Value, Cost, Equalization Scott D Johnson ICA RES Vanguard Appraisals, Inc.

Assessment Process Valuing Process Cost vs Value Creating Equity and Uniformity Equalization

Assessment (IAAO Glossary 2nd Edition) (1) In general, the official act of determining the amount of the tax base. (2) As applied to property taxes, the official act of discovering, listing, and appraising property, whether performed by an assessor, a board of review, or a court. (3) The value placed on property in the course of such act.

Assessors Duties Discover Real Estate List Land Improvements Value Market Value

Visual Interview Governmental Policy Discover In Person (Driving the County) Aerial Photography (orthorectified) Oblique Photography (Pictometry) Interview Property Owner Mailings Governmental Policy Building Permits Building Inspection

Visual Interview Governmental Policy Listing In Person (Driving the County) Aerial Photography (orthorectified) Oblique Photography (Pictometry) Interview Property Owner Mailings Governmental Policy Building Permits Building Inspection

Valuing a Property Cost Approach Income Approach Automotive Prices (MSRP) Sale Price? Income Approach Savings Accounts vs CD’s vs Stocks Interest Rate? Comparable Sales Approach Used Tractors (Brand, Hours, Transmission, Horse Power & Drive Train) What is it worth?

The Valuation Process Review Sales Land Value Cost Level Manual Level, Index, Local Multiplier Depreciation Location Adjustment (Map Area, Neighborhood, Location)

Arms Length Sale Arm’s-Length Transaction A sale between a willing buyer and a willing seller that are unrelated and are not acting under duress, abnormal pressure or undue influences. A sale between two unrelated parties, both seeking to maximize their positions from the transaction.

Cost of a Property vs Market Value Replace Cost New – Depreciation = Market Value Depreciation Formula; Sale Price – Land = Market Value of Improvements RCN – Market Value of Improvements = Dollar amount of depreciation Depreciation in Dollars / RCN = Depreciation as a % (percentage)

Example Example; Dwelling built in 1967 sold for $100,000 (includes the land) Sale Price ($100,000) – Land ($10,000) = Dwelling Value ($90,000) RCN of Dwelling is $180,000 – Dwelling Value $90,000 = $90,000 (Depreciation in Dollars) $90,000 / $180,000 = .50 or 50% depreciation

Equity & Uniformity Level of Assessment Equal to similar properties Listed Correctly (Data) Quality Quantity Condition (Effective Age)

Equity or Equalization Equity between property owners Equity between classes of properties Vertical Equity Horizontal Equity

What Effects Value? Location, Location, Location Size Age Style Quality Materials Workmanship Quantity Layout Design

Adjustments Land Adjustments Improvement Adjustments Underdeveloped Excess Frontage Topo Vacancy Improvement Adjustments Overbuilt Functional Obsolescence (Internal) Economic Obsolescence (External)

Ad Valorem Tax Ad Valorem Tax—A tax levied in proportion to the value of the thing(s) being taxed. Exclusive of exemptions, use-value assessment provisions, and the like, the property tax is an ad valorem tax.

Property Taxes Should you adjust property values due to amount of property taxes?

Research

Uniformity Clause

Assessment Process After determining if the real or tangible personal property is subject to tax, the property must be assigned a value. In assigning a taxable value, property must be assessed (determining taxability and a taxable value) and equalized (comparing valuations of similar property to ensure fair and equal treatment in the assessment process), pursuant to the uniformity clause. CLAUSE IN PRACTICE proportion of taxes than a taxpayer with similar property.

Board of Equalization   The county board of equalization, composed of members of the county board, equalizes the property within the county by correcting any current assessments that are  deemed undervalued or overvalued. The county board of  equalization also hears any taxpayer protests regarding  property valuations, equalization, and other matters.

Agricultural Land The Good, Bad and Ugly!

How to Value Agricultural Land? Market Value with a Factional Assessment Level? Productivity (Income Approach)? Cap Rates Iowa 7%, North Dakota 4.95%, South Dakota 6.6%

Questions and Maybe Answers

Enjoy the rest of the Conference! Thank you! Enjoy the rest of the Conference!