1.What is an Estimated Market Value?
The Estimated Market Value (EMV) is what the assessor estimates your property would likely sell for on the open market. Minnesota Statute 272.03 Subdivision 8 defines market value as ‘the usual selling price at the place where the property to which the term is applied shall be at the time of assessment; being the price which could be obtained at a private sale or an auction sale, if it is determined by the assessor that the price from the auction sale represents an arm’s-length transaction. The price obtained at a forced sale shall not be considered.
2. How Does the Assessor Measure Market Value?
By reviewing the selling prices of similar properties in local areas. A Certificate of Real Estate Value is completed on all real estate transactions and a copy filed with the Assessor. By studying the certificates, Assessors have a good idea of what other properties will sell for. Another method of determining value is based on the current cost of replacement less all depreciation that has occurred.
3. Why Does My Value Increase When Nothing Has Been Done to My Property?
Supply and demand create market value and Assessors measure it. As demand increases and the cost of buying a particular property increases, other property values rise also. Your property becomes worth more, even though no improvements were made and you have no intention of selling it.
4. How Close to the “Actual” Value of a Property is the Assessors Value?
According to State Statutes, properties are to be assessed at Market Value. Because it is impossible to achieve 100% of market value on every property, the acceptable median sale range by state standards is from 90% to 105% of market.
5. What If I Think My Property is Over Assessed?
Assessment records are public information, and you can compare your assessment with other properties. If you have any questions, please call the Assessor’s Office. If you still disagree with the assessment, there are formal appeals you may take.
6. How can my value change every year?
The market values can and often do change every year. Reassessments and physical inspections are conducted at least once every five years. The State of Minnesota requires that county assessors conduct a sales ratio study every year in every area of the county. These studies show if the market values are too high or too low. Assessors are then required to adjust values to comply with the findings of the study. If the county does not respond appropriately the study’s results, the county may be required by the State to increase or decrease values after the appeal meetings. State increases or decreases may not be appealed by the property owner.
7. Why did my taxes go up even when my value went down?
This has been a very common scenario in recent years when the tax levies have increased but the valuations of properties have decreased. Keep in mind that values are only one part of the tax equation. Here’s a simple example: If all property values in a city go down 10% but the amount that the city needs in taxes goes up 3%, then each property’s tax bill would likely go up by 3% if all other factors are held constant. This is because the share of the tax burden on each parcel has remained the same when taxes increased.
8. What are the approaches to valuing property?
Assessors may use three approaches or methods to value property. These are the cost approach, the sales comparison approach, and the income approach. The cost approach considers the cost to build and develop a property and then removes depreciation due to age and other factors. This method is usually more reliable on newer improvements.
The sales comparison approach utilizes sale prices of similar properties as a measurement of market value. This is often used in property tax assessment since it is an easily explainable and reliable way to show value, especially for residential and seasonal property.
The income approach converts the anticipated benefits of future income and sale of a property into a present value. This is most commonly used for commercial, industrial, and apartment property since income is a primary reason for ownership of these properties.
9. Why do some parcels with similar values have huge differences in tax amounts?
This question has a complex answer that cannot be fully explained here. The primary and most common reason for big differences would be due to classification. For example, an agricultural homestead has a much lower tax rate than most others. The ag homestead classification also has additional tax credits that other classifications do not receive.
Another reason for large differences is due to the local tax rate. This rate is determined by the County Auditor. The rate is less in areas with more market value and lower tax levies.
10. If I purchase a property for less than the Estimated Market Value, will my value go down?
The Estimated Market Value (EMV) doesn’t automatically go down because someone pays less than the County’s EMV. The EMV is set based on a group of sales and not a single sale, even if the sale is open market. When many properties in one area sell for more than the assessor’s value, then the assessor raises values. In property tax assessment, care is taken to treat similar properties equally so that owners are not paying an incorrect tax amount.
