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Local Property Tax & Appraisal Information
Mass Appraisal Process
Market/ Sales Approach
Cost Approach
Income Approach
HOW PROPERTY IS APPRAISED
LOCAL PROPERTY TAX & APPRAISAL INFORMATION
Mass Appraisal Process
Texas law requires appraisal districts to appraise all property at its current market value as of January 1. The value of real property subject to local property taxation is determined by the use of Mass Appraisal techniques. Within the Mass Appraisal system, there are three common approaches to determine market value used by the Armstrong County Appraisal District.
Market value is the price at which a property would sell for cash or its equivalent under the prevailing conditions if the property is:
- Exposed for a reasonable time in the open market
- Both buyer and seller are well informed of all property uses, purposes, and restrictions
- Both parties seek to maximize their gains
- Neither party is in a position to take advantage of the other
The three approaches to value are:
- Market or Sales Comparison Approach
- The Market Approach to value develops an estimate of value by comparing the subject to similar properties that have recently sold. Sales prices should be used for similar properties. It is the most reliable approach to value in an active sales market. This approach is best suited for residential properties.
- Cost Approach
- The Cost Approach to value estimates value by calculating what it would cost to develop a new property with characteristics of the property being appraised, then adjusting the cost to reflect the actual condition and the circumstances. The calculated value of the structure is then added to the land value for an overall property value. Best approach for the new or unique properties where there is no sales or income being derived from the property.
- Income Approach
- The Income Approach to value relies on the concept that income over a period of years can be capitalized or converted to a lump sum that represents what someone would pay to purchase the right to receive the income. This lump sum is also called present worth. It is a good value indicator for the properties that produce income, such as apartments and hotels.
Appraisal of Single-Family Residences
In order for the Appraisal District to appraise all the properties in the county, a mass appraisal system is used. This system provides for the appraisal of more than 135,000 properties of which approximately 80,000 are homes. All improved residential property is classed on a scale from 1- 15. Quality architectural design, and building attributes determine the class. A substantial majority of Lubbock County homes are classified within the 4-10 range. Similarly-classed properties within a neighborhood are appraised using sales of comparable properties. A neighborhood can be as small as just a few square blocks or as large as one square mile. The market indicates established boundaries of over 700 defined neighborhoods.
Residences are appraised primarily based on what similar properties in a neighborhood sold for on a price per square foot basis during the twelve-month period prior to the January 1 date of appraisal. The Appraisal District compares the most recent appraised values of sold properties to the recent sale prices. If the neighborhood is less than or greater than 100%, a neighborhood adjustment is made to every property in the neighborhood. Neighborhood adjustments are used to adjust all similar properties equally within the defined neighborhood after determining the level of appraisal. The level of appraisal is calculated by an appraisal to sale price ratio of all qualifying recently sold homes on the defined neighborhood. This process compares the most recent appraised value to the sale price of sold property. The median property value is used to determine the level of appraisal for the neighborhood.
Formula to calculate and individual home value is:
SQUARE FOOTAGE X UNITE PRICE X CONDITION X NEIGHBORHOOD ADJUSTMENT = APPRAISED VALUE