Valuation in Massachusetts is based on "full and fair cash value," the amount a willing buyer would pay a willing seller on the open market. Assessors must collect, record, and analyze a great deal of information property and market characteristics in order to estimate the fair market value of all taxable properties in their communities. Properties such as churches and educational institutions are also valued even though they are exempt from taxation.
Assessors first inspect each property to record specific features of the land and building(s) that contribute to its value. Size, type, and quality of construction, number of rooms, baths, fireplaces, type of heating system – all are examples of the data listed on individual property record cards before the valuation process can begin. Assessors may not have to go inside each property before every revaluation if records are kept up to date and building permits are checked and recorded for changes in individual properties.
Finding the full and fair cash value or market value of a property involves discovering what similar properties are selling for, what the property would cost today to replace and what financial factors, such as interest rates, may be affecting the recall estate market. Valuation techniques for commercial and industrial properties also include analysis form an investment point of view, since the purchase price the buyer is willing to pay depends in part on the return he expects to receive.
The Assessor does not create value. Rather, he has the legal responsibility to discover and reflect the changes that are occurring in the marketplace.