What is the formula for calculating the Sales Ratio?

The formula for calculating the Sales Ratio is determined by the relationship between the assessed value of a property and its actual sales price. Specifically, the Sales Ratio is the assessed value divided by the sales price. This ratio is crucial in real estate appraisal and property assessment as it helps assessors determine whether properties are being over- or under-assessed relative to their current market values.

Using this ratio, if the assessed value is significantly lower than the sales price, it may indicate that properties are undervalued and adjustments may be needed for future assessments. Conversely, if the assessed value is higher than the sales price, it could suggest an overvaluation.

The other choices do not effectively capture this fundamental relationship. For example, dividing the assessed value by comparative rent or sales price does not provide insight into the property’s current market standing when compared to its assessed value. Similarly, expressing sales price related to assessed value or rent, while interesting, does not yield the Sales Ratio but instead offers a different perspective on property valuation. Focusing on assessed value divided by sales price is essential for accurate assessment analysis.