Ask the Assessor

Question: “How do you calculate the value of my home?”

Answer: All residential property in Holliston is valued annually using standards from the International Association of Assessing Officers (IAAO) and – even more important – from the Massachusetts Department of Revenue (DOR)’s Division of Local Services (DLS).  The DLS approves every step we take throughout the annual valuation process.

We start with your house – its size, style, age, neighborhood, building grade, etc. – to build a data model of what it would cost to re-build and what it could sell for if put on the market.  This analysis starts when the home is first built, and continues when there are additions, remodels and at least (per the DOR) one visit by our office every 10 years.

To update your value each year, we start by looking at housing sales within Holliston within the calendar year prior to the current calendar year.  Since this is 2023, that means for Fiscal Year 2024 (July 1, 2023 – June30, 2024) property taxes, we are looking at sales in calendar year 2022.  To satisfy DOR requirements, in some cases we have to use two years of sales (calendar years 2022 and 2021) to ensure we have enough sales to analyze in each class of property (single-family, two-family, condo, etc.).

From these lists of sales, we first eliminate any that are not considered as “arms’ length.”  By “arm’s length” we mean any sale from a willing seller to a willing buyer.  We exclude sales such as those among family members, intra-corporate sales and private sales.

The next step is to look at both the “assessment to sales” (ASR) ratio and the “coefficient of dispersion” (COD) ratio for these sales.

You calculate the ASR by dividing the current assessed value by the actual sales price.  An ASR of 1.00 represents 100% of market value.  Below 1.00 indicates the property is assessed for less than its market value, and above 1.00 indicates the property is assessed for more than its market value.

For single-family homes and condos – which are the bulk of housing in Holliston, the DOR wants the ASR to fall between 0.9 (90%) and 1.10 (110%).  If we are not within this range, we adjust the value to fall within it.  We aim for an overall ASR of 95% for the whole town.

You calculate the COD by finding the median (midpoint) of the ASRs in each class of property.  This is done by arraying the ASRs from low to high and finding the midpoint where there is an equal number of ASRs located above and below it.  Next, you calculate the amount each ASR deviates from that median, add up all the deviations, and divide by the number of sales.  The result is the absolute average deviation.  Divide that number by the median ASR, multiply that result by 100, and you get the COD.

For single-family homes and condos, the DOR wants the COD to be a maximum of 10%.

The next step in the valuation process is to stratify sales in each residential class into subgroups – such as neighborhood, style, building grade, building age and selling price – to more precisely identify the factors influencing market value.  The median ASR and COD also are calculated for each subgroup.

The DOR requires the median for each subgroup to fall within 5% of the median for the particular residential use class.  And, the COD for each subgroup should be within the range for that particular class.

Doing these types of analyses on sold properties identifies what adjustments need to be made to the existing valuation system for buildings and land.  Our computer-aided mass appraisal (CAMA) software has valuation models including land, cost, and depreciation tables.  By adjusting these tables, the values of all comparable properties change at the same rate.

By the way, the term “mass appraisal” does not refer to “Massachusetts” appraisal.  When a professional “fee appraiser” looks at a property, he or she is determining a value only for that single property.  Assessors, on the other hand, apply our analyses to the “mass” of all similar properties.

Both the Principal Assessor and Assistant Assessor in Holliston have earned the “Massachusetts Accredited Assessor” designation, meaning we have passed a rigorous set of eight week-long courses and must earn education credits each year to maintain that designation.

Next Article:  “Why do I have to pay an auto excise tax each year?”

Kevin Rudden

Leave a Comment





Categories