Summit County Utah Assessor Appraisals – Property Valuations & Assessment Process

Appraising Property

The Assessor’s office appraises properties within the county using mass appraisal methods, primarily a sales comparison modified cost approach for residential properties. Summit County currently has nearly 43,000 parcels, with a very diverse makeup of properties -from farming communities to high-end luxury homes. The following approaches to value are needed for many of our diverse property types.  

Sales Comparison Approach

The Sales Comparison approach is the most common approach to valuing residential properties. In this approach, the appraiser compares the property being appraised to similar properties that have recently sold. Similarities and differences must be noted in detail such as date of sale, location of property, physical characteristics, and conditions of the sale.

Before an appraiser can use a home sale as a comparable, the sale must be verified. The sales are analyzed to determine if they are ‘arm’s length’ transaction. An arm’s length transaction is defined as a transaction between unrelated parties under no duress. There are multiple reasons for a home to sell under duress. These reasons include, but are not limited to, foreclosure, short sales, estate sales, job transfer, divorce, etc. Because duress sales typically don’t sell for market value, these sales are removed from the analysis. 

The appraiser then adjusts the sale prices of the comparable properties for different variables such as location, size, quality, condition, amenities, etc. Appraisers generally use a Paired Sales Analysis to determine market differences for different features.  

Income Approach

The Income Approach is the most often used approach in the appraisal of commercial or industrial properties, or properties which are bought and sold by investors primarily because of their income producing potential. This approach to value depends on reliable and detailed information on the income and costs of doing business for a particular business or enterprise.

This is referred to as the ‘income stream’ of the property. The income approach defines value as ‘the present worth of future benefits of owning a property. These are composed of the annual income for an estimated number of years (called the economic life of the property) plus a capital amount representing land value or land value plus some remaining worth of the improvements. This approach emphasizes investment components rather than physical components of a property.

The steps in the income approach are: 

1. Estimate potential gross income (PGI)
2. Add miscellaneous income
3. Deduct vacancy and collection losses to derive effective gross income (EGI)
4. Deduct operating expenses to derive net operating income (NOI)
5. Select appropriate capitalization rate and method
6. Develop an estimated value

Cost Approach

The Cost Approach is based upon the proposition that an informed buyer would not pay more than the cost of producing a substitute property with equal utility as the subject property. The Cost Approach works best for new residences, specialty buildings, large commercial units, and when little market data is available. 

 The steps in performing the Cost Approach are: 

1. Estimate the land value, as if vacant
2. Estimate the replacement cost new of the improvements
3. Estimate cash amount of accrued depreciation due to loss in value, physical deterioration, and/or obsolescence

• Physical – Deterioration due to weathering, wear, tear, etc.
• Functional – Depreciation resulting from deficiencies or super adequacies in the structure
• Economic (external) – Obsolescence due to factors outside of the subject property (being next to the dump or train tracks)

1. Deduct the accrued depreciation
2. Estimate the present depreciated value of any other improvements
3. Add estimate of land value to the depreciated value of improvements to get the value of the subject property.