The assessor determines the classification, or use, of each parcel. For instance, property may be residential homestead (owner-occupied), residential non-homestead, seasonal recreational residential non-homestead, apartment, agricultural or commercial. Each classification is taxed at a different percentage of market value as set by the state statute.
2. Estimates the value
The law specifically requires that assessors view each parcel of real estate to appraise its market value. Market value is the price that would prevail under a competitive open-market condition. In addition to market changes, numerous physical modifications affect the value of land and buildings. All significant factors are considered in estimating the value of property.
How Does the Assessor Determine Market Value?
State law requires that the value and classification of real estate be established as of January 2 of each year. The appraiser works throughout the year to estimate the market value of each property for the following January 2.
a. Views property
Under Minnesota Statute 273.08, the appraiser is required to physically review each property at least once every five years. The appraiser may visit your property at shorter intervals for any of the following reasons:
- To review new construction as a result of a permit. The appraiser may stop each year until all construction is complete. For new construction, buildings, structures, and improvements that are under construction as of January 2, will be valued according to the extent completed as of that date.
- To complete a review appraisal for an appeal, such as the Local Board of Appeal, Open Book Meeting, or tax petition.
- To review the property at the owner’s request.
- To review the property at any time the assessor feels that property information may be in error and/or incorrect value may have been placed on the property.
M.S. 273.20 “Any officer authorized by law to assess property for taxation may, when necessary to the proper performance of duties, enter any dwelling-house, building, or structure, and view the same and the property therein. Any officer authorized by law to assess property for ad valorem tax purposes shall have reasonable access to land and structures as necessary for the proper performance of their duties. A property owner may refuse to allow an assessor to inspect their property. This refusal by the property owner must be either verbal or expressly stated in a letter to the county assessor. If the assessor is denied access to view a property, the assessor is authorized to estimate the property's estimated market value by making assumptions believed appropriate concerning the property's finish and condition.”
b. Gathers information
The appraiser gathers information on all characteristics of the property that affect market value, such as size, location, age, quality of construction, basement finish, and other features.
c. Analyze sales and computing value
Each year the assessor analyzes actual sales of property in each community. Preceding the January 2 assessment date, sales in a 12 month time period (October 1 to September 30 of the previous year) are reviewed to determine what properties have sold for on the open market. These sales are used as a guide to help determine what similar properties would likely sell for if they were placed on the market. We are required that the overall level of assessment be between 90% and 105% of market value.
d. Mail valuation notices
Mass Appraisal vs. Fee Appraisal
Appraisal is an attempt to estimate the value of a property. Mass appraisal, what the county does, is the appraisal of groups of properties as of a given date using standard procedures. Fee appraisal, what is often done by banks, is valuation of a particular property at a given time.
In other words, for mass appraisal, similar properties are valued similarly using generalized data and information, while a fee appraisal is specifically done for an individual property considering specific factors and based on a particular point in time.