Villages of Quechee • White River Junction • Hartford • West Hartford • Wilder
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Fair market value is the benchmark utilized by the State of Vermont Tax Department to value real property. By definition, the Fair Market Value of a property is 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. 32 VSA 3481 (partial).
Fair market value can be determined by utilizing the Sales, Cost, or Income Approach. Residential properties are typically valued with an emphasis on the Sales Comparison Approach, while the Income Approach is most often used in the appraisal of income producing properties, i.e. commercial, industrial and rental properties.
In completing an appraisal on a residential property using the Sales Comparison Approach, a fee appraiser directly compares at least three similar properties to the property being appraised (subject property). These properties are analyzed, and the sale prices are then adjusted to account for the differences between the comparables and the subject. The conclusion is a range of values from which the appraiser selects the most probable market value.
In assessing an entire town, all bona fide sales within a defined time period are analyzed in order to develop tables and factors to apply to all properties in town. The methodology is still based on sales, however, the assessment process tends to bring values to an average, rather than assessing to particularly high or low sales. Therefore, assessments resulting from a townwide reappraisal should approximate the market value of properties. It is very rare that an assessment will exactly equal a sale price. Thus, just as in the fee appraisal process, while the actual sale price of a property is an indicator of value, also considered are sale prices of similar properties. The result will be a reasonable range within which the assessment should fall.