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CABARRUS COUNTY 2012 APPRAISAL MANUAL INTRODUCTION The primary purpose of real property assessment is to arrive at a true value (market value) for each real property parcel for use in deriving property taxes that will be as equitable as is feasible given the time, staff and money available to the assessor. Market value as defined by "Machinery Act of North Carolina" under G.S. 105.283 Uniform Appraisal Standards is "the price estimated in terms of money at which the property would change hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of all the uses to which the property is adapted and for which it is capable of being used ". To accomplish the County's goal of determining just and equitable values the County Assessor must turn to mass appraisal methods and techniques based on solid appraisal principles. In mass appraising, as in any kind of appraising, the realities of the local market along with state and local laws must be considered. Also, fundamental to any mass appraisal system are knowledge, judgment and the ability to adapt a standardized system to the local market. A standardized system and method of handling both data and the application of the three basic approaches to value is necessary to achieve equalization and uniformity in the valuation process. The three basic approaches which may be used to arrive at a fair market value are summarized as follows: COST APPROACH This approach consists of estimating the land value and the depreciated cost of the improvements to arrive at a value. Theoretically, the substitution principle is the basis for determining the maximum value of the property by this approach. The substitution principle assumes the value is equal to the cost of acquiring a substitution of equal utility assuming no cost delay is encountered. MARKET APPROACH This approach utilizes the application of prior sales data from the market and is also referred to as the sales or comparison approach. Use of this approach requires that the sales used should be analyzed to determine that the conditions of fair market value have been satisfied. INCOME APPROACH The two most common applications of this approach in mass appraising are the capitalized net income and the gross rent multiplier. The use of any of the three approaches requires careful consideration to be given to: The relevancy of the approach applied to the property under consideration. 2. The inherent strengths and weaknesses of the approach used. The amount and reliability of the data collected. 4. The affect of the local market on the data collected. This standardized system or Schedule of Values is designed and adopted to be used to establish Fair Market Value as of January 1 of the Revaluation year. Revaluation projects are mandated by State law to be performed every eight years unless the Board of County Commissioners desires to perform the projects more frequently. In the interest of maintaining fair and equitable values for the taxpayers of Cabarrus County the Board of County Commissioners has passed a resolution establishing a four year reappraisal cycle for Cabarrus County as required by G. S. 105- 286(a) (2). Cabarrus County — 2012 Revaluation INTRODUCTION 1- 1 8/9/11 Attachment number 3 G -3 Page 275