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.
