How are Properties Appraised?
Santa Rosa County uses the same appraisal techniques normally used by independent fee appraisers. These are the Cost Approach, Sales Comparison Approach and the Income Approach.
COST APPROACH - The principle of substitution is basic to the cost approach. This principle affirms that no prudent buyer would pay more for a property than the cost to acquire a similar site and construct improvements of equal desirability and utility without undue delay. Information pertaining to cost is acquired from builders, cost information services and from market abstraction. If the property is not new the appraiser must estimate depreciation and deduct it from replacement cost new.
SALES COMPARISON APPROACH - This approach is the process in which a market value estimate is derived by analyzing the market for sales of similar properties and comparing these properties to the subject property. Sales of similar properties must be carefully analyzed to make sure that no adverse conditions existed that would affect the purchase price. Once this is determined, the value of the subject property may be estimated.
INCOME APPROACH - This approach is a unique method to evaluate property, usually used to evaluate commercial properties. It requires a study of how much revenue the property would produce if rented. From the gross estimated revenue the appraiser would adjust for losses and expenses. The net estimated income would then be converted into an indication of value by a mathematical process called "capitalization."