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Introduction
Real Property Appraisal can be accomplished by single property appraisal or mass appraisal. The
credibility each appraisal is judged in the context of the intended use of the appraisal.
Single property appraisals are made for various purposes and involve the appraisal of a single
property as of a given date. Single property appraisals are governed by the Uniform Standards of
Professional Appraisal Practice (USPAP Standards 1 and 2) and the credibility of the appraisal is
judged against comparable sale properties used in the appraisal.
Mass appraisal involves the appraisal of many properties, a universe of properties, as of a given
date. The intended use of mass appraisals is most often for ad valorem purposes, but can be for
other intended uses. Mass appraisals are governed by USPAP – Standard 6.
Both single property and mass appraisal use three traditional approaches to value and require
market research. Both require logical and systematic methods for collecting, analyzing, and
processing data to produce supportive, well-documented value estimates. Single property
appraisal requires only one person to research and analyze data and make appraisal judgments
and decisions, while mass appraisal requires many persons performing many tasks. Appraisal
quality is measured by comparison to comparable sales.
The major difference between the two types of appraisal is the scale of the mass appraisal. It is
much larger, involving many properties, many people (coordination of tasks and appraisal
judgment), with emphasis on standardization in procedures, methods, models and tables. Mass
appraisal requires many people to contribute to the process using standardized procedures.
Quality is measured using statistical procedures to test estimated values against sale prices.
Mass Appraisal
The three traditional approaches considered in valuing real property are the cost approach, the
sales comparison approach, and the income approach. Typically, assessors use a market
calibrated cost model (cost and sales comparison approaches) in ad valorem residential mass
appraisal. For properties bought and sold on their income producing capability (commercial and
industrial property), an income capitalization approach and comparative sales approach are
typically considered.
Minimum standards on appraisal are established in the Uniform Standards of Professional
Appraisal Practice (USPAP) published by the Appraisal Foundation (Washington, DC).
Key mass appraisal concepts are:
MASS APPRAISAL: (is) the process of valuing a universe of properties as of a given date
using standard methodology, employing common data, and allowing for statistical testing.
(USPAP Definitions)
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MASS APPRAISAL MODEL: a mathematical expression of how supply and demand factors
interact in a market. (USPAP Definitions)
Model Specification (USPAP/STD 6)
Supply and demand factors affect property value. Identification of these factors and the formal
development of a model statement or equation are called model specification.
Mass appraisers must develop mathematical models that, with reasonable accuracy, represent the
relationship between property value and supply and demand factors, as represented by
quantitative and qualitative property characteristics. The models may be specified using the cost,
sales comparison, or income approaches to value. The specification format may be tabular,
mathematical, linear, nonlinear, or any other structure suitable for representing the observable
property characteristics. Appropriate approaches must be used to value a class of properties. The
concept of recognized techniques applies to both real and personal property valuation models.
Model Calibration (USPAP/STD 6)
After a model is specified, then model calibration occurs. Calibration refers to the process of
analyzing sets of property and market data to determine the specific parameters of a model. Most
simply, it is the development of rates (coefficients) for use in the model. These include such
things building rates, land rates, depreciation rates, adjustments and other items.
Cost manual, depreciation, land rate tables are examples of calibrated parameters.
Market Calibrated Cost Approach
In mass appraisal, assessors use “production line” methods and techniques to value a “universe”
of properties. For many property types a “market calibrated” cost approach to value is used. A
basic cost model formula (specified model structure) is:
Market Value = Replacement Cost New - Depreciation + Land Value
Model calibration of a cost approach occurs by applying tables of rates for improvement costs,
depreciation, and land values. These rates are applied to each property’s relevant characteristics
to produce a land value and building value. The model is analyzed and tested; and re-applied
until acceptable results are attained. Essentially, properties that have sold are valued using this
method and analyzed via sale to assessment ratio studies and other performance measures. Once
the analysis is completed and acceptable performance measures are attained on the sample of
sales, the model (rates/coefficients) is applied to the all properties (sale and non-sale properties)
to estimate their value. Both during and following the re-appraisal, assessment performance
analysis (ratio studies) is conducted to analyze quality.
Accurate property data (relevant property characteristics) is essential for accurate property
values. Thus, the quality and quantity of data is important. Accurate values begin with accurate
data. Assessors must ensure that the appropriate data is being captured accurately and
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consistently. Market transfers (property sales) must be timely entered into the valuation system
and existing property data characteristics must be updated for changes.
