How is real property assessed?
In order to estimate the market value of a piece of real estate, an assessor can utilize any of three traditional approaches to value. These three methods are the cost approach, market or sales comparison approach and the income approach. Each has advantages and disadvantages and some are better suited to particular types of property.

The cost approach indicates what it would cost to build a house today, allows for depreciation based on age and condition and adds the value of the land to the depreciated cost of all improvements. Land is always valued as if it is vacant. The market or sales comparison approach to valuation analyzes similar properties that have sold recently where both buyer and seller acted without undue pressure in negotiating the final price of the property. Adjustments are made to the selling prices of the comparable properties for amenity differences from the property being appraised. The income approach is most often used when valuing commercial/industrial property. Here, value is estimated by analyzing the net income a property generates for its owner and converting that income into a valuation indication.

Because assessors have both a market value and uniformity standard and because they are required to appraise thousands of parcels, assessors will generally use a hybrid combination of the cost and market approaches to accomplish their goals. The cost approach is used to satisfy the uniformity criteria of the statutes. This value is compared to the actual selling prices of all property within the assessment neighborhood that have occurred during the three years prior to the assessment date. With the help of computer assisted mass appraisal (CAMA) systems, factors are developed to adjust the cost valuations either up or down to the median level of 33.33% for a particular group of properties, as indicated by the sales transactions that qualify for analysis purposes.

Show All Answers

1. Who is the Township Assessor?
2. What are the requirements for the position of Township Assessor?
3. What does a Township Assessor do?
4. What kind of property is assessed?
5. How is real property assessed?
6. What else does the Township Assessor do?
7. Where do I go with questions on my assessment?