To arrive at the “fair market value” for your property, the assessor must know what “willing sellers” and “willing buyers” are doing in the marketplace. To meet this goal, the assessor maintains records of real estate sales, property characteristics, cost of construction in the area, and any changes in zoning, financing, or economic conditions which may affect property values.
The assessor may use any of the three nationally recognized approaches to value:
- COST: Determines the replacement cost of a property
- INCOME: Uses capitalization to convert property ownership benefits into a present value estimate
- MARKET: Estimates a property’s value by referencing comparable sales
The data collected by the assessor is then correlated into a fair market value estimated by the assessor. After property appraisals have been made, the appropriate percentage of fair market value, or level of assessment, required by law is calculated as your “assessed value.”