HOW IS PROPERTY ASSESSED?
To find a property’s value, the assessor must look at many important facts. These include:
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What similar properties are selling for
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How much would it cost today to rebuild the property
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How much does it cost to maintain and repair
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How much rent it could earn
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Current interest rates for borrowing money
Using this information, the assessor determines the property’s value in three main ways.
Sales Comparison Approach
This method compares your property to similar properties that have sold recently.
However, sale prices must be reviewed carefully. Sometimes a buyer pays too much because they are in a hurry. Other times, a property sells for less than it is worth because the owner needs money quickly.
To find a fair value, the assessor studies many sales and adjusts for differences. Important factors include:
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Size
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Quality
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Condition
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Location
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Date of sale
Cost Approach
This method looks at how much it would cost today to rebuild your property using current labor and material prices.
If the property is older, the assessor subtracts depreciation (loss in value due to age and wear). The assessor also estimates how much the land would be worth if it were empty.
Income Approach
This method is used mainly for rental or business properties.
The assessor estimates how much income the property could produce if rented. They subtract expenses such as:
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Operating costs
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Taxes
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Insurance
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Maintenance
The assessor also considers the return that most investors would expect from that type of property.