Properties should be regularly inspected to ensure existing data is accurate and current. IAAO standards
call for routine property inspections at least every six years. Many states have laws requiring more
frequent cycles. Maryland calls for inspections at least every three years. Building permits, aerial/oblique
photography, street view images and the linking of this data with the assessors valuation system allows
for a timely and efficient review and management of property record characteristics. Properties with
changes can be identified and field inspections can be made to verify data as need. In many cases, data
can be updated in the office using these technologies. The largest cost of any mass appraisal is data
collection and review
Geographic Stratification
Market or economic areas are broad geographic areas of properties subject to similar economic
influences and value trends. Subareas or neighborhoods are groupings of homes that share
similar location amenities. In mass appraisal, the universe of properties to be valued is
analyzed and valued based upon type of property within market and submarket areas.
In supporting mass appraisal values, the assessor uses current market transactions of similar
properties within a market or sub market area. The assessor uses land rates, building costs and
depreciation tables in a model to value all similar properties uniformly.
Assessment Performance
A measure of assessment quality is the assessed value to sale price ratio. In a market calibrated
cost approach, the ratio of total property estimate of value is compared to actual sale prices. The
goal is to achieving a ratio of 100%. Known as an assessment ratio study, these assessment
performance analyses are performed measure assessment quality. These studies measure the
typical level of assessment (measures of central tendency) and the variation between assessments
(coefficient of dispersion, coefficient of variation, or standard deviation). Similarly, assessment
uniformity is analyzed.
Frequency of Reassessment
Property values are constantly changing and each property is affected by market factors unique
to the each properties location, neighborhood or market area.
An underlying precept of ad valorem appraisal is uniformity of assessment – that “similar
properties” are assessed alike. Thus, all similar properties should be assessed similarly. This is
accomplished by appraising at market value.
The Maryland Constitution (Article 15 – Declaration of Rights) and law require appraisal at
market value
1
. Historically, Maryland counties have re-appraised properties on a triennial cycle.
1
Article 15 Declaration of Rights – “…General Assembly shall, by uniform rules, provide for the separate assessment,
classification and sub-classification of land, improvements on land and personal property, as it may deem proper; and
all taxes thereafter provided to be levied by the State for the support of the general State Government, and by the
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Many counties have done this since the 1940’s. In the early 1970’s, the state law was amended
to require statewide ad valorem appraisal on a triennial cycle.
In the 1970’s and 1980’s, the state legislature conducted several legislative study groups
regarding real property assessment and enacted numerous provisions of law that govern real
property assessment, tax credits, and real property tax exemptions.
Market Value Standard
The Maryland Constitution and law require a market value appraisal standard and the assessor
must consider the level of assessment and the uniformity of assessments. These are the
underlying principles that guide the assessor.
Some suggest that the assessor should assess every property at 100% of its sale price. Assessors
do not assess to 100% of each sale price. First, all properties do not sell. When they do sell they
may not be current sales. The assessor must consider comparable sales occurring near the date
of appraisal. Also properties are not all the same; and, often the sales may not be indicative of
arms-length market transactions.
Price is a fact – list price, asking price, reduced price, sale price. Cost is a fact or an estimate of
a fact. It cost $100,000 or it will cost $125 a square foot to build. Value is an opinion based
upon fact. The assessor uses arms-length sales as comparables to estimate value.
Residential Property
Article 15 of the Maryland Declaration of Rights, is why the assessor uses a market calibrated
cost approach in valuing residential property. The valuation starts from replacement cost new
(a” common basis” for all similar properties (similar cost new on similar properties). Next,
depreciation (loss in value from all causes) is deducted from replacement cost new depreciation
(similar condition properties have similar depreciation). The result is an estimate of the
improvement value. Next an estimated land value (similar land rates for similar properties) is
added to the improvement value to produce the estimated property value. The formula is RCN –
Dep. = RCND + LV = MV.
The specification of the cost model and the application of the model on a sample of property
sales, allows the assessor calibrate the model and to test it by the use of a sales to value ratio
Counties and by the City of Baltimore for their respective purposes, shall be uniform within each class or sub-class of
land, improvements on land and personal property which the respective taxing powers may have directed to be
subjected to the tax levy;…”
Tax Property Article – Definitions (Section 1-101 (c)
"Assessment" means: (1) for real property, the phased-in full cash value
or use value to which the property tax rate may be applied; and (2) for personal property, the value to which the property tax
rate may be applied.; (pp) Valuation. -- "Valuation" means the process of determining the value of a property; Value. -- "Value"
means the full cash value of property. Case law further defines Full Cash Value as the Market Value of Property.
