FAQs About Appraisers

• Cost Approach – what it would cost to replace the improvements, less physical deterioration and other factors, plus land costs.
• Sales Comparison Approach – making a comparison to other similar, nearby properties which have sold recently.
• Income Approach – involves estimating what an investor would pay based on the income produced by the property.
  

What does an appraiser do?

• An appraiser provides a professional, unbiased opinion of market value to be used in making real estate decisions. Appraisers present their formal analysis in appraisal reports.
  

Does an appraiser have to be licensed?

• Appraisers in Colorado are required to be licensed. Once licensed, an appraiser is required to take continuing education courses in order to keep the license current. The licensing requirements are governed by the Colorado Real Estate Division.

Who does the appraiser work for?

• The lender employees the appraiser to estimate the value of real estate involved in a loan transaction.
  

Who owns the appraisal report?

• In most real estate transactions, the report is ordered by the lender. Though the home buyer pays for the report as a part of the closing costs, the lender retains the right to use the report or any information contained within. The home buyer is entitled to a copy of the report, but cannot use the report for any other purpose without permission from the lender.
  

Why do I need an appraisal?

• Any time the value of your home or other real property is beings used to make a significant financial decision, an appraisal helps. A home is often the single, largest financial asset that a person owns. Knowing its true value will help you make the right financial decisions. There are other reasons to get an appraisal, the most common are:
• To obtain a loan or mortgage
• To lower your tax burden
• To contest high property taxes
• To settle an estate
• To provide a negotiating tool when purchasing real estate
• To determine a reasonable price when selling real estate
Photo Courtesy of svilen001
• To protect your rights in a condemnation sale
• Because a government agency, such as the IRS, requires it
  

What is the difference between an appraisal and a Comparative Market Analysis (CMA)?

• The CMA relies on vague market trends and gives a “ball park figure” of value. An appraisal is based on specific, verifiable comparable sales and delivers a defensible and carefully documented opinion of value.
  

Where does an appraiser get the information to estimate value?

• The data an appraiser gathers can be divided into 2 categories: specific and general.
• Specific data is from the home itself. Namely location, condition, amenities, size and other specific information gathered by the appraiser during the inspection.
• General data is gathered from numerous sources such and the local Multiple Listing Service (MLS), tax records, and other public documents that can verify actual sales prices in the market.
  

What does the appraisal contain?

• Each appraisal report must reflect a credible estimate of value and identify the following:
• The client and other intended users
• The intended use of the report
• The purpose of the assignment
• The type and definition of value reported
• The effective dates of the appraiser’s opinions and conclusions
• Relevant property characteristics including location attributes, physical attributes, legal attributes, economic attributes, real property interest valued and non-real estate items included in the appraisal including personal property, such as a swing set or garden shed
• All known: easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances and other items of similar nature
• The scope of work used to complete the assignment
  

How do I know the value indicated is valid?

• The appraiser must ensure the following:
• The information analysis used in the appraisal was appropriate
• Significant errors of omission or commission were not committed individually or collectively
• The appraisal services were not rendered in a careless or negligent manner
• A credible, supportable appraisal report was communicated
  

What is “Market Value”?

• Market value or fair market value is the most probably price that a property should sell for in a competitive and open market under all conditions requisite to a fair sale.
  

How do I get ready for the appraiser?

• The best thing you can do is help make sure that the appraiser has easy access to the exterior of the house. Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure that items like furnaces and water heaters are easily accessible.

What is the difference between an appraisal and an assessment?

• An appraisal is an estimate or opinion of value. An assessment is the value of a property according to the tax rolls in ad valorem taxation which may be higher or lower than market value
  

How does the Assessor estimate value?

• The assessment date is January 1 of each year, for taxes payable the following year. For residential properties, the Assessor must estimate actual market value. This is based on size, amenities, location, etc., then compare to like-properties that have sold during an eighteen-month time span. Those sales nearest to the end of the eighteen-month period would be the most representative.
  
