Vanguard sales ratio

Vanguard Appraisals, Inc. Copyright © 2021

2021 VANGUARD USER GROUP MEETINGSALES RATIO STUDY

RYAN EHLIREGIONAL FIELD SPECIALIST

13 YEARS

MIKE WEEKSSENIOR VCS FIELD MANAGER

16 YEARS

Sales Ratio - Overview

■What is sales ratio■Importance of sales entry and accurate data on sales■Importance of accurate data and entry■Steps in Sales Ratio■Conducting a sales ratio study including “what if” analysis■Determining and setting final values■Documentation

Sales Ratio

Accurate Data EntryAccurate Sales EntrySales VerificationSteps in Setting ValueSales AnalysisStratification Documentation

Sales Ratio

Why do we conduct a sales ratio study?

Assessment Equity Uniformity in our values

Fair and equitable values Consistency

Sales ratio doesn’t mean we are automatically changing values

Sales Ratio

The ratio of an assessed value to the sale price or adjusted sale price of a property.

Assessed Value ÷ Sale Price

Sales Ratio – Statistical Measures

We could stop at the median – but we can do better! Median COD – Coefficient of Dispersion PRD – Price Related Differential

Sales Ratio – Statistical Measures - Median

Median When ratios are sorted in ascending (or descending) order, the median is the middle ratio Or average of the two middle ratios

The median provides a good measure to monitor the level of assessments

Sales Ratio – Statistical Measures - COD

COD – Coefficient of Dispersion Measures the inequality in assessments 0 – 10 = Excellent 11 – 19 = Acceptable 20+ = Data may need review

Sales Ratio – Statistical Measures - PRD

PRD – Price Related Differential Measures the degree to which high value properties are over assessed or under assessed in relation to

low value properties Index of 1.00 is desired Index greater than 1.00 indicates high value properties are under assessed in comparison to

low value properties. Index less than 1.00 indicates high value properties are over assessed in comparison to low value properties.

Sales Ratio – Accurate Data Entry

List, measure, review all property accurately and enter data into VCSNever, never enter inaccurate data to “achieve” a value as you add your annual work

data into VCSThe computer will set the values after all data has been entered & sales entered,

verified, stratifiedThe data drives the value the value DOES NOT drive the data

Sales Ratio – Accurate Data Entry

Repeat…The data drives the value the value DOES NOT drive the data

Sales Ratio - Accurate Sales Entry – “Heart” of the System

Sales Ratio – Accurate Sales Entry Sale Date Sale Price Personal Property Value VCS Value – value at the time of sale Sale Type Recording Number Code NUT Code Comments Seller/Buyer

Sales Ratio – Accurate Sales Entry VCS Value – value at the time of sale

Add with or without certified prior year value

Sales Ratio – Accurate Sales Entry

VCS Value – value at the time of saleAdd certified prior year valueSetting to turn this option on as

defaultFilePreferencesSales

Sales Ratio – Accurate Sales Entry VCS Value – value at the time of sale

Add with prior year value

Sales Ratio – Accurate Sales Entry Sale Type

Sales Ratio – Accurate Sales Entry Recording

Number

Sales Ratio – Accurate Sales Entry Code

Sales Ratio – Accurate Sales Entry NUT Code Choose whether sale will be considered in

sales ratio study

North Dakota BX Sheet

Choose “Normal” when running sales ratio analysis

Only want to analyze Normal Arms Length transactions

Sales Ratio – Sales Check Apply a sales

check

Compares sale price to VCS value

Comes up depending on system setting for sales tolerance

Sales Ratio – Sales CheckApply a sales check

Sales Ratio – Sales Check

Add a sales check if the ratio is out of toleranceFind later in a queryVERIFY SALES!!!

