Property Appraiser & Three Approaches to Value
PROPERTY APPRAISER DUTIES
The Property Appraiser’s Office is governed by the Florida Constitution, Florida Statutes, and the Rules and Regulations of the Florida Department of Revenue. We are charged with assessing the value of every property in Martin County every year, as of the January 1 assessment date, for ad valorem property tax purposes.
THREE APPROACHES TO VALUE
Property values are established each year based on the status of the property on January 1. To estimate market values, the appraiser must be familiar with all aspects of the local real estate market. Information such as sale prices, construction costs, typical rents, normal operating expenses, and current financing are all considered.
We consider three approaches to value when preparing the property tax value roll. First, sales of comparable properties that occurred prior to the January 1 assessment date are analyzed, using only sales where the buyer and seller both acted without undue pressure or special incentives (such as family relationships). This method is called the Sales Comparison Approach and is given considerable weight when valuing residential properties.
The second method, known as the Cost Approach, considers what it would cost using today’s labor and material prices, to replace the structure with a similar one. If the structure is not new, the appraiser estimates how much it has depreciated since it was built. The resulting value is added to an estimate of the market value of the land.
The third method, referred to as the Income Approach, uses market rental rates, vacancy and collection loss allowances, and operating expenses to estimate what an income-producing property should earn. This net operating income is capitalized to estimate value.
Appraisers may reconcile two or more of the value indications (sales comparison, cost, and income) into a final value based on the appropriateness, accuracy, and quantity of market information from the three approaches. The resulting reconciled value is known as the Just/Market value for property tax purposes.