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What is Market Value?
How does the Assessor Estimate Market Value?
Why does Market Value change?
What
is Market Value?
Market value of a property is an estimate
of the price that it would sell for on the open market on the first
day of January of the year of assessment. This is sometimes referred
to as the "arms length transaction" or "willing buyer/willing seller"
concept.
How
Does the Assessor Estimate Market Value?
To estimate the market value of your
property, the Assessor generally uses three approaches.
The first approach is to find properties
that are comparable to yours which have sold recently. Local conditions
peculiar to your property are taken into consideration. The Assessor
also uses sales ratio studies to determine the general level of
assessment in a community in order to adjust for local conditions.
This method is generally referred to as the MARKET APPROACH and
is usually considered the most important in determining the value
of residential property.
The second approach is the
COST APPROACH
and is an estimate of how many dollars at current labor and material
prices it would take to replace your property with one similar to
it. In the event improvement is not new, appropriate amounts for
depreciation and obsolescence are deducted from replacement value.
Value of the land is added to arrive at an estimate of the total
property value.
The INCOME APPROACH is the third method.
It is used if your property produces income such as an apartment
or office building. In that case, your property could be valued
according to its ability to produce income under prudent management.
In other words, the amount another investor would give for your
property in order to gain its income. The income approach is the
most complex of the three approaches because of the research, information
and analysis necessary for an accurate estimate of value. This method
requires thorough knowledge of local and national financial conditions,
as well as any developmental trends in the area of the subject property
being appraised since errors or inaccurate information can seriously
affect the final estimate of value.
Why
does Market Value change?
State law requires that all real property
be reassessed every two years. The current law requires the reassessment
to occur in odd numbered years. Changes in market value as indicated
by research, sales ratio studies and analysis of local conditions
as well as economic trends both in and outside the construction
industry are used in determining your assessment. If you disagree
with the Assessor's estimate of value, please consider these two
questions:
1. What is the actual market value
of my property?
2. How does the value compare to similar
properties in the neighborhood?
If you have any questions about the
assessment of your property, feel free to come in and discuss it
with the Assessor.
You may file a written protest with
the Board of Review, which is composed of three or five members
from various areas of the assessing jurisdiction. The Board operates
independently of the Assessor's office, and has the power to confirm
or to adjust upward or downward any assessment.
If you are not satisfied with the decision
of the Board of Review you may appeal to district court within twenty
days after adjournment of said Board, or twenty days after May 31st,
whichever is the latest.
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