Sales Ratio Study The three approaches to value are used in single property appraisal, however, considering the magnitude of the assessment jurisdiction, the State of Illinois uses a mass appraisal system. This is a statistical analysis of sales -vs- assessments that encompass a wider geographic area, such as an entire county, township or neighborhood. This analysis is called a Sales Ratio Study; it is used to calculate the ratio of the assessment to the sale. In Illinois this ratio is to be 33.333% of the market value of the property. The compiled sales ratios from year to year give the State Department of Revenue an indication of the overall market trend as compared to the existing assessments in a jurisdiction. If the sale study ratios are predominately below 33.333% the assessments must be increased; if above 33.333% the assessments must be decreased. The State advises each County of the results of this annual study. In turn, the County compiles sales studies for each Township and advises the Township Assessor of the overall increase or decrease of the Township's assessments. In DuPage County, the Township Assessors take this one step further. The Assessor, using the same parameters, study individual neighborhoods, subdivisions, condominium complexes, etc., to attain more accurate market trend information for that particular area. This is done so one area's market trend does not impact another and greater uniformity and accuracy is attained. How It Works When studying an assessment jurisdiction for market value purposes, be it a county, township or a neighborhood, all valid property sales during the last three years become a part of the study. A sales ratio study compares the sale to the prior year’s assessment; this is called the assessment to sale ratio or ratio. It indicates what percentage the assessed value is of the sale. According to Illinois state statute property shall be valued at 33-1/3% of fair cash value. After calculating all of the assessment to sales ratios in a neighborhood, they are sorted low to high. The mid-point ratio is called the median or median level of assessments for the jurisdiction. If the median ratio of the area is under 33-1/3%, a multiplier is calculated which would bring the median ratio up to 33-1/3%. This multiplier is then applied to all assessments in the neighborhood. If the median ratio of the neighborhood is over 33-1/3% a multiplier is calculated to lower the median ratio to 33-1/3% and is applied to all assessments in the area. Example: To determine the current year’s multiplier for an area the sales and sale ratios from prior three years are used:
The median or middle ratio of the range is 32.56%. A multiplier of 1.0236 is needed to bring this area, as a whole, to 33-1/3%. A positive multiplier, more than 1.00, means that assessment must be increased.
If in another example the median ratio had been 35.27%, then a multiplier of .9450 (.3333 / .3527 = .9450) would be applied to all assessments in that area. A negative multiplier, less than 1.00, means that assessment must be lowered.
Some properties remain under assessed and some over assessed. During a general reassessment year the properties are reviewed to improve uniformity within the study area.
This mass appraisal system, which implements sales ratio studies, is used in the State of Illinois. Sales ratio studies such as this are calculated by the state for each county; by the county for each township and by the township for each of their neighborhood codes.
The DuPage County townships are the best assessed in the entire state. Our consistent goal is to strive for accuracy and greater uniformity with the use of advanced assessing techniques and technology.
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