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CABARRUS COUNTY 2012 APPRAISAL MANUAL <br />STATISTICS AND THE APPRAISAL PROCESS <br />Sales offer the only real set of data which can be established as indicating market value for properties. Appraisals which are <br />done to supplement sales as parcels to which one may relate for purposes of comparison are merely attempts to predict what <br />the sales price would be should that parcel actually sell. It is our belief that surrogates for actual sales are needed only when <br />parcels (for a class) show a statistically insignificant number of sales. <br />Particularly for single family residential properties sales are usually always available and are in most cases legitimate arm's <br />length transactions. <br />The most frequently asked question is usually "Where am I in relation to market ?" There are ways of describing this <br />relationship; each of which will help you understand "where" you are in relation to the market. <br />Level of assessment in relation to market is one part of the answer. It is usually expressed as a ratio of appraised values to sale <br />values. Common measures of this ratio, overall, for a county are "MEAN ", MEDIAN, "MEASURES OF CENTRAL <br />TENDENCY ", and "PRICE RELATED DIFFERENTAL ". <br />SIMPLE OR UNWEIGHTED MEAN <br />This measure is found by dividing the sum of all individual sales by the number of sales. That is, given the following <br />hypothetical list of sales, compute the means: <br />OBSERVATION NUMBER <br />SALEPRICE APPRAISED VALUE <br />SALES RATIO <br />1 <br />$22,600. <br />$21,500. <br />95 % <br />2 <br />31,000. <br />28,600. <br />92 <br />3 <br />37,800. <br />34,000. <br />90 <br />4 <br />38,400. <br />33,000. <br />86 <br />5 <br />34,300. <br />29,500. <br />86 <br />6 <br />20,000. <br />16,000. <br />80 <br />7 <br />13,000. <br />9,800. <br />75 <br />8 <br />18,700. <br />13,500. <br />72 <br />9 <br />26,900. <br />17,200. <br />64 <br />10 <br />40,800. <br />24,500. <br />60 <br />$283,500. <br />$227,600. <br />800 % <br />Mean Sale Ratio = 800/10 = 80 %. <br />Mean Appraised Value = $227600/10 = $22,760. <br />Mean Sales Price = $283500/10 = $28,350. <br />As you can see, there are several "MEANS" which may be computed; each of which is an expression of central tendency. <br />There is another type of mean called a WEIGHTED MEAN which reflects the impact of the dollar magnitude of the values in <br />the calculation of the mean. It is obtained by dividing the total of all appraised (or assessed) values by the total of all sales <br />prices. For example: <br />$227,600/$283,500 = 8.3% <br />Cabarrus County — 2012 Revaluation <br />STATISTICS & THE <br />APPRAISAL PROCESS <br />10-3 <br />8/9/11 <br />Attachment number 11 <br />G -6 Page 298 <br />