A number of methods are used to assess real property value.
Factors of Assessment
The assessor’s staff looks at new construction that has taken place, sales prices of comparable property located nearby, the condition of your property, and any other factors that can help place an accurate value on the property.
Assessors choose from 3 available techniques for assessment.
First, the value of the land is estimated, as if vacant. The assessor then adds the amount it would take to replace your structure with 1 of the similar utility, including current costs of materials and labor, profit, overhead, permit fees, and the like. If your structure is not new, the assessor then approximates depreciation from all causes, and subtracts that from the calculation of replacement cost.
Market (Sales Comparison) Approach
Your property is evaluated based on comparable properties that have recently sold, and is adjusted for differences such as a garage, finished basement, or better location. Where there are frequent sales and similarities in properties, this can be the most reliable approach for residential property.
This approach works well for apartments, shopping centers and office buildings. The assessor estimates potential gross income from rentals, then subtracts an amount for vacancies and operating expenses. The amount of net income is then converted to a value for the property, using a process called capitalization.