Appraisal Approaches to Value

In valuing all real estate, except farmland, the assessor uses one or more of the three acceptable appraisal approaches to determine value, whichever is most appropriate for the property being assessed. The three approaches are 1) The Market (Sales Comparison) Approach, 2) the Cost Approach, and 3) the Income Approach.

Market (sales comparison) Approach:
In this approach, sales of similar property are compared to the subject property with adjustments being made for any value influencing disparities to arrive at market value.
Cost Approach:
Replacement cost of material and labor is derived from acceptable cost guides and/or market data. Depreciation from all sources is measured and applied. Land value and contributory value of site improvements is added to obtain market value.
Income Approach:
An income/expense analysis of the market is performed to allow conversion of income to a potential worth. This may be done with gross/monthly income with applicable market multipliers or may entail complex discounted cash flow analyses capitalized at market derived rates.
Exception: Agricultural land (Farmland) Valuation:
Farmhouses and up to five acres of supporting land are assessed as residential property (19% of value) on large acreage agricultural tracts of land. The remaining agricultural land and any farm buildings or other agricultural structures are assessed at 12% of market value. Farm buildings and other agricultural structures are valued at market value as all other property. Agricultural ground, however, is graded by the assessor and applied a grade from 1 to 8. Each grade has a productive value as assigned and certified by the MO State Tax Commission, currently ranging from $985 per acre for Grade 1 to $30 per acre for Grade 8. Once value is determined based on the State Tax Commission grade, agricultural land is then assessed at 12% of that value. The statutes allow vacant and unused farmland to be valued according to its market value, and assessed at 12% of the market value.