Real Estate Valuation

How is my property valued?

Valuation is based on “full and fair cash value,” the amount a willing buyer would pay a willing seller on the open market. Assessors first inspect the property to record specific features of the land and buildings that contribute to its value. Size, type, quality of construction, number of bedrooms, baths, fireplaces, type of heating system are all examples of the data collected and listed on the individual property record cards.

Using these facts, the assessors determine the value of property by choosing the assessing methodology that most accurately reflects the real estate marketplace. The three methods of appraisal are:

Market Approach – This method compares your property to others that have sold recently. Before any sale can be used in this approach, it must be determined if they are “arms length,” or good, open market sales. As there may be outside factors that go into a sale price, the assessors must analyze each sale carefully.
Cost Approach – This approach is based on the cost of replacing your property new. It is how much money it would take, at current material and labor costs, to replace the property with 1 similar. The object of the cost approach is not to estimate the actual cost of buying land and constructing a new building, but to estimate the market value of an existing property. If the property is not new, the assessors must also determine how much it has depreciated. In addition to the value of the improvements, the assessors must also separately establish the value of the land as if it were vacant.
Income Approach – The income approach to value is the process of converting anticipated net income into an estimate of value. The income approach is used to value property which is normally bought and sold on the basis of its income producing capabilities.