How does the city of Madison (WI) calculate assessment value? What does it reflect?

Asked by Tas, Madison, WI Sat Jun 21, 2008

The city website indicates it uses "fair market value," but the tax form often lists a higher "fair market" than the assessment so I'm puzzled about how that is accurate. I'm seeing a wide divergence between the assessment and the listing price; sometimes they're about even, but I've seen a few houses listed at twice the assessment when the improvements were included in the previous year's assessment. Why?? Thanks!

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Darren Kittleson’s answer
Darren Kittl…, , Madison, WI
Sat Jun 21, 2008
Karen's answer is right on the mark. There are many factors that might come into play with the city's valuation of the property vs. what fair market value is in today's market. I always believe the fair market assessed value will be it's most accurate in the year following a recorded sale. Why? Because one of the forms both buyer and seller signs at closing is a document that alerts the taxing authorities as to the sale price. Market value is truly what a ready, willing and able buyer is willing to pay and what a motivated seller is willing to sell for, therefore, the most accurate way to determine "market value" would be a study of the most recent sales of comparable properties.

If a property hasn't sold in many years, it's quite typical that the fair market assessed value will be significantly lower than what current market value truly is. Although, in some Madison neighborhoods we're seeing assessed values much higher than true sale prices. An indication of a market adjustment. In many cases, these neighborhoods were "hot" during the boom of 2004-mid 2006. The tax assessor was keeping up with these sales and adjusting all properties similar to these prices. Now that the market adjustment is occuring, many of these homeowners are over-assessed and should contact the city for an adjustment back down.

Confused? It's not an easy answer but suffice to say the best indication of market value is what someone is willing to sell for and what someone is willing to pay.
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Karen Wenzel,…, Agent, Brookfield, WI
Sat Jun 21, 2008
Tax Assessment "value" is merely a guideline by which a municipality determines the amount of Tax they can collect on a property. A lot of people base what they feel a property is worth (to purchase) based on assessed value. But since there is no across-the-board equality in how each city determines the assessment and fair market value, it has large variances from property to property. (Which you stated in your question)
Plus, alot of municipalities have based their assessments on how much properties sold for at the peak of the market, and have not adjusted for recent sales. Or they may make a judgement on what value they put on a property as an average for a neighborhood. It is a problem that is reflected in most every city nation-wide.
The best way to determine current market value is to have a Realtor provide you with a current market evaluation of comparable homes that have SOLD in the last 1-4 months.
All the best to you!
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