Property Valuation Division, Directive

Directive Number:98-033
Tax Type:Property Tax
Brief Description:Listing Prices and Fair Market Value
Keywords:
Approval Date:08/27/1998


Body:
DIVISION OF PROPERTY VALUATION


DIRECTIVE #98-033

TO: County Appraisers

SUBJECT: Listing Prices and Fair Market Value
__________________________________________________________________________________

A question has arisen as to whether the “listing price” of property that is for sale can be considered its value for Kansas property tax purposes. The county appraiser shall not use the listing price of property as the sole criteria for determining the fair market value of property for Kansas property tax purposes.

By law, property other than land devoted to agricultural use, commercial and industrial machinery and equipment and certain motor vehicles must be valued based upon its fair market value for Kansas property tax purposes. (K.S.A. 79-501, K.S.A. 79-1439, K.S.A. 79-5100 et seq., Kan. Const., art. 11, 1, Kan. Const., art. 11. 12) For Kansas property tax purposes, “fair market value” means:

K.S.A. 79-503a also requires a county appraiser to consider several factors when determining the fair market value of property for tax purposes. These factors comprise the three approaches to value: the sales approach, the cost approach and the income approach. All appraisers must consider and apply the three approaches to value in order to determine the fair market value of property when data to perform each approach is readily available.

When determining the validity of an appraisal for Kansas property tax purposes, the courts have repeatedly stated:

The highest courts in Kansas have held that compliance with K.S.A. 79-503a is a vital factor in the determination of whether a tax assessment is uniform and equal. In re Tax Appeals of Andrews, 18 Kan App.2d 311, 317, 851 P.2d 1027 (1993).

The listing price of a property is not itself expressly mentioned as a factor that a county appraiser must consider when determining the fair market value of property for tax purposes. However, K.S.A. 79-503a does state that the appraisal process utilized for property tax purposes should conform with generally accepted appraisal procedures, when applicable. Uniform Standards of Professional Appraisal Practice (“U.S.P.A.P.”), Standards Rule 1-5 provides:

In developing a real property appraisal, an appraiser must:

Generally accepted appraisal procedures do provide that an appraiser should consider a listing price when determining the fair market value of property. However, it is wholly inappropriate for an appraiser to complete an appraisal simply by assigning the amount, or a percentage of the amount, of the listing price as the taxable value of a property. The listing price is simply one factor to consider when it exists; it is by no means the sole criteria of market value or the strongest indicator of market value.

A county appraiser must consider all the factors presented in K.S.A. 79-503a in order to determine the fair market value of property. A county appraiser cannot rely solely on a property’s listing price as the basis for its fair market value.


Approved: .
Mark S. Beck
Director of Property Valuation




Date Composed: 08/23/1999 Date Modified: 10/11/2001