ASSESSING DEFINITIONS USED IN MASS APPRAISAL
Mass appraisal is defined as the use of standardized procedures for collecting data and appraising property to ensure that all properties within a municipality are valued uniformly and equitably. It is the process of valuing a group of properties as of a given date, using common data, employing standardized methods and conducting statistical tests to ensure uniformity and equity in the valuations. Assessors use mass appraisal procedures and techniques when determining the fair cash value of properties in their municipalities.
Ratio studies are used to analyze existing assessments by (1) assessment level and (2) assessment uniformity. Assessment level measures the degree to which the assessments approximate current market value. Assessment uniformity measures the degree to which properties in the same class or subclass are assessed at the same percentage of current market value.
Assessment level is determined by calculating the median assessment/sales ratio (ASR) or the class or subclass being analyzed. The first step is to calculate the ASR for each property in the sample. The ASR is calculated by dividing the current assessed valuation of the property by the sales price. An ASR of 1.00 represents market value. An ASR below 1.00 indicates the property is assessed for less than its market value. An ASR above 1.00 indicates the property is assessed for more than its market value.
A property assessed at $700,000 sold for $735,000. The ASR is .95 (700,000 ÷ 735,000). This property’s assessment is below market value, i.e., is 95% of its market value.
Assessment uniformity is determined by calculating the coefficient of dispersion (COD) for the class or subclass being analyzed. The COD measures how sales prices for properties within the sample vary from the median ASR.
ASR and COD Standards
For certification, the sales analysis must follow mass appraisal standards of assessment level and uniformity for each type of property for which there is a sufficient sales sample.
Certification standards also require that the difference in the median ASR of the residential subclass with the largest number of parcels and the median ASR of any other subclass of residential property should be five percent or less. The median ASR for any subclass may go below 90 percent or above 110 percent, as long as the median is within five percent points of the original class median from which the subclass is derived.