May 4, 2006

3 common methods to find the value of a property

There are 3 common methods to find the cost of a property:

1. cost approach

2. income approach

3. fair market value comparison approach

The best and most widely-used approach to use in your tax appeal is the fair market value comparison approach. This approach uses sales and appraisal data and examines the current relationship between these two factors. This is done by comparing the market value of your house to other houses of similar size, location, etc. which have recently been sold.

1. The cost approach is used most often by the assessor to value your property. Because it values each component of a building structurally, it is difficult to use.

The is used most often by the assessor to value your property. Because it values each component of a building structurally, it is difficult to use.

2. The income approach is used when valuing income-producing property. Even though residential property is sometimes rented, the income approach is generally not used.

The is used when valuing income-producing property. Even though residential property is sometimes rented, the income approach is generally not used.

3. The fair market value comparison approach uses the principle of substitution. The principle of substitution states that the maximum value of your house and property tends to be set by the sales price of an equivalent, equally desirable, similar substitute house and property, for a certain date in time. This market approach is most easily understood and most relied upon by the taxing authorities to capture the realistic value of your house and property. There are four basic phases involved in this approach:

The uses the principle of substitution. The principle of substitution states that the maximum value of your house and property tends to be set by the sales price of an equivalent, equally desirable, similar substitute house and property, for a certain date in time. This market approach is most easily understood and most relied upon by the taxing authorities to capture the realistic value of your house and property. There are four basic phases involved in this approach:

Using a market value approach would be good for a condo. An income approach would be used for an apartment complex.

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