A Property's Estimated Market Value
Many property owners have probably wondered how the County Assessor arrives at a property's Estimated Market Value. Contrary to popular belief, it does not involve a dartboard and darts. It actually all starts with sales of properties throughout our very own county.
SALES PRICES are the exact amount given in an exchange to obtain ownership of a property. Many considerations enter into the sales price, some of which may be: the location of a property, current market trends, financing terms, points or closing costs, supply and demand of certain properties and the length of time a property has been for sale. These elements are reflected in the actual sales price between a willing seller and willing buyer.
The annual Estimated Market Value is an estimate of the dollar amount a property might sell for as of January 2nd of each year. The actual SALES PRICES of properties are used to determine the Estimated Market Value of other similar properties. This comparison is accomplished by utilizing the Law of Substitution (examining sales and market trends). The Law of Substitution refers to the fact that people will not spend more money in the purchase of property than the amount other similar properties have sold for in like circumstances. The County Assessor compares similar structures, age, condition, quality of the construction and the location of the properties that have sold in order to arrive at what a property could sell for. The Assessor's goal is to FOLLOW the real estate market, based on property sale prices and market trends, in order to arrive at a property's Estimated Market Value.
For the assessment date of January 2nd, 2016, property sales that took place between October 1st, 2014 and September 30th, 2015 were examined to reflect any market trends. In a SELLER'S MARKET, properties will sell for more as time passes and in a BUYER'S MARKET properties will sell for less as time passes. Market trend variations are caused by not only the time factor, but also the differences of property location, property types, interest rates, demand and the economy in general. Because value estimates are derived from sales that have occurred in the past, the Assessor's value estimates are BEHIND the current real estate market.
In the mentioned seller's market, our value estimates in general, will be lower than the current sales. In the mentioned buyer's market, our value estimates will be higher than the current sales (because of the above mentioned factors).
If you would like more details about the value of your property, please feel free to contact the Morrison County Assessor's Office at 320-632-0101, or toll free at 866-401-1111, ext. 101.