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CABARRUS COUNTY 2012 APPRAISAL MANUAL SALES UTILIZATION AND FAIR MARKET VALUE PREFACE Sales Collection and verification is the single most important activity in the appraiser's office. There is no other activity necessary to the operation of the appraiser's office which is as important as the meticulous and regimented collection of sales data. Ultimately, all valuation approaches, regression, cost /market, or income rely upon the analysis of VALID, QUALIFIED, SALES in order to properly value a subject property. MEETING LEGISLATIVE REQUIREMENTS North Carolina General Statutes mandate the assessment of real property at 100% of the "fair market value ". This criterion has made it imperative for the property appraiser to have an accurate and supportable sales file from which the market approach can be properly implemented. Regardless of how well or how accurate the data about a property may be the data is useless without sales data against which the data may be compared. The entire premise of the computerized appraisal system is that regardless of the appraisal approach used, the analysis of sales is necessary in order to do the following: a. develop regression equations b. set cost /market base rates c. determine depreciation schedules d. determine income capitalization or discount rates Without sales, the appraiser has to depend on the Cost and Income Approach to base his decisions. Therefore you need sales to support the Cost Approach. Sales also help to determine depreciation and obsolescence in the Cost Approach and cap rates in the Income Approach. The basic sales information is available at the Register of Deeds. However, before a proper analysis can be made between the sales for the tax year and those of similar properties that did not sell, the sales must be checked or qualified to verify that an "arm's length" transaction has taken place and that the source of information is correct. The transaction must then be further checked to determine if all rights and benefits of property ownership were transferred and if any personal property was involved. This procedure is known as SALES QUALIFICATION. SALES QUALIFICATION Sales of some residential, but primarily agricultural, industrial and commercial properties often include personal property. There are also a number of intra- company or intra- family transfers "distress" sales, etc., many of which have limiting terms and conditions which affect the sales price. For these reasons and others, further qualification of sales of this type through communication with one or more of the parties involved may be necessary to determine if the sales price should be adjusted for terms, personal property, etc., or disqualified entirely. For this purpose, we have designed the following SALES QUESTIONAIRE which will help standardize the procedure and also build a source of useful sales data. The Sales Questionnaire is a record of sales research performed to establish the quality of a specific sale. Qualified sales are of inestimable value in establishing unit land values, base rates, depreciation schedules, and for checking the quality and degree of equalization of all work performed. Since recent sales are the BEST indication of MARKET VALUE and because of their affect on the entire mass appraisal process, careful handling and qualification cannot be overemphasized. Cabarrus County — 2012 Revaluation SALES UTILIZATION & 2-1 FAIR MARKET VALUE 8/9/11 Attachment number 4 G -3 Page 281