Rising property taxes is a frustrating fact of life in Chicago and greater Cook County. However, the City and County’s rising debt has caused politicians to increase real estate taxes to solve city and county’s budget woes. Even worse, county assessor’s valuation methodology has come under increasing scrutiny. Savvy homeowners need to understand how the system works and act proactively to moderate their taxes.
A Chicago Tribune FOIA lawsuit to uncover documents relating to Cook County’s assessment practices) revealed that county assessors often turned Zillow to adjust valuations on properties. This is a problem. Zillow admits that its rating system is flawed, giving itself 2 out of 5 stars score for accuracy of valuation. When did any of us choose to eat at a restaurant, or stay at a hotel, that was rated 2 out of 5!?!?!?
Zillow’s popular Zestimate calculation for home valuation practices, used as a tool for tax assessments, could not be a worse reference point for determining property values for tax purposes or otherwise.
Ok, that sounds bad – but why should it be a concern?
Paying large and increasing tax bills can stress the finances and emotions of any individual or family, especially if the system is skewed and one does not now that they are paying their “fair share”. This emotional and financial toll can be magnified in a divorce setting, where the role of a couple’s real estate assets, and its future viability, is perhaps the focus of dividing or allocating assets and cash flow.
In the case of a divorce settlement or estate division, the flawed valuation of a property can derail the financial aspects of the proceedings and cause unnecessary uncertainty for one or both parties. If the methodology of property is so faulty, how can the parties make educated and well considered decisions to assure that they receive their respective fair share of assets?
So is this Zillow’s problem?
Not necessarily. Zillow deserves credit for openly admitting the flaws in their data, although they (for good reason) don’t widely publicize these flaws. However, the truth is that like any other ratings/valuation algorithm, the formula used to calculate these valuations is constantly being updated. This means that if you haven’t checked on the Zestimate score (or similar valuation estimate from a competitor) in over a year, there’s a good chance an adjustment has already been made that alters the property valuation, to the tune of thousands of dollars in many cases. In all cases, the resort to expert real estate tax attorneys is needed to identify and challenge inaccurate property valuations and assessments.
So, what to do about Zillow?
Take Zillow and similar sites with a grain of salt, and a serious dose of caution. While they can provide immediate ballpark guestimates, one must continue to do more serious research on actual sales comparable(s) with a licensed real estate broker. This is not only important when creating expectations as to property values, but even more so when arriving at hard figures for use during complicated and contentious legal or business proceedings.