Assessment Versus Market Value

Assessment Versus Market Value

by Loren J. Martin, CNHA

Because sales are based on emotional likes and dislikes of buyers, there is no one right number, but rather a range of numbers depending on the negotiations and motivations of the buyers and sellers involved in a transaction.  Industry standard indicates 10% plus or minus is reasonable as multiple appraisers and/or assessors giving an opinion of market value of the same property will vary lowest to highest by +/-10% because it is an opinion and it is essentially subjective.

In an update year, assessments as of April 1 should be fairly representative of market value; however, due to the decline in the real estate market, taxpayers for the first time, in a long time, are seeing their assessments higher than what they could sell their property for (market value).  This in and of itself does not invalidate the assessments or indicate they are wrong or unfair and one must consider the local assessment to sales ratio.

Every year the State of New Hampshire, Department of Revenue Administration (DRA) calculates an equalization ratio.   This ratio represents the difference between the assessments and the market transactions (sales).  The following example will help you decide if your assessment is fair:


I live in Any Town, NH.   For 4/1/2012, the DRA published the median ratio for my town at 110.4% and the assessment on my home is $300,000.  Similar homes to mine are selling today (Nov. 2012) for $275,000.  It would appear I am over assessed, but am I?

To determine the indicated market value of my home, I must take the assessment of $300,000 and divide it by the ratio of 1.104 which produces an indicated market value of $270,739 as of 4/1/2012.  This number is similar to the November sales of $275,000 indicating it is a reasonable assessment. Industry standards indicate value opinions that are within 10% of one another are complementary.  If homes are selling at $275,000 and yours is very similar and your equalized assessment (assessment divided by ratio) is within 10% ($247,500 to $302,500), then your assessment would appear reasonable.


As long as all properties are being assessed similarly, the assessments, even if they are higher than current market value are fair and equitable because everyone is being treated the same.  As such, to reduce all assessments to the current real estate market or bring assessments back to 100%, would not shift tax burdens as the tax rate would have to increase to meet the same budgetary needs.

Assessments are arrived at, as of a certain day (April 1st in NH) in a given year.   However, the real estate market is constantly fluctuating making comparisons of assessments and sales very difficult for the average taxpayer.  When deciding whether to file for abatement or not, the DRA ratio is typically not published yet, however your Assessor should be able to give you an estimated ratio to use in the above calculation.