Assessment Process

There are numerous things to keep in mind when understanding how the Assessor appraises property:

  1. In Washington State, the Assessor is required to value property at 100% of true and fair market value.
  2. There are three standard approaches to value:
    • Cost
    • Sales
    • Income (commercial property)
  3. For residential property, we use the cost approach to establish a base construction value, then we apply the sales approach to get to market value.
  4. We use a process called Mass Appraisal, which is different than your typical Fee Appraisal you would get when buying/selling/refinancing your property.
  5. We cannot assign a market adjustment (increase or decrease) to your property that is different than all of the other properties in your market area.
  6. Your market area may be as small as a group of homes in a specified area (subdivision, waterfront, etc) or a much larger area, both defined by how the market is reacting to sales in that area.
  7. You have one value on your property, but it is cumulative of the land component and any improvements (structures, commercial ag root stock, ag irrigation systems) on the property.
  8. Physical inspections of property occur every 4 years, whereas statistical analysis of market conditions, and the accompanying adjustments, are done annually. All taxable properties in Chelan County have been revalued annually since 2010.
  9. All sales used in the market analysis must be good, closed, arm’s length transactions. Department of Revenue (DOR) stipulates the types of sales that can and cannot be used in the analysis. For example, a sale between relatives, bankruptcy, sheriff sales, tax deeds, gift deeds, Quit Claim deeds, forced sales, short sales, deeds in lieu of foreclosure, bank sales, sale or acquisition of exempt property, and classified land sales under RCW 84.34, cannot be used as they are not considered arm’s length transactions. This is referred to as a DOR Ratio Code.
  10. It is against the law to set an assessed value, independent of the rest of the market area, at its sale price. This is referred to as “shooting the sale”
  11. The sales ratio is the Assessed Value/Sales Price.
  12. Because Mass Appraisal works on the law of averages, if we set our goal ratio at 100%, we will have 50% of the properties over assessed, and 50% under assessed.
  13. Chelan County prefers not to be on the high end of the range for over assessment, so our target ratio is between 85-90%.
  14. The assessed value is always as of January 1 of the assessment year, which uses the prior year’s sales. Example: 2017 assessments are based on 2016 sales and are for 2018 taxes.
  15. A market adjustment is simply what the market will bare above and beyond the base construction cost of a new home. The raw cost of land plus new construction, or replacement cost (less depreciation) compared to the market value. The difference is the market adjustment, or influence. Think of this the same as the developer, or builder profit, but will fluctuate from year to year depending on the real estate market.
  16. There are a few exceptions to the sales used in the market analysis. Even though we are not supposed to use foreclosed properties in our sales analysis, we realize that if there are a substantial number of foreclosures in one area, we cannot ignore the impact this has on the market. These foreclosed properties may be setting the new market value, but usually will recover within a year or so.


The mass appraisal process:

  1. Land is valued as if vacant. We typically have enough sales to determine whether land values need to be adjusted. If we do not have enough sales in a given market area, we typically will not change the value, but will continue to monitor for the following year. The law allows a look-back up to 5 years for market trends. The sales volume in Chelan County has been high enough that there are only a couple of areas where trending has been used; Stehekin being one.
  2. In determining the land value, we take the market area, draw out all of the vacant land sales that have not been “coded out” (identified with a DOR Ratio Code), and then compare those sales prices against those properties prior years assessed value. This creates a list of sales ratios (Assessed Value/Sale Price).
  3. The list of sales ratios gives us a range. The real estate market is made up of buyers and sellers with individual ideas on what the true value of a property is (it’s worth exactly what someone is willing to pay for it), which can lead to different prices for two identical properties, side by side, in the same time frame. The market is driven by buyer’s preferences and desires, not by science.
  4. With this list of sales ratios, we order them highest to lowest and make a market adjustment so that the average ratio of all sales is between 85-90%. Typically this only pushes 1 or 2 of the numerous sales over 100%. (See #9 in prior section)
  5. That market adjustment for land (in % form) is now added to all properties in that defined market area. All properties, regardless of whether they sold or not, receive the same adjustment.
  6. Improvements/structures are first valued through the Marshal & Swift manual, which is a national cost manual used by almost all industries related to building and construction, appraisal, etc.
  7. The cost approach basically builds and values the structure as a replacement cost new less depreciation (RCN-D). The initial construction quality is a basis for the replacement cost new. The depreciation is a combination of age and condition of the property. Both the quality and condition of the property are considered “appraiser opinion”. We also use local quality and condition checklists for consistency throughout the county.
  8. Once we have the RCN-D, we consider that the base construction cost. However, a home does not sell for simply the cost of construction, therefore we look at the sales in the market area for market adjustments.
  9. We now look at improved sales in that same market area, and within that same group of sales. The exact same process is used for this analysis as was used for the land sales – ordering the ratios (assessed/sale) and determining the market adjustments. Any market adjustments at this point will be added/deducted from the Improvement value, since the land value has already been set to market.
  10. We do not select a few comparables in an area to analyze and set values, we use ALL qualifying sales (see #9 in prior section). This is where fee appraisal work and our mass appraisal work diverge. We do not have the luxury of using exact (or very similar) homes across the county as comparables. We have to stay within the market area and do our analysis on a much larger scale. A fee appraiser will use comparables from all over, but then add or subtract adjustments differently on each property based on their current market area. Although our methods are different, unless we have incorrect details on the improvements, we are typically right on par with the appraisers and realtors market analysis.