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analysis. When acceptable ratio results are achieved the model is then applied to all other similar
properties. This approach causes like type of property to be assessed alike.
Commercial Property
Assessments on commercial income producing properties must, also, be uniform between like
types of properties. This is why the income approach is used. The “common basis” for income
property valuation is using market rents, market vacancy, and market expense ratios, in
developing an estimate of the properties Net Operating Income (NOI). The assessor then uses a
market capitalization rate to estimate market value. The formula is Income/Capitalization Rate =
Value. We should emphasize that this is Market Income; Market Capitalization Rate equals
Market Value.
The income approach, as with the cost approach (market calibrated cost approach), is related to
the comparative sales approach. Market Capitalization rates consider the relationship of income
to sale price. In other words, the capitalization rate is the percentage that income (NOI) is to
value (sale price). The use of market rent and market cap rates allow the assessor to treat similar
income producing properties similarly for assessment purposes.
Many do not understand the concept of the level of assessment and the uniformity/equalization
requirement for assessments and tend to think of the income capitalization approach is separate
and distinct from the comparative sales approach. The income approach and comparative sales
approach are related. Market capitalization rates must be supported by market information. To
do this, the assessor can develop capitalization rates, when they have income and expense
information on properties that have sold. This is known as the direct comparison method.
Similarly capitalization rates can be developed from the band of investment (mortgage/ equity)
method and other methods.
Sales of income producing properties are not as common as sales of non-income producing
properties or residential properties. Maryland has over 109,000 commercial parcels with
approximately 900 (0.08%) commercial sales per year. Of all commercial sales many are not
income producing properties and often property owners do not comply with the income and
expense form filling requirement, so appraisers and assessors usually subscribe to commercial
services that provide income and expense data summaries.
Discover, List, and Value
Assessment officials are to discover, list and value all property for ad valorem purposes. For real
property, discovery means to find each parcel of real property and assure that it is on the tax roll.
This is accomplished by reviewing property deeds, and adding each parcel to the jurisdiction’s
tax roll and tax maps.
Listing involves adding each property to the assessment roll and identifying the relevant property
characteristics in the assessment records needed to value the property. This includes relevant
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quantitative and qualitative characteristics for improvements and improvement sketches, zoning,
property images, etc.
Value means developing an opinion of market value for all land and improvements to land at the
highest and best use of the property for ad valorem purposes.
Property Characteristics Changes
Modern appraisal systems, such as Computer Assisted Mass Appraisal (CAMA), greatly speed
calculations and valuation in ad valorem mass appraisal. These systems streamline valuation
sales analysis and individual property valuation. CAMA provides for more efficient assessment
performance analysis (ratio analysis, data edits, and management reports). These systems allow
linking of other technology systems which provide for efficient mass appraisal. Maryland’s
current CAMA system, known as AAVS should be linked to the various counties zoning,
permits, and vacant (etc.) departments.
Assessment Calendar
The Maryland Annotated Code prescribes many of the governing criteria for property assessment
administration. In Maryland one third of all properties must be re-valued each year, and
assessment notices are to be mailed by January 1. First level assessment appeal hearings must be
heard (preferably before the assessment/tax roll is certified for real property tax billing July 1).
If first level appeals are not completed timely, tax billing can be complicated by supplemental
billing or by many manual adjustments.
Administrative and assessor staff must complete many administrative functions along with
completing the reassessment program. Major administrative functions of the assessment office
include the real property transfer process, administration of property tax credit and exemption
programs, maintaining parcel maps, maintenance of the tax roll, and maintaining relations with
county government agencies and community groups.
Major assessment functions include the annual revaluation program, pick up of additions and
new construction to be added to the tax roll (full year. semi-annual or quarterly levy), and to hear
and finalize assessment appeal hearings at all appeal levels.
New Construction
• New Property Pick-up includes all new buildings and any renovations over a cost of $100,000
in each triennial group
• New Property Pickup occurs twice a year (July 1 – Full Year Levy and the January 1 -Half year
levy and several counties have a quarterly pickup)
• Renovations with a cost of less than $100,000 are to be picked up in reappraisal cycle once
every three years.