Sales Ratio – Sales Check - Tolerance

Adjust sales toleranceTablesTable UtilitiesAdjust Sales Tolerance

Sales Ratio – Sales Check - Tolerance

Adjust tolerance99 will ask to apply a

check to every saleCommon is 10 to 15

Sales Ratio – Sales Verification

Do not confuse sales verification with sales chasingSales ChasingThe practice of using the sale of a property to trigger a reappraisal of that

property at or near the selling priceCauses invalid uniformity results

Inequities will flush out and may create necessary clean up projects


What sold may not be reflective of the physical property upon inspectionUpdate records, change sale NUTC if applicableWhat sold may reflect exactly how the physical property is listedThese physical characteristics will be stratified to set values and make

appropriate table adjustments to reflect the market


Conduct inspectionsSend surveysDrive by review


Conduct inspectionsSend surveysDrive by reviewExample:Sale: $55,000Value: $35,000

Interior remodeled and better than exterior

New Kitchen and bathroom


Conduct inspectionsSend surveysDrive by reviewExample:Sale: $35,000Value: $55,000

Exterior remodeled and better than original interior

New siding, windows, and roof

Sales Ratio – Sales Verification - Complete

Check the “Verified by office” BoxThis can be queried

Sales Ratio – Steps in Setting Value

Review and set LAND valuesReview and set Replacement Costs - MANUAL LEVELReview and adjust DEPRECIATIONReview and adjust MAP AREA (economic obsolescence)Consider ADDITIONAL OBSOLESCENCEAt the parcel levelFunctional or otherAbove and beyond

Steps in Setting Value - LAND

Land is the BASEMust have a good Land Value


Too low on land – overinflate replacement costs on improvementsToo high on land – low on actual replacement costs of improvements


Land is the BASEVacant lot sales – always the bestFew and far between in some jurisdictions

Then what?


No sales - The then what part…Allocation MethodAbstraction MethodLand Build UpNot as desirable, but recognized methodology


No sales - The then what part…Allocation Method A percentage of total property value is allocated to the site IAAO recommends 20 percent of sale price Example: $200,000 sale: 200,000 x .20 = $20,000


No sales - The then what part…Abstraction MethodLand value is extracted from the sale priceMust have accurate replacement costs and depreciationNot as desirable or accurateExample: sale price=$230,000/replacement cost=$280,000/depreciation=30 percent 280,000x.70=196,000 230,000-196000 = $34,000


No sales - The then what part…Land Build Up Method May be considered when there is insufficient sales data Purchase price plus improvements Example: 10 acres raw ag land Land purchase: $30,000 Septic: $5,500 Well: $7,500 Landscaping (minimal): $15,000

$58,000

$58,000/10 acres = $5,800 per acre (as a guide only)


I have land sales – GREAT!Vacant lot sales ratio study


Land is the BASELand Ratio study


Land is the BASELand Ratio study - allocation


Land Ratio study - allocation


Land is the BASEHow many land rates/lot basis types should I have?Query out rate/lot basis that are in use by jurisdiction Check for how many Check for consistency


Land is the BASEHow many land rates/lot basis types should I have?Example:“Town A”Population 300Mostly Front footSome Lump sum Rates: $5, $10, $20, $30, $33, $39, $40, $50, $60


Land is the BASEHow many land rates/lot basis types should I have?Example:“Town A”Do we need NINE different front foot rates?Majority are front foot at $30 and $33Could be adjusting rate for deficiencies to land Location, railroad, elevator, topography, etc.

Review area and see if it really needs that many rates


Land is the BASEThere is no exact scienceWant to be able to maintainRemain consistent and equitable

Look at land EVERY yearConsider changing every 2-6 years if needed

Steps in Setting Value – MANUAL LEVEL

Must achieve accurate replacement costsReview sales of new

construction if possible

Steps in Setting Value - DEPRECIATION

Review Depreciation according to year built and conditionUpdate base yearReview Price Related

Differential (PRD)


Run depreciation analysis


Certain properties should not be included in analysisExtremely high or low quality dwellingsProperties with high outbuilding valueProperties with a large amount of surplus land

Set depreciation looking at strongest marketLessens the impact of economic obsolescence


