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.
The property tax classification usually refers to the use of the property as of the assessment date. Assessors are responsible for putting property tax classifications on all types of real estate. These classifications are set by State Statutes. In the case of vacant property that does not have a clear use, the classification is often the highest and best use of the property. This may mean that a vacant lot on a busy highway that is zoned commercial has a commercial tax classification. Classification for property tax purposes may be different than a zoning classification.
Mass appraisal is the process of valuing many properties using a standard method and common data. A CAMA system is Computer Aided Mass Appraisal which uses computers to implement this process. The CAMA system stores the many factors of value for each property and generates values for each property using models which replicate the actual market.
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. Adjusting only one owner’s value could be unfair to other owners. We also do not automatically raise the value of a property to the sale price if it sells for more than our estimated market value.
The State Board of Equalization requires our median sales ratio be between 90% and 105%. For example: A property sells for $100,000 that has an estimated market value of $90,000. This would be a 90% ratio of value to sales price. The median ratio is the middle ratio of the group of sales of a particular type in a taxing district. If the median ratio is outside the 90% to 105% range, the State Board will normally order aggregate value changes to bring values into the correct ratio for that taxing district.
The law requires that at least 1/5 of the counties properties should be viewed and reassessed each year. Market adjustments are made to all properties every year even if it was not physically viewed. All new construction is to be valued each 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.
Sales listings may be useful indicators of market activity but assessors cannot directly use listings to value property. When a sales study is done, only open market sales are considered as true indicators of market value.
Appraisers from an assessor’s office will look at many things on an inspection since anything that affects value is important to note. They may ask to view the interior of the home. Homeowners are encouraged to allow appraisers to view the interior since assessors may make value assumptions on items they cannot see.
On a residential inspection, appraisers look at items including square footage of the exterior, exterior wall and roof condition and type, foundation type, window type and condition, interior wall and floor finish and type, number of bedrooms and bathrooms, basement finish, sidewall heights, presence of mold or water damage, floorplan of the house, heating/cooling system, and other items. The items that contribute to value can change over time. Valuation adjustments can be made based on certain items when sales have shown that those items affect value.
There are many factors that are considered to determine land value. For property that is not on water, the following items are often considered: size, elevation, wetlands, type of land, drainage, access to roads, proximity to development and tree cover. For lakeshore land, all of the factors listed above also can play a role in valuation. Special attention is paid to the condition and quality of land near the lake on these properties.
Appraisals prepared by a private fee appraiser are often limited to a specific end use such as mortgage financing or settlement of an estate. They are different in nature and subject to different rules than appraisals done by an assessor. The assessor’s office does not prepare narrative appraisals with specific comparable sales for every property in the county.
The effective date of assessor’s appraisals are January 2 of each year and the supporting sales information is taken from the sales study period during part of the two years prior to January 2. Specifically, the 2021 assessment values have an effective date of January 2, 2021. The sales to support these values occurred from October 2019 through September 2020.
For example, if your financing appraisal has an effective date of November 2020, it may reflect a market change that the assessor’s value does not reflect since it’s a newer appraisal.
The estimated market value for property tax purposes does not specifically include the value of timber, crops, or any personal property. However, in the case of timber, the valuation of the land is split up into different categories or land types that may show a different valuation for wooded land than non-wooded land. Also, in the case of crops, the valuation of land is also split up so that tillable cropland is valued separately from other land types such as swamp. This doesn’t necessarily mean that wooded land is always worth more than non-wooded land. Sometimes the opposite is true.
Not necessarily. The amount of tax collected is determined by State Statutes, County Board, School Board, Township Board, City Council, and other elected officials. The County Board has the key role in setting the property tax levy at the county level. A simple way of describing the tax system is through the pie analogy. The whole pie represents the amount of money the local government needs to operate. Each taxpayer has one piece of the pie. The size of that piece is determined in large part by the values and classifications on the property.
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.