Minnesota Statute 272.03 defines "market value" as "the usual selling price at the place where the property…is…at the time of assessment." It is "the price that could be obtained at a private sale or an auction sale, if the assessor determines the price from an auction sale represents an arms-length transaction. The price obtained at a forced sale shall not be considered."
In other words: Market value is the price that would prevail under competitive open-market conditions.
How Market Value is Determined
Approximately every 5th year, a county appraiser will view the property. Any property that had a building permit / zoning certificate issued in a given year is viewed also and its new value calculated for January 2 following the construction.
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. Characteristics of the land are also observed.
Each year the assessor analyzes actual sales of property in each township or city. Sales in a 12-month time period preceding the January 2 assessment date, (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 open market.
The characteristics are entered into a computer-aided mass appraisal (CAMA) system. Information on actual sales is updated to reflect market trends, 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. According to state law, the market values are supposed to represent 100% of real value in the real estate market.
The State Board of Equalization requires the overall level of assessment to be between 90-105% of market value. Clay County consistently meets the state board's requirement.
The Assessor's Office mails a value notice to each property owner around the end of March every year. The assessment on January 2 forms the basis for the following year's tax.