How did the assessor set the assessed value on my property?

Assessors are required to physically inspect property every five years but must value every property every year, as of the January 2nd assessment date. How do assessors do all that? Since assessors are often overworked and understaffed, they rely on a mass appraisal analysis, looking at sales in the vicinity and analyzing market trends. Most properties are assessed with little or no specific information on the property itself. Accordingly, the more information a property owner can share with the assessor, the more the assessment can reflect the specific valuation issues unique to that particular property.

Once we file a property tax appeal on your property, we look at the three typical approaches used by appraisers to value commercial property.

The Sales Comparison, or Market Approach, looks at sales of comparable properties to compare their sales price to your property. In the last few years, with so few sales of commercial property, this approach has become more difficult.

The Cost Approach looks at what the building would cost to replace, depreciated accordingly. This approach is rarely used for older buildings as the proper depreciation amounts become too subjective.

The Income Approach looks at the income a property could generate and applies a capitalization, or “cap” rate to the income to determine value. Cap rates are usually derived from actual sales transactions in the market.

If you have an income generating commercial property and have seen vacancies rise, have lost tenants, or find yourself forced to give rent concessions, in this market with cap rates on the rise, your property may have a lower value in these distressed economic times.

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