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Real Property Appraisal

The County Auditor is mandated by the State to conduct a comprehensive county-wide reappraisal of real estate properties every six years to establish property values for tax purposes, using a uniform approach that produces a fair estimate of what the property would sell for on the open market. There are many things which influence the market value of a property besides comparable sales, such as interest rates, cost of land acquisition, construction and material costs, etc.

On the third year between the six-year reappraisal cycle the state issues to the county auditor percentage updates for property values based upon the current sales amounts in any given area of the county.

Three Approaches of Valuation:

Cost Approach
The cost approach involves estimating the cost of reproducing, or replacing, the building and site improvements. Reproduction cost looks at reproducing a replica property at a given point in time at its full current value. Replacement cost refers to the cost of reproducing improvements of equal quality, meaning that the full reproduction cost is given a functional or economic obsolescence factor to account for the current condition of the improvements. Then the estimated land value is added to the depreciated value of the buildings to reach a total replacement value.

Income Approach
The income approach is often used for commercial and industrial property. The income approach allows the property value to be based on the property's ability to generate and maintain a standard of income for the owner. This method requires the appraiser to analyze the income yields for their relative durability, and relate this to the changing economic environment in the local area. This approach works well since potential buyers are primarily interested in the potential revenue and tax shelter the business will generate. A buyer will weigh the potential return on their investment when purchasing the property. For commercial and industrial vacant land the market approach may work best.

Market Approach
The market approach involves gathering sales comparison data and relating it to the property being appraised. The appraiser must consider not only the location, but the square feet, quality, design, age, condition, usefulness, and desirability of the property when making comparisons to other properties sold in the area. The ability to generate a list of comparable sales in a given area from the auditor's sales records is very useful in this approach.

Property Class Equalization

The property classes are residential, agricultural, commercial, and industrial. Market value is the most common basis of equalization, where a residential property is not only equalized to other residential property classes, but also to all the other property classes in the area. The market value is the price an intelligent informed person is willing to pay in an arm's length sale for the property. The appraiser must estimate a reasonable price for the property by taking into account all the different property classes and the potential sales value for each property class. In this way all property classes are equalized in a mass appraisal.

Independent Sources that May Help Indicate Real Property Value

(to help property owners know they are being treated fairly)

  • Recent sales amounts of similar homes in your immediate neighborhood.
  • Asking price of homes for sale in a similar neighborhood within a reasonable proximity to your neighborhood.
  • Realtors can often offer a good indication of market values for properties.
    (Sometimes the Realtor's listing books can be of help in comparing a certain neighborhood)
  • Independent appraisals done for banks making mortgage loans or estate settlements.
    (Note: These can be very conservative to protect the bank's interests or to minimize estate taxes)
  • Insurance value amounts for coverage on the house, if this amount is updated annually.
    (Note: Be sure to look at the "Replacement Value" line instead of reproduction cost at the time of the loan)
  • Home equity loan appraisals. (These too may be conservative)
  • The total cost to build your new home (including the cost of the land, septic/sewer, well/water, landscaping, and driveway).
    (Note: The market value is not reduced for savings due to owner participation in construction) 

If you have questions please call the Auditor's Office.