The law specifically requires that assessors view each parcel of real estate to appraise its market value. Property values change continuously with changing economic conditions. In addition to market changes, numerous physical changes affect the value of land and buildings. All factors are considered in estimating the value of property.
Minnesota state law defines market value as "the usual selling price ... at the time of assessment.” The value of real estate is established annually as of January 2 of each year. The assessor's office works throughout the year to estimate the market value of each property for the following January 2. The value can change each year based on the market.
Determining Market Value
There are a varying number of factors that go in to determining a property's market value, many of which depend on the type of property (residential, commercial, agricultural, etc.). To determine market value, the county's appraisers follow this process:
- Review Property - Approximately every fifth year, an appraiser will view the property. This is in addition to other visits for new construction, alterations, or improvements that will be viewed in the current year.
- Gather Information - The appraiser gathers characteristics of the property that affect market value, such as size, age, quality, basement finish, and extra features (i.e. - fireplaces, decks / porches, etc.).
- Estimate Value - The property characteristics are entered into a computerized system. The computer aids the assessor in estimating the property value. Information from actual sales is used to update market value. The market value estimated by the assessor should be at, or very close to, the amount the property would sell for if placed on the open market as of January 2 for that given year. The State of Minnesota requires the overall level of assessment to be between 90% and 105% of market value. Blue Earth County consistently meets this standard.
- Owners Notified - A value notice is mailed in the spring to each property owner. The assessment on January 2 forms the basis for the following year's tax. The value and classification on January 2, 2013, is used to calculate the tax payable in 2014.
Mass Appraisal vs. Fee Appraisal
Appraisal is an attempt to estimate the value of a property. Mass appraisal, what the county does, is the appraisal of groups of properties as of a given date using standard procedures. Fee appraisal, what is often done by banks, is valuation of a particular property at a given time.
In other words, for mass appraisal, similar properties are valued similarly using generalized data and information, while a fee appraisal is specifically done for an individual property considering specific factors and based on a particular point in time.