When valuing entire neighborhoods for reassessment purposes, the assessor analyzes all recent sales in order to produce a valuation model. This simply means that the assessor determines the factors for all items influencing value which will produce the best equity and overall level of value, and applies them in a uniform manner.
When defending these values at the Property Tax Assessment Appeals Board or the Maryland Tax Court, the assessor must select representative comparable sales, when they are available, which support the value assigned to the property under appeal.
"Comparability is a measure of similarity between a sale and a subject. Sale and subject should be similar with respect to date of sale, economic conditions, physical attributes, and competitiveness in the same market. Of these, the most important is competitiveness. If the comparable and subject do not compete in the same market, they do not face the same supply and demand forces, so value inferences from comparable to subject may be misleading."
"The geographic area from which comparable sales can be selected depends on the property type. In valuing certain types of retail property, only properties with main street frontage may be pertinent. For many large industrial properties and most investment properties, the entire community should be studied; for larger properties, the national market may be relevant. For a residential appraisal, adequate data may occasionally be found within a block of the subject property. Even in these cases, however, the appraiser should consider the broader market to place the subject property and the comparables in a general market context."
When sales are not available within a close proximity, those from further away must be considered. When sales of similar model houses, similar style, similar size, etc., are not available, others must be considered. When the similarities are few, or the distance great, it should be noted that the reliability of the comparison made, and thus the market comparison approach itself, becomes questionable. In such circumstances the assessor may determine that the cost approach or income approach produces a more reliable estimate of value.
