How is My Estimated Market Value Established?
The Assessor's Office estimates market value and classifies about 55,000 residential and commercial parcels each year for property tax purposes. The estimate of market value is as of January 2nd of each year for taxes payable in the following year (Example: January 2, 2023 estimated market value is established for taxes payable in 2024).
Estimate Market Value
The estimated market value should be the most probable sale price of a property in terms of money in a competitive and open market assuming that a buyer and seller are acting prudently and knowledgeable, allowing sufficient time for the sale and assuming that the transaction is not affected by undue pressures.
Classification of Property
The Assessor's Office determines the classification, or use, of each parcel. For instance, property may be residential homestead (owner-occupied), residential non-homestead, apartment, or commercial. Each classification is taxed at a different percentage of market value as set by state statutes.
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. These sales are used, as a guide to help determine what similar properties would likely sell for if they were placed on the market.
An "arm's length transaction" is defined as:
"A sale in which the buyer and seller are acting prudently, and the price is not affected by undue stimulus. Neither the buyer or seller must be under great pressure to complete a transaction in a short time. An "arm's length transaction" is between two parties, both of whom are seeking to maximize their gain from the transfer."
It is important to note that certain sales are not considered in this process and are typically rejected. Some examples of rejected sales are:
- Bank sales
- Short sales
- Foreclosure sales
- Auction sales
- Sales between relatives or friends
Minnesota Statutes, section 273.01 requires that your assessor view your property at least once every five years. This review is part of an ongoing revaluation program to ensure the accuracy of our data and to assist us in estimating a fair and equitable assessment of your property for property tax purposes.
- County appraisers visit approximately 11,000 parcels each year.
- Appraisal staff view the interior and exterior of your property to collect property characteristics used in estimating market value.
The property characteristics and sales information are entered into a computerized appraisal system. An estimate of market value is computed based on this information and reviewed by a county appraiser. The estimated market value should be close to the amount the property would sell for if placed on the open market.
State law requires assessors to value property at full market value. The level of assessment is measured through sales ratio studies. Sales ratios are computed by dividing the assessor's market value by the sale price of each individual property. Individual ratios are then analyzed according to property type and municipality to measure the level of assessment. The acceptable level of assessment in Minnesota is to have a sales ratio between 90% and 105%.
If this level of assessment is not reached each assessment year, the State of Minnesota is required to adjust the assessment to an acceptable level within each municipality.
Scott County consistently meets the State's criteria for an acceptable level of assessment
Mail Notice of Valuation & Classification
Scott County mails a Value and Classification Notice to each property owner in March of each year. The estimated market value established on January 2 of each year forms the basis for the following year's tax. For example, the value and classification on January 2, 2023 affect the taxes payable in 2024.
Property classification is the statutory classification that has been assigned to your property based upon your use of the property, such as homestead, non-homestead, commercial, agricultural, etc. A change in classification of your property can have a significant impact on the amount of your property tax.
If you feel your valuation and property class are correct, it is not necessary to contact your assessor.