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The approaches that Assesor Office uses when computing the worth of your property

You finally finished your monthly amortization of your house and thought of buying a new one since your family has grown and you need more space for all the things that have been acquired through the years. Your wife is asking for a larger kitchen to work around, the kids have always longed to have a pool and you need another space for the new van that you bought a couple of months back. You now need to sell your house and look for a bigger house that has everything that you need.

Have you ever thought how much is the market value of your property? One way of knowing the cost of your property is to visit the assesor office and ask them how your property is sharing in the market today. Although the data that the assesor office has is being updated regularly, it may not truly reflect the value of your property. But the information that you get from your assesor office will give you an idea of how much your property is in the market today. There are three ways the assesor office gets the estimated value of a property.

  • Market approach
  • Cost approach
  • Income approach

The first approach that the assesor office uses to get the value of a particular property is through market approach. The assesor office will get the value of your property by comparing it with a similar property that was recently sold. But the only time that the assesor office will gather a data from a recent sale is when the seller and the buyer acted upon the sale without any pressure. It is important that they base it in a transaction that has been consummated without undue pressure from both parties in order to come up with a fair comparison.

The second way the assesor office assesses the value of your property is through cost approach. In this manner, the assesor office gathers the present value of the materials that has been used on your property and the cost of labor that it will entail if the construction were to be held today. In case the house has already been around for a couple of years, then the assesor office will calculate the depreciation of each material. After getting the value of your house, they add it with the present market value of your land and the sum is the estimated value of your property.

The third and last approach that the assesor office uses in knowing the value of your property is through the income approach. The assesor office uses the amount that your property is earning if an apartment, building or even a factory is being rented. It is very important that they incorporate other factors when coming up with their true assessment. The other factors to be considered are: the amount that is being paid for the insurance, the amount that it would cost in maintaining the property, the cost of operating expenses and the financing terms should be included on the computation.

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