Understanding Residential Mass Appraisal
Supporting Your Value
Often, property owners want to review comparable sales that support their assessment. Your appraiser will always be happy to discuss your property value and the appraisal process with you. Although your appraiser may be able to locate several sale properties that are similar to yours as examples of how sales in the market support your value, this does not mean that your value was based on only those sales.
Unlike an independent appraiser, we cannot provide you with two or three individual properties used to establish your property value because that would misrepresent the mass appraisal methodology used. Instead, we can provide a list of all the sales used in the sales comparison model for your neighborhood. This may include up to three years of sales, but only the prior year’s sales were used to set the assessment level.
Note that none of the properties that sold may be identical to yours, particularly if you live in a very unique house. Sometimes we may need to reach into other nearby neighborhoods to show you a sale of a similar property. A unique home’s value may differ from other homes in the neighborhood based on characteristics such as land value, size and amenities.
When you are looking at sales in your neighborhood to help determine if you believe the Just/Market value is a fair and accurate reflection of the value, please keep in mind the following:
- In mass appraisal, we review hundreds of sales, not just the two or three that may appear most relevant from an independent appraisal standpoint.
- The assessment date is January 1 of each year, so sales that occurred after that date will not be considered in establishing current year values.
- Your area appraiser is always happy to answer any questions you have.
Mass Appraisal & Comparable Sales For Residential Property
The Property Appraiser’s Office is governed by the Florida Constitution, Florida Statutes, and the Rules and Regulations of the Florida Department of Revenue. We are charged with assessing the value of every property in Pinellas County every year, as of the January 1 assessment date, for ad valorem property tax purposes. The following will help explain how the sales comparison approach to value works in mass appraisal for residential property.
- Three Approaches to Value
Property values are established each year based on the status of the property on January 1. To estimate market values, the appraiser must be familiar with all aspects of the local real estate market. Information such as sale prices, construction costs, typical rents, normal operating expenses, and current financing are all considered. We consider three approaches to value when preparing the property tax value roll. First, sales of comparable properties that occurred prior to the January 1 assessment date are analyzed, using only sales where the buyer and seller both acted without undue pressure. This method is called the Sales Comparison Approach and is given considerable weight when valuing residential properties. The second method, known as the Cost Approach, considers what it would cost, using today’s labor and material prices, to replace the structure with a similar one. If the structure is not new, the appraiser estimates how much it has depreciated since it was built. The resulting value is added to an estimate of the market value of the land. The third method, referred to as the Income Approach, uses market rental rates, vacancy and collection loss allowances, and operating expenses to estimate what an income producing property should earn. This net operating income is capitalized to estimate value. Appraisers may reconcile two or more of the value indications (sales comparison, cost, and income) into a final value based on the appropriateness, accuracy, and quantity of market information from the three approaches. The resulting reconciled value is known as the Just/Market Value for property tax purposes.
- Sales Comparison
The “sales comparison” value listed on our web site is the preliminary value indication based on the sales comparison approach to value alone; it is not a final determination of value and is not used in calculating taxes. The Just/Market value is the primary value established for tax purposes, after the most applicable approaches to value have been reconciled.
- Qualified / Unqualified
Only “qualified” sales are used in the sales comparison model for appraisal areas. Qualified sales are transactions between unrelated, knowledgeable buyers and sellers with no undue pressure on either party, which therefore best represent market value. Sales may be “unqualified” if it is determined that they are not arms-length transactions or do not accurately reflect the market. E.g., unqualified sales may include foreclosures, court settlements, transfers between relatives, or other transfers in which the transactions may be affected by undue stimulus. Although foreclosure sales are not considered qualified sales and therefore are not typically used in our sales comparison models, we do consider the impact of foreclosure sales on the market when and where applicable.
- Mass Appraisal
Because we are charged with establishing the value of every property in the county for ad valorem tax purposes each year, and there are approximately 435,000 real property parcels in the county, it is necessary to use a mass appraisal system. Our office utilizes a Computer Assisted Mass Appraisal (CAMA) system to analyze sales and estimate values for many properties at once. Mass appraisal is different from the independent appraisals most people are familiar with for obtaining mortgages, refinancing, or insurance purposes. An independent appraiser typically values only one parcel at a time and selects three to six sales to compare to the property being appraised. In mass appraisal, large groups of sales are used to provide value indications for large populations of properties every year. In Pinellas County, we have 21 residential market appraisal areas and 8 condominium areas. Each one of those areas can have hundreds of annual sales.
- Area / Neighborhood Sales
When establishing your property value each year, we first analyze all the sales in the appraisal area where your property is located, using an appraisal area model, to obtain an estimate of value. The model can include hundreds of sales. We then review a subset of sales in a smaller geographical area more closely identified with your property, referred to as your appraisal neighborhood. We give the greatest emphasis to sales within the appraisal neighborhood through use of a neighborhood “factor.” Through statistical analysis of all of these sales, we establish sales comparison values that account for different property characteristics (location, size, amenities, construction quality, view, etc.).