Knowledge Base

Assessments for residential properties are based on the market approach to value. It incorporates a statistical analysis of property sales to determine market values as of January 1. It takes into consideration only transactions that are deemed "arm's length", e.g. sales that took place between a willing buyer and a willing seller, when neither party was under any compulsion to make the transaction. This data is incorporated into computerized valuation models, which simulate varying market conditions in each neighborhood and form the basis for residential values. Assessments for office, retail, apartment and industrial properties are derived using the income and cost approaches to value. Under the income approach, fair cash value is derived from the property's ability to generate income. The assessors examine the rents, subtract operating expenses to achieve a net income, then divide net income by an appropriate capitalization rate, in order to derive a market value for each parcel of commercial property. The cost approach measures estimated cost of replacing or reproducing the buildings and improvements on a property plus the value of the land on which the building stands.