• Residential properties may only be valued by the Market approach pursuant to Colorado Revised Statute 39-1-103(5)(a), which reads in part "...The actual value of residential real property shall be determined solely by consideration of the market approach to appraisal."
  
• For most non-residential property, the Assessor considers the 3 main approaches to valuing property: Market, Cost, and Income.
  

How do I know the actual value the Assessor has placed on property I own?

• In May, a Notice of Valuation (NOV) is mailed to property owners. This is NOT a tax bill!The purpose of the NOV is to notify you of any change in your property valuation and inform you of your right to appeal the new value.
  

What if I disagree with the total actual value of my property?

• Gather as much information as you can on similar properties in your neighborhood. Compare the features of these properties to the features of yours. If there are differences, the values of the properties will probably be different.
  
• If you've recently purchased your property, what was the sale amount? If you're considering selling, what price are you thinking of asking? How do those values compare with the estimated value the Assessor has placed on your property? What do you believe your property value should be?
  
• If, after researching surrounding property values, you still think your value is too high, you may wish to Appeal the value. On the reverse side of your Notice of Valuation there is an Appeal form. Follow the instructions on the form and submit it to the Assessor. Your Appeal will be reviewed and a response will be mailed to you in the form of a Notice of Determination (NOD) by the last working day in June.
  
• Residential property owners only also have the option of Appealing their valuation through our web site, beginning May 1.
  
• Further information regarding Appeals can be found on the "Appeal Process" page of the El Paso County Assessor’s website or at Teller County Assessor's website
  

Where do I find comparable properties?

• All property sales should be recorded with the Clerk & Recorders Office. Access to these property sales is then given to the Assessor's Office. This is "public information" and your Assessor's Office will be happy to assist you in locating comparable property sales data. A real estate office is another good source for information on sold properties.
  
• Residential property owners can also find comparables on our web site, linked through our "Property Record Search" page.
  

My NOV is divided into Land Value and Improvement Value, even though I didn't make any improvements to my property. Why?

• "Improvement" is the terminology used by the Department of Property Taxation to identify everything added to or put on the land, such as buildings. If you have made no changes to an existing structure but you still have an increase, this would reflect the market showing an increase in value.
  

I agree with the total actual value placed on my property, but I'm afraid my taxes will go up accordingly. Should I appeal?

• NO!!!  The Assessor's Office has no control over tax rates! The assessment rate is set by the State Legislature.  Mill levies are set each year by taxing authorities.  The mill levy is the total percentage of each tax bill going to schools, fire districts, water and sanitation districts, library districts, governmental agencies, and other special districts that provide services to the area in which your property is located.  Each tax district differs. The following is an example of how property taxes are calculated:
  • $100,000 (market value)  x  .0796 (current residential assessment rate)  =  $7,960 (assessed value)

THEN

• $7,960 (assessed value)  x  .054454 (hypothetical mill rate)  =  $433.45 (approximate taxes due)
  

What is a mill?

• A mill is one-tenth of one cent; often used to express real estate taxes. A Mill Levy is a tax rate expressed in tenths of a cent; e.g., a tax rate of one mill per thousand means $1 of taxes per $1,000 of assessed value.
  

The Notice of Valuation says the Assessment Rate on my residential property is 7.96%...yet the noted change in value does not reflect this percentage, why?

• 7.96% is the Current Assessment Rate for residential property, set by the State Legislature, not the percentage of Increase or Decrease in market value. This is the percentage of the estimated Market value upon which your property tax is calculated.
  

What if I disagree with a change in value?

• You may file an Appeal with the County Assessor. The following deadlines must be followed in order to preserve your legal rights:
• If the date for filing any report, schedule, claim, tax return, statement, remittance, or other document falls upon a Saturday, Sunday, or legal holiday, it shall be deemed to have been timely filed if filed on the next business day.  §39-1-120(3), C.R.S.
• Real Property Appeals: Begin on May 1 and conclude on June 1.

Information provided by Assessor's Office and Gary Eisenbraun