The assessor's job is to assess all property in the city at its fair market value.
What is market value?
The market value of your property is simply the probable price that it would sell for in an arm’s length transaction between a willing buyer and a willing seller. In Michigan, market value is defined as "True Cash Value".
Determining a property’s value is the Assessor’s job, and is required for every piece of property, no matter how large or small.
Also, each year the Assessor has to do the whole thing all over again, because the market value of almost everything changes from one year to the next.
The Assessor is required by state law to assess at 50% of true cash value all assessable property, as of December 31. This includes homes, factories, commercial properties, vacant land and personal property (machinery and equipment for commercial and industrial properties).
How Properties Are Appraised
To find the value of any piece of property, the Assessor must first gather all pertinent information in the community, such as real estate sales, construction costs, rental incomes, operating expenses. Interest rates and any other factors available. Utilizing the information collected, the Assessor can then go about finding a property’s value in three different ways.
1. Sales Comparison Approach
The first way is to find properties like yours, which have sold recently. Their selling prices must be analyzed very carefully to get at the true picture. One property may have sold for more because the buyer was in a hurry to occupy the property and would pay any price. Another may have sold for less because the owner needed cash right away and took the first offer.
2. Cost Approach
The second way the Assessor values property is based on how much money it would take, at current material and labor costs, to replace your property with one just like it. If your property is not new, the Assessor must also determine how much it has depreciated due to normal wear and tear or other negative factors. In addition, the Assessor must estimate how much a lot like yours would be worth if vacant.
3. Income Approach
The third approach measures a property’s value by its ability to generate net income. In most cases, this approach is not used for houses unless it is used a rental property.
Why Does the Assessed Value Change From Year to Year?
The assessed value must reflect 50% of market value. As market values change, so does your assessment. For instance, if you add a garage to your home, the assessed value would increase. However, should your property be permanently damaged by fire, the assessed value would decrease. Property owners have a responsibility for reporting any changes to their property that would affect values. If you obtained a building permit, our office will be notified by the Building Inspector’s Office.
Why Assessments Go Up When A Property Hasn't Changed
Since assessments must be set by market value, changing real estate values in the community will be reflected in the assessments. Market value is a product of the prices paid for property. As prices increase/decrease, so does market value.
All properties do not change in value to the same degree. Many factors influence values. Those properties with water or scenic views, for example, may well increase more rapidly than others.
You Determine Your Tax Bill
Your property bill is the end calculation of multiplying your assessed valuation by the local millage rate. The Assessor simply reports the current assessed value of your property. You determine the amount of the tax by voting for, or against, local millages. You also determine the amount of tax by voting for elected community and school leaders who you empower to set millage rates within specified limits.
Remember: A general increase in assessment can be negated on the tax bill by a general decrease of the millage rate.
What Are Your Rights and Responsibilities?
If your opinion of the value of your property differs from the Assessor’s, by all means, go to the office and discuss the matter. The staff will be glad to answer your questions and explain how to appeal if you cannot come to an agreement. The Assessor’s Office relies on the property owner for information. You can help by providing accurate information.
If you feel taxes are too high, you should make your opinion known to the proper taxing authorities. Be sure to take advantage of the state’s property tax relief programs.
We’re here to help you. Just ask!