Determining Market Value
Definition of "Market Value"
Minnesota's statutory definition describes it as the usual selling price at the time of assessment. A more detailed definition developed by the International Association of Assessing Officers defines market value as the most probable price expressed in terms of money that a property would bring if exposed for sale in the open market in an arm's length transaction between a willing seller and a willing buyer both of whom are knowledgeable concerning all the uses to which the property is adapted and for which it is capable of being used. An arm's length transaction is a sale between two unrelated parties both seeking to maximize their position from the transaction.
How Market Value is Determined
State law requires that the value and classification of real estate be established as of January 2 each year. The Assessor’s Office works throughout the year to estimate the market value of each property for the following January 2 assessment date. The Assessor:
- Views Property: Approximately every 5th year, an appraiser will view the property. In addition, all new construction, alterations or improvements will be viewed in the current year.
- Gathers Information: The appraiser gathers information on all characteristics of the property that affect market value, such as size, age, quality, basement finish, and also extra features such as fireplaces, extra baths, walkouts, sheds, etc.
- Estimates Value: The property characteristics are entered into a computerized system. The computer aids the appraiser in estimating the property value. Information from actual sales is used to update the computer model and set the table schedules which are used to update your 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. The State Board of Equalization requires the overall level of assessment to be between 90% and 105% of market value.