Review Normal condition firstDetermine spread from normal to

other condition ratingsOffice discussionWhat does it take in your

jurisdiction to move condition

Condition Change from NormalExcellent

-30%Very Good

-20%Above Normal -10%

NormalBelow Normal +10%

Poor+20%

Steps in Setting Value – MAP AREA

How are sales according to locationSame house here versus same house over there


Table driven blanket economic obsolescenceA factor is entered in the table“Percent good” Ie: .80 = 20 percent economic obsolescence


Positive Map Area Factors - ??Yes / No - ?Try to use sparinglyThey have a time and place

Consider after the rest of the jurisdiction has been set accordingly

Lake areaRiverfront areaAreas with a viewGolf course area

Steps in Setting Value – Additional Obsolescence

Above and beyond Land, Manual Level, Depreciation, and Map AreasHave gone through the steps and small handful of parcels need thisPreferably there are sales that support


When to use additional obsolescence Is there something functional beyond condition Additional location factor (railroad tracks) Plumbing HVAC Design/Layout Over improved Over size


Things to remember about additional obsolescenceApplied at the parcel levelApplied parcel by parcelOnce you assign a parcel obsolescence it stays until you changeTry to use sparingly

Sales Ratio – Sales AnalysisWizard DrivenSet up StudyRun StudyAnalyze resultsTest changesRe analyzeCopy changes to main

tables

Sales Ratio – Sales Analysis – Set up Study

Remarks – print on stratification reportsStart/End Date for sales

selectionSelect PDFsSelect Map AreasSelect SubdivisionsSelect NUT Codes

Sales Ratio – Sales Analysis – Set up StudySale TypeSale Code

Sales Ratio – Sales Analysis – Set up Study Ignore “Exclude from Analysis flag”


Include Multi Parcel Sales

Once you have your selectionClick “Get Sales”


Save current StudySave timeCan load at a later date



In this study 104 parcels have been foundClick “Next”Can’t click forward until

you follow the steps

Value SourceAppraised Value Compares Sale price to

current VCS ValueCurrent Value Compares sale price to

most current value


Value SourceAppraised Value Compares Sale price to

current VCS Value


Value SourceCurrent Value Compares sale price to

most current value


Pricing Table SourceMAINRun on main to start

TESTConduct “What if”

analysisCompare tables


Pricing Table SourceCompare tablesScans and shows differences

between main and test


Pricing Table SourceCompare tablesScans and shows differences

between main and test Double Click on results to show

differences Top: Main Bottom: Test

Date stamps the changes


Pricing Table SourceHistorical Analysis Value at date of sale Most current prior year Choose prior year


Sales Ratio – Sales Analysis – Run StudyOnce you have chosen value

source and pricing table optionClick “Prepare”Click Next

Sales Ratio – Sales Analysis – Run StudyHow do we want to analyze

data?Select Stratification reports

to viewNot necessarily in the order

of this list or the order in this presentation

Sales Ratio – Sales Analysis – Run StudySelecting salesQuick SelectWill include all sales in

studyClick “Report”

Sales Ratio – Sales Analysis – Run StudySelecting SalesQueryBuild Query to stratify

certain sets of parcelsSelect specific sets of

parcelsClick “Report”

Sales Ratio – Sales Analysis – Run StudyQueryThere are sales ratio queriesStart with these and edit as

needed

Sales Ratio – Sales Analysis – Run StudyQuery Example: Ratios Trimming low and high Review full set of results

Sales Ratio – Sales Analysis – Run StudyQuery Example: Ratios Trimming low and high Review full set of results Filter off low and high ratios

Sales Ratio – Sales Analysis – Run StudyQueryWe trimmed off low and

high ratiosLess influence when

making decisions

Sales Ratio – Sales Analysis – Analyze ResultsOverall Group Stats

StratificationMedianCoefficient of DispersionPrice Related DifferentialHigh Ratio Low Ratio

Sales Ratio – Sales Analysis – Analyze ResultsMEDIANThe middle ratio when

the ratios are arrayed in order of magnitude

North Dakota tolerance90 to 100 percent

IAAO Tolerance90 to 105 percent

Sales Ratio – Sales Analysis – Analyze ResultsCoefficient of Dispersion (COD)The measure of variability is the

coefficient of dispersion The COD measures the average

percentage deviation of the ratios from the median ratio

Goal Under 25Under 20 is greatUnder 10 is even better!

