Analysis Begins with Recent Sales
The reassessment process begins with research of recent sales. The real estate appraisers may disqualify some transfers from the sales analysis if they are not considered to be an arms-length transaction.
Examples of transfers that may not be an arms-length transaction include family transfers, foreclosures, bank sales, estate sales and other distress sales, related to court orders or divorces. It is sometimes necessary for the appraiser to extensively research a property transaction.
Field visits to the sold properties are conducted to confirm the size of structure(s), property characteristics, outbuildings and site characteristics, as well as the property's relationship to the surrounding area.
Assessment neighborhoods are defined as a group of complementary land uses (a congruous grouping of inhabitants, buildings, or business enterprises). An assessment neighborhood may include properties from several subdivisions and conversely several assessment areas may be located within the boundaries of a single subdivision.
Sales analysis and reassessment of properties is done by assessment neighborhoods. The analysis begins by measuring the recent arms-length transactions against their previous assessments. The Constitution of Virginia (PDF) directs real estate assessments to be fair market value.
Market Value is defined by the International Association of Assessing Officers as "the most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus, as of a specific date."
The assessment divided by the sales price provides the assessment-sales ratio which will suggest if reassessment is needed.
Assessment / Sales Price equals Assessment Sales Ratio
$180,000 / $200,000 equals 90% The real estate appraiser also analyzes the sales as an accurate estimate of the market value of the properties in the entire neighborhood.