Listers are unique to Vermont. The primary responsibility of the lister is to determine the fair market value of your property, they strive to provide all property owners with fair and accurate assessments.
What Type of Property Is Assessed?
All real property commonly known as real estate is assessed. Real property is defined as land and any permanent structures attached to it.
How Property Is Assessed
Generally speaking, property is to be appraised at its fair market value. Fair market value is defined as the price which the property will bring in the market when offered for sale and purchased by another, taking into consideration all the elements of the availability of the property, its use both potential and prospective, any functional deficiencies, and all other elements such as age and condition which combine to give property a market value.
This value is converted into an assessment, which is one component in the computation of real property tax bills.
Determining Fair Market Value
There are three approaches to determining the fair market value of a property:
- Cost Approach - This is sometimes called the summation approach, the theory being that the value of a property can be estimated by summing the land value and the depreciated value of any improvements. It is the land value, plus the cost to reconstruct any improvements, less the depreciation on those improvements.
- Market Data Approach - This approach uses the sales of properties similar to the subject are analyzed and the sale prices adjusted to account for differences in the compared properties to the subject to determine the fair market value.
- Income Approach -This method is most often used in the appraisal of income producing properties commercial, industrial and rental properties. To do this, the income stream is analyzed in terms of quantity, quality and duration. To conduct an income approach appraisal on an apartment building, for instance, you would need:
- potential gross income from the market
- vacancy rate and collection loss from the market
- operating expenses
- capitalization rate
Expenses are deducted from gross income. The resulting net operating income is capitalized to determine value.
In theory, if all three approaches are utilized to appraise any given parcel, it will result in the same. Once the lister or assessor has determined the fair market value an assessment is calculated using the fair market value and the town or city’s level of assessment.
Find out more information and tools used by listers and assessors.