To estimate the market value of your property, the Assessor generally uses three approaches. The first approach is to find properties that are comparable to yours which have sold recently. Local conditions peculiar to your property are taken into consideration. The assessor also uses sales ratio studies to determine the general level of assessment in a community in order to adjust for local conditions. This method is generally referred to as the market approach and is usually considered the most important in determining the value of the residential property.
The second approach is the cost approach and is an estimate of how many dollars at current labor and material prices it would take to replace your building(s) with a similar one(s). In the event the building(s) is not new appropriate amounts for depreciation and obsolescence would be deducted from replacement value. The value of the land would then be added to arrive at the total estimate of value.
The income approach is the third method used if your property produces income such as an apartment or office building. In that case, your property could be valued according to its ability to produce income under prudent management; in other words, what another investor would give for a property in order to gain its income. The income approach is the most complex of the three approaches because of the research, information, and analysis necessary for an accurate estimate of value. This method requires thorough knowledge of local and national financial conditions as well as any market trends in the area of the property being appraised since errors or inaccurate information can seriously affect the final estimate of value.