\| Assessment Evaluation |
Market Value Vs Cost Approach (Basis) Market Value Analysis This term is suspect from several view points. In real estate this method of value determinations has been applied for many years. Upon close evaluation from a small sample of assessed properties in Fort Ann, data seem to indicate that the MV method fails to support many of the claims such as probable price a property will sell (for), conditions requisite to a fair sale, property must be valued to ascertain its share of the tax levy, or equalization rates. Apparently MV is a smoke screen to justify property value using non-valid and unreliable data collection. Market Value is not valid simply because the collected data does not measure accurately comparable properties. The sample size is limited in scope that fails to establish an accurate correlation between properties. Probable price is an educated guess to establish sales. Upon closer examination probable price is speculation that cannot be supported. Although both buyers and sellers historically have been conducting sales with this method is fatally flawed. When compared to reproduction cost new less depreciation (RCNLD), the MV price exposes a gap which may be significantly large when the possibility of property loss is taken into account. This is illustrated when purchasing a vehicle. The purchase price agreed before delivery is substantially higher than the vehicle worth after delivery. RCNLD is the value that insurance companies typically set for maximum loss settlement. The difference between MV and RCNLD indicates that a buyer is at substantial risk for responsibility of the gap difference should a major loss occur. Further when MV is applied as the determining factor for valuation, no other component should be added, waterfront or other amenities because they should already be imbedded in the MV. Another claim consistently offered is that reevaluating is required to maintain fair tax levy for all properties. Here is an issue that is extremely difficult to prove. The overall leveling process is not immediately determined from published inventory data, web sites etc. However, an individual property can be compare to others of the same property coding by searching all comparables in that class. This will be demonstrated by charts in following sections. Without this supporting data, could a claim be made that previous assessments are faulty? Determination from this summary indicates that MV is not valid, the measurement does not quantify the intended purpose, and is not reliable in that other researchers will not be able to exactly replicate outcomes. When this web site obtains input from other participants, further support to discontinue the MV approach. Cost Approach (Basis) Analysis From the introduction Cost Approach is a method of appraising property based on the depreciated reproduction or replacement cost (new) of improvements. This method meets both the test of validity and reliability. Validity in that objective measure of value is quantified by actual costs rather than speculation and market fluctuations. Further, the method is reliable since anyone performing assessments will arrive at identical conclusions. When the 2009 assessment notices were published, containing a huge increase, an investigation of the process was begun by many people. During analysis of adjacent properties two major defects were detected. First, Assessment of land per square foot calculations had no consistent value. Three sides by side properties with identical SqFt measurements had assessments of $3.00, $3.30, and $5.00 respectfully. Structure value should be determined by RCNLD. Assigned time restraints for filing of grievances prevented a detailed investigation of housing comparisons, however, a brief overview led to a significant difference in values. In the next section, these differences will be examined. The charts compare 2008 -2009 data based on plot length and width, then on acreage. While there ought to be some measure of equality, judge for yourself. |