Where Do Property Values Come From?

Property values--where do they come from? Have you ever stopped to think about it?

It's the data that populates your MLS's tax software, and it's what breathes life into your CMAs and what informs your opinion on pricing a home.

But where does that information come from, exactly? And how does something that starts as a real-world assessment of a physical space come to exist digitally?

To find out, we talked to an expert. Edward Gettelfinger is the Director of Data Acquisition at CRS Data, a company that provides tax software to MLSs and their members. CRS Data employs hundreds of people to collect, input, and maintain property tax data from counties in the areas they serve.

"The collection of property tax data is a constant flowing, living, breathing thing," Gettelfinger says. "It never stops. As soon as you think you're done, you're starting over."

Gettelfinger broke down the process of acquiring property tax data and incorporating it into software that thousands of agents rely on every day. Learn more about the steps that bring data from the real world into the digital below.

Step 1: Measure

The determination of a property's value begins with a tax assessor physically measuring its square footage. This measurement provides the baseline of a structure's value.

"This happens every four or five years, depending on the county," says Gettelfinger. "So, for example, the state of Tennessee has a team of field appraisers that go out and do 25 percent of a county's assessments every year."

Step 2: Evaluate

Next, tax assessors take the measurements, condition, and amenities of the property into account to determine its overall value.

"They try to compare it to other properties in the area," Gettelfinger says. "They're going to assume that the properties are pretty different when determining the value."

Step 3: Update

Once measurement and condition information is recorded, the tax assessor will update the records at the property's county courthouse.

Step 4: Calculate

Once records are updated at the courthouse, tax rates can be calculated and adjusted accordingly depending on changes.

What kind of changes can affect tax rates? "Say someone added a bedroom to the back of their house," says Gettelfinger. "The assessor works on it and adds that square footage, and then the values are going to change."

Step 5: Access

Step five is where the magic happens—when property tax data is taken from courthouse and input into software that agents and brokers rely on every day.

This process is not without its challenges, however. According to CRS Data, most counties only update their assessor files once a year, but CRS Data continuously aggregates new sales information to ensure their database is up to date.

"We typically get a digital file from the county, but the county's almost always working a year behind," says Gettelfinger. "Sometimes, if ownership of a property has changed hands recently, it may not be reflected in the file. But the deeds are being recorded, and we'll transfer the property to the correct owner within our data and make that change to our database."

Sometimes the data isn't available in a digital file, so CRS Data has to key in by hand all the information from paper records into their database. They're just one part of the group of people who collect and update property data and ensure its integrity.

"We've got a team who all they do is contact the courthouse to get the data," says Gettelfinger. "And we've got hundreds of people that are keying in information every day, as well as our production group. There are a lot of people that are looking at the data and formatting it into our system, and they're doing it constantly."

Step 6: Use

Once property tax data is integrated in CRS Data's system, it joins a wealth of other types of data—sales records, mortgage histories, warranty deeds, interactive GIS and plat maps, area demographics, and property analyses.

Realtors can use all of this information together to create branded property reports, CMAs, and even generate targeted lists of homeowners to prospect to.

"Collecting all of this data is a lot of work," says Gettelfinger. "Some may think it's free, or that we can just 'plug in' to the courthouse and siphon off their data, but it's not that simple."

Collecting property values data is a constant, ongoing process that keeps the team at CRS Data busy year-round. But as a result, Realtors have access to accurate property information—sometimes more accurate and up-to-date than county data, says Gettelfinger—that makes their job easier.

To learn more about CRS Data, visit CRSData.com.