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Know what market value is
Market value is “the most probable price as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under duress.” The Appraisal of Real Estate, Eleventh Edition, 1996, Appraisal Institute, Chicago, Illinois, pg. 22.
By state law, the exact assessment date is January 2 of each year. By approximately mid-May, the assessor begins working to estimate the market value of real estate for the following January 2. The assessor gathers contemporary sales that meet Department of Revenue standards for open-market, arm’s-length transactions, and analyzes the physical, functional, and economic characteristics and features of the land and any improvements to it to find market units of comparison to aid in the valuation of all properties. Such market units of comparison include location, size, age, construction quality, number of baths, and so on.
The Department of Revenue audits the assessor’s level of assessment each year by grouping valid sales (all residential sales, for instance) within a particular 12-month time period and comparing the assessed value of each valid sale against the actual sale price. The result for each sale is known as the assessment to sale price ratio. For example, a home that is assessed at $85,000 and sells for $100,000 has an assessment to sale price ratio of 85 percent. The Department of Revenue annually arrays all the ratios low to high and declares the median (middle) ratio to be indicative of the quality of the assessment. A median ratio within the 90% to 105% range is considered acceptable. Any thing above or below the range must be adjusted via city-wide value decreases or increases to the subject study group.