Estimating Market Value
Appraising Market Value
The Scott County Assessor’s office uses a mass appraisal process for estimating market values. This system involves the analysis of sales that have taken place in the jurisdiction and the collection of the physical features of each property in the jurisdiction. The assessor also analyzes information on construction costs, how much it takes to operate and keep a property in good repair, what rent it may earn, and many other financial considerations affecting market value, such as the current rate of interest charged for borrowing money to buy or build properties like yours.
Using these facts, the assessor can then go about finding the property value in three different ways.
Sales Comparison Approach
The first approach the assessor uses compares your property to others that have sold recently. Each year the Assessor analyzes all sales of property in each jurisdiction. State law provides guidelines of sales to be used for assessment purposes. Only good sales, or arm's length transactions, are used in determining estimated market value.
This approach compares the property characteristics of your property and compares them to the characteristics of the sold property; adjustments are made for differences to arrive at an estimate of what your property would sell for if placed on the open market.
A second approach the assessor can use to value your property is based on how much money it would take, at current material and labor costs, to replace your property with a similar one. If your property is not new, the assessor depreciates the cost of constructing a new building to estimate the value of a building with your building’s age.
The third approach the assessor can use involves estimating how much income your property would produce if it were rented as an apartment house, a store, or a factory. The assessor considers operating expenses, typical vacancy, insurance, and maintenance costs to estimate how much net income your property could generate. The assessor compares this net income with how much income most people would expect to earn on other types of investments to estimate the value of your property.
After calculating the values using these three methods, the assessor makes a final judgment on the value of your property. Depending on the type and nature of your property, the assessor may rely more heavily on the value estimated by one approach, disregard the value estimated by one approach entirely, or try to combine the values suggested by the three approaches into one value.