Sales Ratio – Sales Analysis – Analyze ResultsPrice Related Differential

(PRD) Indicates bias between higher

valued properties and lower valued properties Price-related differentials above

1.00 tend to indicate assessment regressivity Price-related differentials below

1.00 tend to indicate assessment progressivity

Tolerance .98 to 1.03

Sales Ratio – Sales Analysis – Analyze ResultsSales ListCheck to make sure you

haveLand value Improvement valueTotalSale priceRatio

Sales Ratio – Sales Analysis – Analyze ResultsSales ListUse list to review salesCheck ratios under 50 Check ratios over 150Not always the case

depending on number of sales

Sales Ratio – Sales Analysis – Analyze ResultsYear Built StrataReview ratios on newer year-

built salesWill help establish and set

manual level

Sales Ratio – Sales Analysis – Analyze ResultsYear Built StrataReview for consistency in ratiosWill also help review and set

depreciation tableDon’t “hang your hat” on a small

number of sales or chase outliers

Sales Ratio – Sales Analysis – Analyze ResultsStrata by ConditionUse to review spacing

between condition rates in depreciation table

Sales Ratio – Sales Analysis – Analyze ResultsStrata by ConditionHow much does it take to

move condition in your jurisdictionLook at the spread in

condition

Sales Ratio – Sales Analysis – Analyze ResultsStrata by ConditionMay show a need

for data reviewDon’t “hang your

hat” on a small number of sales or chase outliers

Sales Ratio – Sales Analysis – Analyze ResultsMap Area StrataReview sales by areaApply blanket

obsolescence by area

Sales Ratio – Sales Analysis – Analyze ResultsMap Area StrataLast step before

applying parcel by parcel obsolescenceDon’t “hang your hat” on

a small number of sales or chase outliers

Sales Ratio – Sales Analysis – Analyze ResultsStrata by GradeReview ratios by gradeShould be a nice spread

from top to bottomDo not want to see all in

one grade or grade category

Sales Ratio – Sales Analysis – Analyze Results Strata by Grade Is there anything going on

within a certain category Low ratios? High ratios? Low or high PRD High COD May show a need for data

review Don’t “hang your hat” on a

small number of sales or chase outliers

Sales Ratio – Sales Analysis – Analyze ResultsStyle StrataRun towards the endReview ratios between

different stylesMay show a need for

possible additional obsolescence to a certain style

Sales Ratio – Sales Analysis – Analyze ResultsSale Price StrataIs there anything going

on within a certain sale price rangeLow ratios?High ratios?Low or high PRD High COD

May need further review

Sales Ratio – Sales Analysis – Analyze ResultsStrata by SizeReview ratios by sizeIs there anything going on

within a certain square foot rangeLow ratios?High ratios?Low or high PRD High CODPossible additional parcel by

parcel obsolescence

Sales Ratio – Sales Analysis – Test Changes “What If”Run through StepsLandManual LevelDepreciationMap Area

Analyze “Strongest and Best” market first

Sales Ratio – Sales Analysis – Test Changes “What If”LANDVacant lot sales are bestLand values should be approximately 15 to 20 percent of sale priceLow land value will result in overinflating manual levelHigh land value will result in low manual levelRather be on the high side than lowReview every year Not necessarily updated or changed every year

Sales Ratio – Sales Analysis – Test Changes “What If”LAND

Sales Ratio – Sales Analysis – Test Changes “What If”MANUAL LEVELReview new

construction salesPush ratios as close to

100 as possibleThis is All 105 sales



100 as possibleUse query


construction salesAnalyze 2015 and newerFilter out those sales



100 as possible

Sales Ratio – Sales Analysis – Test Changes “What If”Manual LevelEdit TablesTest Manual LevelGeneral Table

