to just email us information [photographs and videos, i.e.]. You can’t gauge the status of someone’s kitchen or bathroom finishes or condition from the outside of the home. [But] appraisers will look at the exterior, and then presume an average condition, an average wear and tear for a property.
If you think about a 1950s ranch home — what were the construction materials available at that time? We’re going to presume that’s what’s in that property [and] kept in an average condition for its age.
How many examples of comparable properties do homeowners challenging their assessment need to supply for an adjustment?
Drea: Three to five would be sufficient. We [assess] value as of Jan. 1— for 2025 we’re looking at sales in 2024, so when folks look at sales, they should first look in the year prior. You want to look at the same assessment areas, or general geographic boundaries that the assessor looks at.
The more unique the property, there’s an argument that you could go back further in time: Lakefront homes, condos that are uniquely situated, like downtown condos. [Case law says] the furthest back you can go is three years.
Lukens: [On our website], you can look at those sales that are what we consider valid for market purposes — [you] can have reliability that those represent market [value]. If you search on Zillow or some other site, those haven’t been investigated. I encourage folks to use the data that we already provide online, as those would be the same sales that we would be looking at.
How often does the appeal process result in an increased assessment?
Drea: We don’t track that specifically. It’s not typical, but it does happen, based on the data.
There are three possible outcomes to an appeal — you could be sustained, you could be increased, or you could be decreased. We’re mindful that that’s a real bummer to folks, but we do have to follow the data. If we are not following the data, that means that the tax burden shifts to other property owners — we have to do our best to ensure that that is not an outcome.
How often does it result in a decreased assessment?
Drea: Same answer — we don’t track this specifically.
Lukens: When you engage in our appeal process, you’re going from the blunt instrument of a trend to a much more refined review — you’re not at a 50,000-foot-view, you’re now at a 5,000-foot-view. You’re going to learn more about that property and more about the sales.
How does the assessor’s office account for homes that haven’t sold for decades and appear to be assessed at dramatically lower levels than similar size, age, and condition homes that have been sold and resold multiple times over the same period?
Drea: When you’re investigating a sale, there’s two steps to it. You’re looking to see whether or not it’s an arm’s length transaction, which is a specific kind of legal test. The second component of it is checking that it conforms to [the] market. That market check requires our appraisers to understand their assessment areas to say, “Does this sale conform with not only other sales in that area, but assessments?”
If your typical home in an assessment area is valued between $300,000-$500,000, but you had one of those sales sell at a million dollars, you’re going to go, “Whoa. What’s going on with that sale?” and dive a little bit deeper into it.
In a geographic scope that we predetermined to be relatively homogeneous, we’ll look at the sales, how they’re performing against assessments, and then you derive a trend based on the difference.
In many jurisdictions it has been found that lower-value properties tend to be over-assessed and higher-value properties tend to be under-assessed. What measures have you taken to determine whether this is the case here and/or what measures have you taken to address this?
Lukens: There are very specific statistical measures that assessors can take to look at this kind of situation. In Madison, we’ve undergone this analysis, and we haven’t found this to be the case.
I won’t get super data nerdy on everybody, but there’s two statistics that you can run specifically to try to see whether or not this exists within your data set. [The International Association of Assessing Officers] will do different reports for jurisdictions. [They] found that [we] did not have this situation.
