How Mass Appraisal Works

Sales ratio studies, “are the primary administrative tool for establishing or reviewing municipal assessments.”[1] The sales ratio study measures assessment quality by comparing assessed values against recent real estate sales. The more recent the sales the more reliable the study. We typically use sales from the past two years, but the current real estate market has been so active we’ve been able to use the optimum twelve-month perspective.

Between October 1, 2020 and September 30, 2021 (the most recent past twelve months for which we had data at the time the study was performed for this adjustment), town wide, we had 153 qualified sales. The median ratio for those sales was 79%.

http://www.krtappraisal.com/dist/camden.html Follow this link to review sales.

Typically the lowest acceptable ratio is 91% (more on this in the Ratio section). To discern what adjustments are needed to bring the 79% up, we divide the sales into their proper grouping, as mentioned earlier.

Since single-family dwellings is the largest grouping within the town, I’ll isolate them for this illustration. Of Rockport’s 153 qualified sales, 74 were single-family dwellings.

We first calculate each sale’s A/S ratio, that’s the Assessed value divided by the Sale price.  An assessed value of $350,000 divided by a sale price of $350,000 has an A/S ratio of 1.0 or 100%. If that same property sold for $400,000, its A/S ratio would be .875, or 88%.

Once all 74 ratios have been determined, they are sorted in ascending order. We next locate the median average. The median is the middle ratio. That middle ratio was .717. The median ratio for single-family dwellings is 72%.

[1] Course PT103 – Valuation of Real Estate, Published by Maine Revenue Services