Frequently Asked Questions - Real Property

1. What is Market Value?

Market value has been defined by: statue, state regulations, and court cases. Generally, it is the amount of money a buyer of property willing but not obligated to buy would pay a seller of property willing but not obligated to sell. In arriving at a determination of such value, the assessing officer can consider only those factors which can within reason be said to affect the price in negotiations between a willing purchaser and a willing seller, and he must consider all of such factors.

2. Effective Date of the Appraisal

Real estate markets are dynamic and in a constant state of change. These changes can be due to seasonal as well as cyclical factors. As a result, statue determines a specific date on which all properties are to be valued in order to avoid any bias in relationship to time. In our state that day is January 1.

3. Why have a Property Tax?

Properties are appraised so our community has advantages such as schools, fire and police protection, and other public benefits. Each property owner pays a fair share of the cost, in proportion to the amount of money our individual properties are worth.

Historically, it is a more stable source of funds than either the sales and income taxes. Why? Because it flucuates less to the rapid changes associated with consumer spending or employment levels. It may seem counter intutive, but properties taxes often improved the value of homes. When jurisdictions have sufficient funds to invest in schools, libraries, police and fire services there is generally a rise in home values.

4. How is Property Appraised?

To find the value of any piece of property, the assessor must first find out what properties similar to it are selling for, what it would cost to replace it, how much it takes to operate and keep it in repair, what rent it may earn, and many other facts affecting its value, such as the current rate of interest charged for borrowing the money to buy or build properties like yours.

Using these facts, the assessor can then determine the property value in three different ways. Cost Approach: The first method to value your property is based on how much money it would take, using current material and labor costs, to replace your property with one similar. If your property is not new, the assessor must estimate depreciation as measured in the marketplace based on sales of used homes.

Sales Comparison Approach: A second method compares your property to others with similar characteristics that have sold recently. These prices, however, must be analyzed very carefully to get the true picture. One property may have sold for more than it was really worth because the buyer was in a hurry and would pay any price. Another may have sold for less money than it was actually worth because the owner needed cash right away and sold the property to the first person who made an offer.

When using the sales comparison approach, the assessor considers overpricing or under-pricing and analyzes many sales to arrive at a fair valuation for your property. Size, quality, condition, location, and time of sale are also important factors that are considered.

Income Approach: The third way is to evaluate how much income your property would produce if it were rented as an apartment house, a store, or a factory. The assessor must consider operating expenses, taxes, insurance, maintenance costs, and the return most people would expect on your kind of property.

5. Why do Assessed Values change from year to year?

When market value changes, so does assessed value. For instance, if you added a garage to your home, the assessed value would increase. Property in poor repair decreases in value.

Real Estate transactions create value. The assessor has the legal responsibility to study transactions and appraise your property accordingly.

6. What are your rights and responsibilities?

If your opinion of the value of your property differs from the assessor's, by all means go to the office and discuss the matter. Staff will answer your questions about the appraisal and explain how to appeal if you cannot come to an agreement. The Assessor's Office relies on the property owner for information. You can help by providing accurate information. If you have questions, feel free to call our office at (360) 867-2200 or come in to see us.