Several counties have a Quarterly Levy – Baltimore City, Baltimore, Charles, Howard,
Montgomery, and Prince George’s Counties
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Other characteristics of new construction are:
New property consists of new improvements to land (buildings and site improvements or
additions/renovations to property;
New improvements to land are picked up for Full Year and Half Year (or Quarterly) when
substantially complete;
Additions/renovations to property are picked up for Full Year and Half Year (or Quarterly
when complete if the cost is greater than $100,000. If cost is less than $100,000
additions/renovations are picked up during the triennial valuation cycle;
Change of use to land is picked up for Full Year Levy only;
Building permits are used to identify of new improvements/additions/renovations. However
property owners sometimes make improvements without going through the permit process,
the only way to identify this is through field review or the use of imagery;
Most counties have automated building permit systems for the issuance and processing of
building permits for the county and municipalities within a county;
Some municipalities have their own building permit systems; and
Historically, counties and municipalities forward paper copies of building permits and
certificates of occupancy to each local assessment office and/or listings of permits &
certificates of occupancy.
There are various methods of transmitting permit information to the assessment offices. These
include:
Paper permit or lists
Periodic PDF file (monthly) of what would be paper permits
Assessment office access to the county permit system
Electronic extract from county system, typically Excel files, which can be used by
assessment managers for management of the pick-up process and for loading of permit
information to each account in the AAVS system
It is important for all counties and municipalities to work closely with the local assessment
office to provide permit and certificate of occupancy information as efficiently, as possible
to help insure proper pickup
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Anne Arundel County building permit data is summarized below:
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Assessment Appeals
The assessment appeals process includes:
Supervisors’ level appeal/owner can get a copy of worksheet/that information will be reviewed
at the appeal meeting.
The first level hearing is informal and should be viewed as an opportunity to present
evidence which would indicate that the department's value of the property is inaccurate.
The property owner should focus on points that affect value/math errors/differences in
property characteristics, and property sales that support the property owners’ findings as
to value.
Following the 1
st
level hearing, the property owner will be mailed a Final Notice of
Assessment
Property Tax Assessment Appeal Board
If the property owner does not agree with decision of the assessor, they may appeal to the
Property Tax Assessment Appeal Board in the county where the property is located (three
member independent board)
Property owner can obtain a list of comparable properties if requested 15 days before
hearing.
Property owner is free to submit any supporting evidence.
Maryland Tax Court.
If dissatisfied with the notice of decision from the Appeal Board, you may file (within 30
days) to the Maryland Tax Court.
Assessment appeal levels include:
1
st
Level – Supervisor of Assessment – informal meeting with assessor
2
nd
Level – PTAAB – informal independent board
3
rd
Level – Md. Tax Court – more formal
4
th
Level – Circuit Court – county where property is located.
5
th
Level – Court of Special Appeals
6
th
Level – Court of Appeals
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The assessment appeal process is available to allow property owners the opportunity to dispute
the value determined by the department, if they feel the value is wrong.
Appeals may be filed on three occasions:
When an assessment notice is received (reassessment)
Out of cycle review – file a petition for review (in the two years when the property is not
valued)
Upon Purchase (When a property is transferred between Jan. 1 and July 1
Appeals vary by county by year and type (Res. & C&I)
Appeals impact workload each year
Statewide Res and C& I averages mask actual impact by county
Note typical days to hearings from statewide to big 5 counties on Pages Following
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CORE Work Processes
Assessors must annually complete certain core processes besides field inspection in the general
reassessment. Work production studies can be developed for any work segment of a years’
work. Each staff member is only available for work a certain number of days a year.
Total work days would typically be about 200 days per year after weekends, holidays, sick days,
vacation, and training days are deducted from 365 days per year
Each year supervisors of assessment year plan for the revaluation cycle, make assessor
assignments, review exempt accounts, prepare AAVS for next revaluation, and complete a work
production analysis next revaluation cycle.
CORE Processes include:
Inspection and verification property sales information for each area being appraised and
conducting market research;
Re-appraise each triennial group once every three years including conducting market
analysis, field inspections, and valuation analysis (sales analysis, market value index analysis
and valuation edits).
