Assessments

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ANNUAL REASSESSMENT PROGRAM

The process of annually reviewing assessment valuations as of January 1 is referred to as General Reassessment. Annual assessments are made by utilizing accepted professional real estate mass appraisal methods, techniques and standards.

Mass appraisal is defined by the International Association of Assessing Officers (IAAO) as “the process of valuing a group of properties as of a given date, using standard methods, employing common data, and allowing for statistical testing.” All real estate assessments are reviewed every year, although not all assessments are necessarily changed.  Real estate appraisers will consider the sales comparison, income and cost approaches, although certain approaches may be determined to be more relevant to a particular property type.

Real estate assessments may increase, remain unchanged or decrease: Changes in assessments will result from changes in the real estate market, changes to the property (new construction, additions, demolition, rezoning) or corrections in property information. Assessment notices are mailed on January 28.  Requirements for notification are set forth in the Code of Virginia § 58.1-3330.   The assessment notice includes the new assessment and the two prior assessments, as well as information regarding the appeal process (Office Appeal and Board of Review).

 

FAIR MARKET VALUE

The Constitution of Virginia directs real estate assessments to be fair market value.  
Market value is defined by the International Association of Assessing Officers (IAAO) as "the most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus, as of a specific date."

 

SALES ANALYSIS AND FIELD VISITS

The reassessment process begins with research of recent sales, as sales are typically the best indicator of fair market value. The real estate appraisers may disqualify some transfers from the sales analysis if they are not considered to be an arms-length transaction.  Examples of transfers that may not be an arms-length transaction include family transfers, foreclosures, bank sales, estate sales and other distressed sales related to court orders or divorces. It is sometimes necessary for the appraiser to extensively research a property transaction.

The reassessment of commercial and industrial property assessments may also utilize income and expense data, and construction cost data. The request of income and expense data from owners of income-producing properties is authorized by the Code of Virginia § 58.1-3294.  On April 1, the Real Estate Assessor’s Office makes a request of audited income and expense data from the previous year from commercial property owners. This information is used in the reassessment for the following January 1 valuations.  

Field visits to the sold properties are conducted to confirm the size of structures, property characteristics, outbuildings and site characteristics, as well as the property’s relationship to the surrounding area.  Field visits are particularly important, as sold properties and their characteristics are the basis of the assessed values for the next biennial reassessment.

ASSESSMENT SALES RATIO

The assessment divided by the sales price provides the assessment-sales ratio which will suggest if reassessment is needed.  Ideally the assessment-sales ratio should be 100%, although 90% to 110% is considered to be an acceptable range by the International Association of Assessing Officers (IAAO).

     Assessment / Sales Price = Assessment Sales Ratio
     $300,000 / $300,000 = 100%......................................No reassessment needed

     Assessment / Sales Price = Assessment Sales Ratio
     $300,000 / $350,000 = 86%........................................Assessment increase needed 

     Assessment / Sales Price = Assessment Sales Ratio
     $300,000 / $250,000 = 120% ………….………………Assessment reduction needed

A variety of statistical measurements of the assessment sales ratios are also considered to select the best reassessment proposal. These measures include the quantity of sales, the range of sales prices, the median assessment sales ratio, as well as the coefficients of dispersion (COD), standard deviations and the price related differential (PRD) of the assessment sales ratios.

Coefficient of Dispersion (COD) - a statistical measure of dispersion from the median.
Median Assessment Sales Ratio - The middle assessment sales ratio when arrayed from low to high, or high to low
Price Related Differential (PRD) - The mean divided by the weighted mean. PRDs above 103% suggest assessments are regressive, where more expensive homes in the sample are assessed at a lower rate and less expensive homes are assessed at a higher rate: PRDs below 98% suggest assessments are progressive with more expensive homes in the sample assessed at a higher rate and less expensive homes assessed at a lower rate.
Quantity of Sales - The number of sales during the specified period in the particular assessment neighborhood.
Range of Sales Prices - From the lowest to the highest sales price.
Standard Deviation - A statistical measure of dispersion from the mean.

 

ASSESSMENT NEIGHBORHOODS AND REVALUATIONS

Sales analysis and reassessment of properties is done by assessment neighborhoods.  Assessment neighborhoods are defined as a group of complementary land uses (a congruous grouping of inhabitants, buildings, or business enterprises). An assessment neighborhood may include properties from several subdivisions and conversely several assessment neighborhoods may be located within the boundaries of a single subdivision.

Following sales analysis, the real estate appraisers utilize the Vision CAMA (Computer Assisted Mass Appraisal) to equalize properties based on their characteristics and revalue assessment neighborhoods as necessary. The revaluation process begins with reassessment of the land, which is followed by reassessment of improvements.

 

LAND BOOK

The land book is the culmination of the reassessment process.  This listing includes each parcel of real estate with the owner’s name, legal description, amount of the assessment, and the taxes levied. The valuation date of the land book is January 1 each year. The January 1 values are effective for billing from the following July 1 through June 30 of the following calendar year.  The effective date of the Land Book is July 1 each year.

 

PROCESS NEW CONSTRUCTION, RENOVATIONS AND DEMOLITIONS

The added value of new construction and renovations to a property is assessed and billed when substantially complete in accordance with the Code of Virginia § 58.1-3292.  The value and tax are supplemented to the parcel and tax billing account.  The following example is for a new home finished on January 1, six months after the last assessment and tax bill took effect.

                                  July 1                    January 1                            Next July 1
Land                          $50,000                                                                $50,000
Improvement              -------                      $300,000                             $300,000
Total                          $50,000                  $300,000                             $350,000

Tax Rate                     x .0082                     x .0082                             x .0082    
Tax Liability                $410.00                   $2,460.00                           $2,870
                                                                 ___/2____
                                                                 $1,230.00

In January the existing bill would be supplemented with an additional $1,230.00 for the six months that the house was complete.  The bill created on the next July 1 would reflect the land and the completed home.