The Actual Ratio and Certified Ratio

To be at market value, the ratios for all groupings need to average out at, or be close to, 100%. In mass appraisal we work by averaging the ratios. In all groupings, some sales will be below 100% and others will be above. As long they average out close to 100%, we’re doing okay.

Maine Revenue Services allows us to add 10% to the actual ratio for state certification purposes. This means a ratio at or higher than 91% can certify at 100%. Here’s the math: 10% of 91 is 9, and 91 + 9 = 100. This means we can set our target ratio below 100%, which is a way to minimize the increase in values and the subsequent taxes.

When we certify at 100% you get the full benefit of the homestead exemption. The exemption reduces a property’s taxable value by $25,000. But in 2021, Rockport’s actual ratio was 90%. Adding 10% to 90 only brought us to 99%. We had to certify at 99%, which meant that a homestead exemption was worth $24,750 and the actual tax bill savings was $421.99.

The state calculates our ratio each year. I work with the state to make sure we agree on which sales are qualified and which are not. Once we’re both comfortable with the list I receive a report from the state with our declared ratio. It is that number to which I can add 10%.

I conduct my own ratio studies so as to anticipate, and serve as a check on, the state’s calculation. Because the state’s number lags the market by two years and my studies only lag the market by a few months we are able to forestall the negative repercussions of a ratio that’s too low by preemptively adjusting our values to the market. That is what we are doing now.