Revaluing new subdivision plats, splits and combinations
Completing and reviewing ratio reports, making final edit checks and percent change edit
reports checks
Picking up New Buildings and Major Renovations (over $100,000 in cost) at least twice a
year (Full year and Half Year Levy and quarter year levy where applicable) – conduct field
inspections and value
Conducting 1
st
Level assessment appeals
Conducting 2
nd
Level assessment appeals
Conducting 3
nd
Level assessment appeals
Daily completing all real property transfers and entering that information on the tax roll in
the AAVS system – sales data and owner information
Completing mapping prep for all splits and combinations and subdivision plats
Performing customer service duties– phone and tax roll counter
Processing change reports (abatements and increases)
Processing address and occupancy changes
Staffing production reports allow management to estimate staff requirements
CORE processes must be completed daily as required. After CORE processes are complete, the
assessors can focus reassessment physical inspections. In staffing analysis the supervisor of
assessments estimates the number of days for all CORE Processes. If CORE process days are
subtracted from total available work days for all assessors, the remaining days are available for
reassessment physical inspection.
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If there are not enough personnel to complete the physical review in the days available for
physical review, additional resources would have to be added to complete field reviewed. If
additional personal are not added, then the physical review cannot be accomplished.
CORE days and Reassessment field days can vary from county to county and are due to the
property complexity, property density (urban, suburban, and rural), method of valuation, etc.
For each county, work production estimates can be developed and consider the various job
functions, standard production rates per day, and a difficulty factor.
Assessment Office Production
An example of a CORE work production report follows. It is a suburban jurisdiction with
approximately 200,000 total parcels. Assuming the production for residential and commercial
properties are roughly the same (which it is not) and 9 assessors would produce the following
results.
Assuming 1/3 of the 200,000 total parcels are valued each year, 66,700 parcels would have to be
reassessed. If total work days for the 9 assessors is 1,845 and the CORE days are 1,024, the
remaining days for reassessment are 821.
With 9 assessors and 821 reassessment days, there are 91 man days for reassessment field review
and edit. If the average field review is 45 accounts per day, 1 assessor could review 4,100
parcels and 9 assessors would complete 36,900 of a total of 66.700. In this case, all properties
could be field reviewed in about 6 years
Rural Counties or counties with more complex properties would take longer to field and office
review as the distance between properties or the complexity of the property increases.
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Example - CORE day analysis worksheet
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Staffing
Staffing production reports allow management to estimate staff requirements
CORE processes must be completed daily as required
After CORE processes are complete, the assessors can focus on the reappraisal physucak
review for the current assessment year
Supervisors of Assessment can calculate the number of Rating Days for each assessor
function
Total Parcels
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Staffing and Parcels
SDAT Total FTE staffing from 1976 to 1992 reduced by 18% while Total Accounts
increased by 33.3 %
SDAT Field Assessor staff from 1990 to 2014 reduced 70% while the number of
accounts increased by 25.5%
Current county FTE staffing is 401 with 131 personnel having more than 30 years service
(32%)
IAAO Staffing Survey conducted in 1986 and 2013
Staffing in Assessment Offices in the United States and Canada Results of 2013 Survey – IAAO
Research Committee and Lawrence C. Walters, PH.D. - 62 pages
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FTE Maryland vs. 2013 IAAO Study Table 35 SDAT needs 85 personnel
Maryland FY 15 budget per parcel
• Maryland Class A (largest) Counites Median Budget per parcel $ 11.74
• Maryland Class B (midsize) Counites Median Budget per parcel $ 13.26
• Maryland Class C (smallest) Counites Median Budget per parcel $ 21.35
IAAO Staffing Study 2013 – Budget Per Parcel
Mean Median
• County $ 26.38 $ 21.85
• Municipality $ 30.79 $ 28.02
• State Provence $ 24.04 $ 21.00
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Should assessor staff have to be added one Assessor III salary with fringe benefits is listed below
this includes costs for multiples of 10 assessors.
Typical Assessor Salary
Maryland Assessor 3 Salary
Salary over 6 years $40,547 to $45,194
Average Salary $43,500
Fringe Benefits (Dept./ Leg. Ser.) 27.35 % 11,897
Total $55,397
Representative Key Data
Market Areas and Neighborhoods (geographic stratification) SDAT statewide:
Market Areas Neighborhoods Parcels
1,250 15,722 2,275,062
Total Parcel Transfers (arms length/non-arms length
2012 2013 2014 (7 months)
141,501 160,378 80,902
Estimated annual arms length residential sales (all groups statewide) – 50,000
Owner-Occupied residential sales – 35,000 to 40,000
Estimated arms length com/ind sales - 900
