How Does The Assessor Determine The Value Of Your Property?

Proposition 117 – What it means to you.
February 20, 2014

How Does The Assessor Determine The Value Of Your Property?

The way in which the County Assessor determines the value of your home is through a Computer Assisted Mass Appraisal System.  Under this type of system, there are two methods that are used for valuing your propertyReplacement Cost New Less Depreciation, and Sales Analysis. 

 

Replacement Cost New Less Depreciation

The Replacement Cost New Less Depreciation method (“Replacement Cost New”) starts with the construction cost to build or reproduce your property today, as if it were brand new.  To determine the construction costs the County Assessor uses nationally recognized cost valuation company information.  Of course, few properties are brand new, so depreciation must be deducted for wear and tear, actions of the elements (sun, rain, snow, etc.), and physical or insect damage.  Depreciation tables that have been developed through structure mortality studies and sales of similar types of properties are used to estimate the loss in value from the property’s new condition.  The total amount of depreciation is then subtracted from Replacement Cost New to obtain the current estimated value of the house and other physical improvements.  The land value is then added to the depreciated value of the improvements to obtain the total property value.

The Sale Analysis method examines what similar properties are selling for in the local market.  By compiling and analyzing all home sales the assessor determines the average selling price per square foot of various types of homes.  Sales are independently analyzed for each county in Arizona and each market area within the county.  The price is then adjusted for specific differences between the average home and the home being valued.  Adjustments are made for items such as size, construction type, and quality of materials, design, amenities, age, and condition.

Is One Appraisal Method Better Than The Other?

Both methods, if used appropriately, are very accurate.  The majority of single-family homes and condominiums in Arizona are valued using the sales analysis method.  Where adequate sales are not available for analysis, the cost method is used.  This generally occurs in rural areas or with very high quality or low quality homes that do not sell that frequently.

Can I Select Which Method Is Used For My Home?

Generally, no, the County Assessor selects which method to use.  This is based upon technical considerations such as the accuracy of each method for that area and the number of sales available for analysis.

What Can You Do?

If you believe your home is being over-valued by the assessor you can file an appeal within a limited period after the valuations are mailed each February.  You will need to determine which method of valuation the assessor used and then provide appropriate evidence disputing the assessor’s value.

For additional information or questions regarding appealing your assessed valuations, please contact us at Anthony Liberatore & Associates at 480-838-7175.  Anthony Liberatore is the founder of Realtaxcut.com, an online property tax appeal service for Arizona homeowners, and CEO of Anthony Liberatore and Associates, a national commercial property tax consulting firm.

Information for this article was obtained from the State of Arizona Department of Revenue publications.

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