An attorney's guide to reviewing commercial appraisal reports before submitting evidence to the Cook County Board of Review or the Illinois Property Tax Appeal Board.
Not every commercial appraisal is suitable for a property tax appeal. Reports prepared for financing, estate planning, acquisition, or accounting purposes often fail to address the valuation issues, procedural requirements, and evidentiary standards expected by the Cook County Board of Review (CCBOR) and the Illinois Property Tax Appeal Board (PTAB). This guide is designed to help attorneys identify common deficiencies before an appraisal becomes part of the record.
Property tax appeal litigation requires more than a well written appraisal. It requires a report that is credible, well-supported, and prepared with an understanding of how reviewing agencies evaluate valuation evidence. While the Uniform Standards of Professional Appraisal Practice (USPAP) establish the minimum standards for appraisal practice, attorneys should also consider whether an appraisal addresses the procedural expectations of the Cook County Board of Review and the Illinois Property Tax Appeal Board. A report that satisfies lending requirements may not provide the level of analysis necessary to support a tax appeal.
Before relying upon a commercial appraisal in support of a Cook County property tax appeal, attorneys should determine whether the report was actually prepared for litigation rather than another intended use. A valuation prepared for financing, acquisition, estate planning, or accounting purposes may satisfy the needs of the client who commissioned it, yet fail to address issues that frequently determine the outcome of a tax appeal.
As an MAI-designated appraiser specializing in commercial property tax appeals, I recommend reviewing every appraisal with the following questions before it is submitted to the Cook County Board of Review or the Illinois Property Tax Appeal Board.
The capitalization rate frequently receives the greatest scrutiny in commercial property tax appeals because relatively small changes in the selected rate can materially influence the concluded market value.
Attorneys should determine whether the capitalization rate is supported by recent market evidence rather than historical averages or unsupported judgment. The report should explain where the capitalization rate originated, whether market extraction or published investor surveys were utilized, and how the appraiser reconciled competing indications.
When analyzing income-producing properties, the report should also explain the treatment of real estate taxes within the income capitalization approach. Depending upon the intended use and tribunal, the methodology may differ from lending assignments. A reader should be able to understand the reasoning without making assumptions regarding the appraiser's calculations.
A capitalization rate should never appear as a single unexplained number. The strongest reports demonstrate exactly how the final rate was developed using market transactions, investor surveys, published research, and professional judgment.
Every appraisal submitted in support of a property tax appeal should comply with the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP establishes the minimum standards governing appraisal development and reporting and is recognized throughout the appraisal profession.
While USPAP alone does not determine whether an appraisal is persuasive, failure to comply with its requirements can significantly reduce the credibility of a valuation report.
Relevant USPAP references include the Ethics Rule, Scope of Work Rule, Standards Rule 1-3, Standards Rule 1-4, and Standards Rule 2-2.
The Cook County Board of Review evaluates evidence under its published Rules and Filing Procedures. Attorneys should verify that the appraisal addresses the requirements applicable to the property type and appeal being filed.
Although every assignment differs, a litigation-ready appraisal should generally include sufficient supporting documentation to allow reviewers to independently understand the appraiser's reasoning.
Many appraisal reports prepared for financing omit documentation commonly expected during tax appeal litigation. Before filing, verify that the supporting exhibits are complete and clearly referenced throughout the report.
The Illinois Property Tax Appeal Board independently reviews valuation evidence submitted by both taxpayers and assessing officials. While PTAB considers numerous forms of evidence, professionally prepared appraisal reports are often among the most persuasive when adequately supported.
A persuasive appraisal should provide sufficient market evidence to permit an independent reviewer to understand and evaluate the appraiser's reasoning rather than merely accepting an unsupported conclusion.
Whenever practical, the appraiser should also be prepared to testify regarding the methodology used and defend the conclusions contained within the report.
Highest and Best Use is the foundation of every market value appraisal. If the highest and best use conclusion is unsupported or incorrect, every valuation approach that follows—including the Sales Comparison and Income Capitalization Approaches—may also be affected.
