Wednesday, May 30, 2018

A Good Property Assessment System Allows Easy Comparison of County vs. Town Ratios

COUNTYWIDE SALES RATIO - CLICK TO ENLARGE
FAIRLY-ASSESSED TOWN - CLICK TO ENLARGE
OVER-ASSESSED TOWN - CLICK TO ENLARGE
UNDER-ASSESSED TOWN - CLICK TO ENLARGE
Sales Ratio (County Market Value to Adjusted Sales Price) is a better indicator of the proper assessment level than the Assessment Ratio (County Assessed Value to Adjusted Sales), as the latter often includes Town-wise special assessment, abatement, exemption, etc. 

All sales therefore must be adjusted to the taxable status date so the two values (county market value vs. sales) are comparable and the resulting ratios are statistically significant. 

In this example, since the Countywide Median Sales Ratio is .778, all Towns in that County must be valued at or close to this ratio so that the Assessment Roll becomes fair and equitable. Better yet, compare the 25th to 75th percentile of the ratio curve. If the sales are individually validated for ratio eligibility (ours are not), a much wider range – say, 5th to 95th - could be considered.

The Fairly-Assessed Town has a very similar median ratio of .768, along with the 25th-to-75th expanse of the curve.

The Over-Assessed Town however shows a significantly higher Median Sales Ratio (.877), including the short end of the curve. The lower-value homes are generally over-assessed.

The Under-Assessed Town, on the other hand, shows a much lower Median Sales Ratio (.715), including the long end of the curve. The higher-value homes are generally under-assessed.

In order to introduce statistical validation of sales, AVM Ratios (AVM Value to ASP)  may be used to identify the irrational clusters on the curve, thus narrowing the universe of sales down to a more manageable pool requiring individual validation. It's imprudent to assign equal weights to the entire validation curve.  

While this is the Town-wise summary of ratios, in a separate Blog post we will further drill down to the areas in the Town - spatially - where the incidence of over and under assessments could be more severe. 

I picked the above tables from TownAnalyst.com as I own and operate it, to avoid having to deal with any copyright issues. My TownAnalyst site is totally free (no strings) and requires no login or registration whatsoever. Please use the assessment evaluation system that works best for you.

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