ASSESSMENT GUIDE

How Commercial Properties Are Assessed

Understand how assessors determine your property's taxable value — and why getting it right matters for your bottom line.

ASSESSMENT METHODS

Three Approaches Assessors Use to Value Your Property

Assessors rely on one or more of these standard methods to estimate your commercial property's market value. Each has strengths — and weaknesses.

Cost Approach

Estimates what it would cost to rebuild your property from scratch, minus depreciation. Often used for special-purpose buildings like hospitals or factories. Can overstate value for older properties by underestimating functional obsolescence.

Income Approach

Converts your property's net operating income (NOI) into a value estimate using a capitalization rate. The most common method for income-producing commercial properties. Errors in assumed rents, vacancy, or cap rates lead to over-assessments.

Sales Comparison Approach

Compares your property to recent sales of similar properties, with adjustments for differences. Works well when comparable sales exist. Assessors sometimes use non-comparable sales or fail to account for property condition.

THE PROCESS

How the Assessment Process Works

Understanding the timeline helps you know when to act — and what to look for.

Assessment Notice Arrives

Your local assessor mails an assessment notice showing your property's proposed assessed value. In Michigan, this typically arrives in February. Ohio and Indiana timelines vary by county.

Review the Values

Check the assessed value, property classification, and any notes about the methodology used. Look for obvious errors in square footage, property type, or land value.

Compare to Market Reality

Compare the assessed value to your property's actual income, recent comparable sales, and current condition. If the assessment assumes higher rents or lower vacancy than reality, it may be inflated.

Identify Errors or Overstatements

Common issues include outdated income data, incorrect property characteristics, failure to account for deferred maintenance, and using non-comparable sales as benchmarks.

Decide Whether to Appeal

If the gap between assessed value and market value is significant, filing an appeal can produce meaningful savings — often tens of thousands of dollars annually for commercial properties.

WATCH FOR THESE

Common Assessment Errors That Lead to Overpayment

Assessors work with limited data and broad assumptions. These errors are surprisingly common — and they cost property owners real money.

Overstated rental income or occupancy assumptions

Incorrect square footage or building classification

Failure to account for deferred maintenance or obsolescence

Using a cap rate that's too low for the property's risk profile

Relying on non-comparable sales from different submarkets

Not adjusting for vacancy, tenant improvements, or lease concessions

It depends on the state. Michigan reassesses properties annually. Ohio reassesses every six years with triennial updates. Indiana conducts annual trending adjustments based on a base assessment cycle. Regardless of schedule, you should review your assessment every year.

Market value is what your property would sell for in an open transaction between a willing buyer and seller. Assessed value is the number the local assessor assigns for tax purposes. In Michigan, assessed value should be 50% of market value. When the assessed value exceeds what the market supports, you're over-assessed.

Assessors may use any of the three approaches, but the income approach is most common for income-producing commercial properties like office buildings, retail centers, and apartments. The cost approach is more common for special-purpose properties. Sales comparison is often used alongside the other methods as a cross-check.

Yes. Assessors often rely on broad market trends rather than property-specific data. They may also use outdated income assumptions, incorrect square footage, or miss factors like deferred maintenance and vacancy. This is why over-assessments are common — and why appeals exist.

Start by comparing your assessed value to recent comparable sales and your property's actual income. If there's a gap, you likely have grounds for an appeal. The next step is a free assessment review — we'll analyze your property and tell you if an appeal makes sense.

THE BOTTOM LINE

Why Getting Your Assessment Right Matters

Your assessment directly controls your property tax bill. An over-assessment doesn't just cost you this year — it compounds. Every year you don't appeal, you're paying more than your fair share.

Over-assessments inflate your tax bill every year they go uncorrected

Incorrect values affect property sale prices and refinancing terms

Tenants feel the impact through higher NNN charges and CAM recoveries

A successful appeal creates ongoing savings, not just a one-time fix

Commercial property owner reviewing assessment documents

RELATED RESOURCES

More Property Tax Appeal Resources

How to Appeal Commercial Property Taxes — Step-by-step guide

What Evidence You Need to Appeal — Build a stronger case

Why Commercial Property Taxes Increase — Common factors explained

Michigan Property Tax Appeals — Tax Tribunal representation

Indiana Property Tax Appeals — PTABOA and IBTR representation

Retail Property Tax Appeals — Shopping centers and strip malls

TAKE THE NEXT STEP

Get a Free Assessment Review

Now that you understand how assessments work — let us check yours. We'll analyze your property's assessment and tell you if you have grounds for an appeal. No fee unless we save you money.

Government building representing commercial property tax assessment review process