Assessment Process

Assessment Process

WHY HAVE A PROPERTY TAX?

Properties are appraised and taxed to provide services such as schools, fire and police protection, public parks and other public benefits. Property owners thereby absorb their fair share of the cost in proportion to the amount of money their individual properties are worth.

The property tax is part of a well-balanced revenue system. It is a more stable source of money than sales and income taxes because it does not fluctuate as much during recessions. When the community spends tax dollars on better schools, parks, and so on, property values generally rise.

WHAT AUTHORITY DOES THE CITY HAVE TO CONDUCT A REASSESSMENT?

The Code of Virginia requires all property be assessed for taxation at

100% of market value

. The law also requires all property be assessed on an annual basis (every year). The city of Roanoke notifies property owners each January of assessed values. Annual assessments keep pace with changes in the market. During a reassessment, all property values are examined and adjustments are made where necessary. Guaranteeing assessment at market value assures taxes are distributed equitably and uniformly.

WHAT IS MARKET VALUE?

Finding the market value of your property involves discovering the price most people would pay for it in its present condition. It's not quite that simple, however, because the assessor has to find what this value would be for every property, no matter how big or small. Each year it has to be done all over again, because the market value of almost everything changes from one year to the next.

Market value is defined as the amount a typical, well-informed purchaser would be willing to pay for a property. The seller and buyer must be unrelated, the seller must be willing, but not under pressure to sell, and the buyer must be willing, but not under any obligation to buy. The property must be on the market for a reasonable length of time, the payment must be in cash or its equivalent, and the financing must be typical for that type of property. If all of these conditions are present, a market value, arm's-length sale, exists.

HOW IS PROPERTY APPRAISED?

To find the value of any piece of property, the assessor must first know what similar properties are selling for, what it would cost to replace the property, how much it takes to operate and keep the property in repair, what rent it may earn, and many other dollar facts affecting its value, such as the current rate of interest charged for borrowing the money to buy or build similar properties.

Using these facts, the assessor can then go about finding the property value in one of three different ways.

Sales comparison approach

The first method compares your property to others recently sold . These prices, however, must be analyzed very carefully to get the true picture. One property may have sold for more than it was really worth because the buyer was in a hurry and would pay any price. Another may have sold for less money than it was actually worth because the owner needed cash right away and the property was sold to the first person who made an offer. When using the sales comparison approach, the assessor must always consider such overpricing or underpricing and analyze many sales to arrive at a fair valuation. Size, quality, condition, location, and time of sale are also important factors to consider.

Cost approach

A second way to value your property is based on how much money it would take, at current material and labor costs, to replace your property with one similar. If your property is not new, the assessor must also estimate how much value has been lost to wear and tear or other factors such as obsolescence. The adjustment, called depreciation, is then deducted from the replacement cost. Finally, the assessor estimates the value of your lot and adds this to the depreciated cost to arrive at the total property value.

Income approach

The third way is to evaluate how much income your property would produce if it were rented as an apartment house, a store, or a factory. The assessor must consider operating expenses, taxes, insurance, maintenance costs, and the return most people would expect on your kind of property. The net income from operation of the property is then capitalized into a value estimate by using a rate providing a return on the property investment. This method of estimating value is seldom used to appraise single family residential properties.

WHAT CAUSES PROPERTY VALUES TO CHANGE?

A property's value can change for many reasons. The most obvious is the property changes. For example, a bedroom, garage, or swimming pool is added, or part of the property is destroyed by flood or fire.

The most frequent cause of a change in value is a change in the market. When market value changes, so does assessed value. People make value by their transactions in the marketplace.

It is important to remember the assessor does not create this value.

The assessor simply has the legal responsibility to study those transactions and appraise your property accordingly.

WHAT IS THE ROLE OF COMPUTERS IN THE ASSESSMENT PROCESS?

Just as in many other fields, computers are useful in the assessment process. Assessors are trained to look for relationships between property characteristics and market value. By coding these characteristics and studying sale prices, assessors can estimate value by developing formulas and models.

Computers are much faster and are capable of advanced analysis in this area. But despite these capabilities, common sense and assessor judgment are always required to verify assessments. Staff appraisers most familiar with the neighborhoods and properties review all assessments.

CAN THE ASSESSMENT ON MY PROPERTY BE CHANGED EVEN IF THE ASSESSOR HAS NOT BEEN INSIDE MY PROPERTY?

To make a proper assessment on a building, it is desirable for the assessor to see the inside and the outside of the property. The assessor keeps records on the physical characteristics of each property in the city of Roanoke. Even though the assessor may have been unable to go through your property, the assessment will still be reviewed, based on the existing records and the sales of similar properties.

WILL I BE PENALIZED IF I DON'T LET THE ASSESSOR IN WHEN AN INSPECTION IS REQUESTED?

No.

However, when an interior inspection is not allowed, the assessor will attempt to update the records by looking at the property from the outside and using any other available information. To ensure an accurate assessment, it is to your advantage to allow the assessor inside your property when an inspection is requested.

WHAT WILL HAPPEN TO MY ASSESSMENT IF I IMPROVE MY PROPERTY?

Generally speaking, improvements increasing the market value of a property will increase the assessed value. The following are typical items that will increase the assessed value of your property:

Added rooms or garages
Replacing older siding with aluminum or vinyl siding
Substantial modernization of kitchens or baths
Central air conditioning
Fireplaces
Extensive remodelling

WILL MY ASSESSMENT GO UP IF I REPAIR MY PROPERTY?

Proper and regular maintenance will help retain the market value of your property. Generally, your assessment will not be increased for individual minor repairs such as the following; however, a combination of several of these items could result in an increased assessment:

Repairing or replacing roof
Repairing porches and steps
Repairing original siding
Patching or repairing interior walls and ceilings
Exterior painting
Replacing electrical fixtures
Replacing furnace
Exterior awnings and shutters
Weather stripping, screens, storm windows, doors
Exterior landscaping including lawns, shrubbery, trees, flowers

HOW CAN MY ASSESSMENT CHANGE WHEN I HAVEN'T DONE ANYTHING TO MY PROPERTY?

General economic conditions such as interest rates, inflation rates, supply and demand, and changes in tax laws, will influence the value of real estate. As property values change in the market place, those changes must be reflected on the assessment roll.

DO ALL ASSESSMENTS CHANGE AT THE SAME RATE?

There are differences between individual properties and between neighborhoods. In one area, the sales may indicate a substantial increase in value in a given year. In another neighborhood, there may be no change in value, or even a decrease in property values.

Different types of properties within the same neighborhood may also show different value changes. For example, one-story houses may be more in demand than two-story houses, or vice-versa. Older homes in the same area may be rising in value more slowly than newer homes.

There are numerous factors to be considered with each property, which will cause the values to differ. Some of the factors affecting value are location, condition, size, quality, number of baths, basement finish and garages, among others.