Unfortunately, many appraisal reports devote only a few sentences to this analysis, concluding that the highest and best use is "as improved" without explaining why. In a property tax appeal, attorneys should expect more than a boilerplate statement.
A properly developed Highest and Best Use analysis generally addresses four recognized tests:
USPAP Standards Rule 1-3 requires an appraiser to develop an opinion of Highest and Best Use when it is necessary for credible assignment results. For commercial properties, this analysis is often central to the valuation process.
If the report simply states "The Highest and Best Use is as improved" without discussing the four tests, consider asking the appraiser for additional analysis before submitting the report.
Many appraisal reports are technically competent but were developed for purposes other than litigation. During appraisal reviews, we frequently encounter issues that reduce the persuasive value of an otherwise well-written report.
Identifying these issues before filing can help attorneys avoid unnecessary challenges during administrative review or testimony.
One of the most common misconceptions is that any commercial appraisal can be used in a property tax appeal. While many valuation principles are similar, lending assignments and litigation assignments often differ significantly in purpose, intended users, reporting requirements, and the depth of supporting analysis.
| Lending Appraisal | Tax Appeal Appraisal |
|---|---|
| Prepared for a lender. | Prepared for litigation or assessment review. |
| Focuses on underwriting risk. | Focuses on market value for assessment purposes. |
| Limited supporting documentation may be acceptable. | Extensive support is generally expected. |
| Rarely written with testimony in mind. | Should withstand cross-examination. |
| Client is typically the lender. | Client is often an attorney or property owner pursuing an appeal. |
Commercial property tax appeals often involve issues extending well beyond ordinary appraisal practice. Attorneys require valuation reports that are not only USPAP compliant but also understandable, defensible, and supported by current market evidence.
With more than twenty years of commercial appraisal experience and extensive testimony before the Cook County Board of Review, the Illinois Property Tax Appeal Board, and Circuit Court proceedings, David Barros, MAI prepares litigation-focused appraisal reports designed specifically for assessment appeals.
The following are common questions we receive from attorneys, property owners, and tax consultants regarding appraisal reports used in Cook County property tax appeals.
A property tax appeal appraisal is prepared for assessment litigation and focuses on the property's market value as of the applicable valuation date. It is intended to satisfy the evidentiary requirements of reviewing authorities such as the Cook County Board of Review (CCBOR) and the Illinois Property Tax Appeal Board (PTAB). Lending appraisals are developed for underwriting decisions and may not address the issues critical to a tax appeal.
No. Neither the CCBOR nor PTAB requires that an appraisal be prepared by an MAI-designated appraiser. However, attorneys often seek appraisers with substantial commercial valuation and tax appeal experience because those reports tend to better address litigation-related valuation issues.
The appropriate treatment depends on the intended use of the appraisal and the methodology employed. The report should clearly explain how real estate taxes are treated so the analysis can be understood and replicated by the reviewer.
Comparable sales should be as close as reasonably possible to the effective valuation date. Older sales may still be useful when properly verified and adjusted for changing market conditions.
Generally no. Property tax appeals require a market value opinion as of a specific assessment date. Market conditions, capitalization rates, lease activity, and property conditions may have changed since the earlier assignment.
The effective date is the specific date for which the appraiser develops an opinion of market value. All comparable sales, leases, market conditions, and valuation analyses should relate to that date.
No. The appropriate valuation approaches depend upon the type of property and the actions of typical buyers in the marketplace. USPAP requires the appraiser to develop only those approaches necessary to produce credible assignment results.
A frequent issue is relying on an appraisal originally prepared for financing or another non-litigation purpose. Such reports may not contain the supporting analysis, documentation, or explanations expected in a property tax appeal.
Yes. In many cases, testimony provides the opportunity to explain valuation methodology, support adjustments, and respond to questions raised by the reviewing authority.
Disclaimer: This article is intended for educational purposes and does not constitute legal advice. Attorneys should consult the current rules, statutes, and administrative procedures applicable to their appeal before filing.