Sales Ratio – Sales Analysis – Test Changes “What If”

MAIN


TEST

Pricing Table Source ChangeSelect TestRe-PrepareClick Next


MAIN


TEST

MANUAL LEVEL - Test change 130 to 135

Sales Ratio – Sales Analysis – Test Changes “What If”MANUAL LEVELTest change 130 to 135

Depreciation


Depreciation – base year - 2019


Depreciation –base year update


Depreciation – base year update - 2021


MAIN


TEST

Manual Level with Base Year Update – 2019 to 2021

Sales Ratio – Sales Analysis – Test Changes “What If”DepreciationBase Year update2019 to 2021

Includes Manual level update (130 to 135)

MAIN


Test: Manual level and Base Year Update – 2019 to 2021Test: Manual Level 130 to 135

DepreciationRan analysis, re-

worked the tableOnly as good as the

data entered


Map Area Changes


Sales Ratio – Sales Analysis – Test Changes “What If”Map AreaGeneral


Map Area Changes

Prepare on new test table changesClick Next


Map Area Changes


Review Test Table ChangesManual level updateDepreciation updateMap area updates


MAIN


Test: Manual Level, Depreciation, Map Areas

Test: Manual Level 130 to 135

Manual Level table back to 130


Run a reval on the test tables


Review Revaluation Logs – Remember, this is only Test – Will only show parcels that Changed


Review Revaluation Logs – Remember, this is only Test – Report by Parcel


Review Revaluation Logs – Remember, this is only Test – Report by Map Area


Review Revaluation Logs – Remember, this is only Test – Report by PDF


Review Revaluation Logs – Remember, this is only Test – Report by Class


Sales Ratio – Sales Analysis – Now What?

• Now What – Decision Time• The joys of sales ratio• Do we make a change• Are we confident in our data

Sales Ratio - Review

■What is sales ratio■Importance of sales entry and accurate data on sales■Importance of accurate data and entry■Steps in Sales Ratio■Conducting a sales ratio study including “what if” analysis■Determining and setting final values■Documentation

Sales Ratio - Review

■ Ideally – Ideally… Data is good going into sales ratio analysis You will find out if it is not May be pockets you need to review

Good and consistent data = fair and equitable values The data drives the value the value DOES NOT drive the data

North Dakota Sales Ratio Export

Select PDFChoose DirectoryChoose sale datesResidentialCommercialOther


Select PDFChoose DirectoryChoose sale datesResidentialCommercialOther

EXPORT


Exported as a CSV FileReady to upload to TAP


Exported as a CSV FileWant to review before sending – convert to excel spreadsheetOpen blank excel document and go to DATA tab


Exported as a CSV FileWant to review before sending – convert to excel spreadsheetClick “From Text/CSV”


Exported as a CSV FileWant to review before sending –

convert to excel spreadsheet

Select the CSV File you want to convert and select open


Exported as a CSV FileWant to review before sending –

convert to excel spreadsheetNow it is in Excel formatDO NOT reconvert this to CSV and

try to re-uploadNeed to re-export from CAMA


TablesMake sure Cities Table is

PopulatedCities will be first and

have feature ID’s greater than threeTownships will be at the

end and feature ID’s less than four characters


TablesPopulate Subdivisions


TablesNUT CodeTransaction

Verified as useableSet in NUT Code

table


Checking “Exclude from Analysis” on the sales entry screen can override this

County Number – assigned from the stateAlternate Jurisdiction ID – blank

for counties


Populate the correct Fields


Populate the correct FieldsSectionTownshipRangeBlockLot


Populate the correct Fields Sale Date Sale Price PP Value Points Adj VCS Value Sale Type Recording Code NUT Code Comments Verified by office Multi Parcel Sale


Populate the correct FieldsManufactured Homes Year Built Width TLA Other Info


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Vanguard sales ratio

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