The value of your property is determined by its market value. Simply put, market value is the price that your property would sell for if placed on the open market.
Changing Market Conditions
State law requires that assessors view each parcel of real estate to determine its market value. Property values are continuously affected by changing market conditions, as well as numerous physical changes, such as additions or remodeling.
The assessor also determines the classification, or use, of each parcel. For instance, property may be residential homestead (owner-occupied), residential non-homestead, commercial, and so on. Each classification is taxed at a different percentage of market value.
Impact of Property Market Value
Changes in your property’s market value may affect your property taxes. The actual impact, however, can be affected by what happens to other property in the City since the property tax is levied on all of the taxable property in the City.
Below are some examples of how an increase in the value of your property may or may not affect your taxes:
- If the value of your property goes up by 10%, and all of the other property values in the City also go up by 10%, your property taxes will not be affected by the increase in the value of your property.
- If the value of your property goes up by 10%, and all of the other property values in the City go up by 15%, your property taxes may well decrease regardless of the increase in the value of your property.
- If the value of your property goes up by 10%, and all of the other property values in the City only go up by 5% your property taxes will likely increase.
The same affect occurs when properties are going down in value. During the last recession, property values decreased but some property owners were surprised when their taxes did not also decrease. This was due to the fact that almost all of the taxable properties in the City lost value during the recession.
How is Market Value Determined?
An Appraiser Views the Property
Approximately every five years, an appraiser will view your property. Value and classification of real estate must be established on January 2 each year. The City Assessor's Office works throughout the year to estimate the market value of each property for the following January 2 assessment.
An appraiser will also view your property if a building permit has been issued during a given year. Your property's new value is then calculated for January 2 following the construction.
The Appraiser Gathers Information About the Property
The appraiser gathers information on all characteristics of the property that affect market value, such as size, age, quality, basement finish, and extra features, such as fireplaces, walkout basements, etc.
Actual Sales in Hopkins Are Analyzed
Each year the assessor analyzes actual sales of property within the city. Sales in a 12-month time period preceding the January 2 assessment (from October 1 to September 30), are reviewed to determine what properties have sold for on the open market. These sales are used as a guide to help determine 'what similar properties would likely sell for' if they were placed on the market.
A Value is Computed Based on the Gathered Information
The characteristics are entered into a computerized appraisal system and the computer calculates the property's value. The market value estimated by the appraiser in this way should be very close to the amount the property would sell for if placed on the open market.
The State Board of Equalization requires the overall level of assessment to be between 90-105% of market value. The City of Hopkins consistently meets the State Board's requirement.
Notices Are Mailed
Notices are mailed out by Hennepin County around the end of March every year. This valuation is the basis for taxes the following year. For example, your home's assessed value in 2014 will determine the taxes you pay in 2015.
If you believe your property value to be incorrect, you can appeal your property valuation.