How commercial value is determined

A house is valued by comparison. You find properties that recently sold, adjust for the differences, and arrive at a number. It works because houses are numerous and similar and the sales are visible.

A commercial property is valued on the income it produces. Ada County does exactly this in its own assessment work, and it staffs accordingly: apartment property is handled by the county's commercial appraisers rather than its residential ones, alongside office, retail and industrial.

The switch is not a preference. Commercial buildings are too few and too unalike for comparison to carry the weight, and the thing a buyer is actually purchasing is a stream of income rather than a place to live. So above the point where a property stops being a house, the question changes from what did similar things sell for to what does this one earn.

If value follows income, then the input to the valuation is the property's own operating performance — rent roll, actual collections, operating expenses, what is really leased versus what is on paper.

There is no portal that publishes that. The only party who holds it is the owner. This is the genuine asymmetry in commercial property, and it runs the opposite way to the one people expect: the owner has the data and lacks the method, and everyone else has the method and lacks the data.

It is also why a serious commercial conversation starts with documents rather than with a number. Anyone willing to give you a figure before seeing the income is not valuing your property. They are guessing, or they are anchoring you.

The obvious response is to go round the income question and look at what similar buildings sold for. In Idaho you generally cannot, and the reason is more interesting than secrecy.

Access to the record is total. Idaho law requires every book of record, map, chart, survey and other paper on file in the recorder's office to be open during office hours to any person who wishes to inspect it, without charge. Nothing is being withheld from you.

The price is simply not in the document. Idaho states what a conveyance must contain — a written instrument, subscribed by the party disposing of the property or an authorised agent, and the grantee's name and complete mailing address. The price is not among the required elements. You can read the deed in full and still not know what was paid.

County assessors describe the consequence in their own words. As Bonner County's assessor puts it, "Since Idaho is a non-disclosure state, the Assessor's office depends heavily on the public to provide sales and cost information." Canyon County says the same thing. The people whose statutory job is to value every property in a county are, on this point, in a position not much better than yours: they ask, and hope people tell them.

There is a related asymmetry in what the public record does hold. Idaho's disclosure exemptions list what is always available from assessor records — owner name and mailing address, parcel number, legal description, square footage and acreage, the assessed value, the tax district and rate, the total property tax. A transaction price is not on that list. Which is why an owner can look up their own assessment in seconds and cannot look up what the building down the street actually sold for.

Almost every owner looks at the assessed value first, and it is the most misleading figure available to them — not because it is wrong, but because it answers a different question. Three features of Idaho law explain the whole gap, and none of them is anyone's mistake.

First, the date is fixed. Idaho sets assessment at market value as of 12:01 a.m. on the first day of January of the year the taxes are levied. For most of the year, that is a statement about a date that has passed.

Second, the law states its own tolerance. It does not require an assessment to equal market value. It requires the median ratio of assessed value to market value, for each category of property tested, to fall within 90 percent to 110 percent of market value, tested statistically, with categories within five percentage points of one another. That is a band, and it is a band measured across a category — not a guarantee about any single building.

Third, nobody may have looked at the property recently. Idaho requires every taxable property to be appraised at least once every five years, on a rolling schedule that reaches fifteen percent of a county's properties in year one and all of them by year five. In the years between, a property is indexed to current market value using recorded transactions rather than individually examined.

Put those together and an assessed value is a figure with a fixed date, an openly stated tolerance, and potentially several years since anyone looked at that specific building. For a commercial property whose income has moved materially since, that is the entire explanation of the divergence — without anyone having erred.

We ask for a rent roll and a trailing twelve months of operating statements, and for the things that change what those numbers will look like next year: leases expiring, concessions, units held off the market, capital work deferred.

We then tell you what we would pay and show the arithmetic. That is a commercial position, not an opinion of value, and the difference matters: we are the buyer, and an opinion of value from the buyer is not an opinion of value. If you need one of those, you need an appraiser, and we will say so.

What we will not do is give you a number before we have seen the income, or tell you what your property is worth.