Sales comparison approach
The Sales Comparison Approach to Value can be used to determine the assessed values of the following properties:
- residential and condominium properties
- multi-residential properties
- commercial and warehouse properties
The Sales Comparison Approach to Value is an approach for estimating market value-based assessments by comparison to the sale prices of similar properties that have sold recently. The Sales Comparison Approach is based upon the theory that value is directly related to the sale prices of similar properties and the assumption that a purchaser would not pay more to purchase a property than for comparable properties of similar utility.
This approach is best suited for residential and investment type properties that sell frequently on the open market and where there are sufficient sales to use this approach.
Calculating your property's assessment
To calculate your property's assessment using the Sales Comparison Approach, the Assessment Branch uses Multiple Regression Analysis (MRA).
MRA is a mass appraisal Sales Comparison Approach method that is commonly used in the assessment of properties. MRA is a statistical technique that analyzes market (independent) variables, such as lot size, building size, building quality and location, and then predicts the value of a single (dependent) variable, that being sale price (market value). Through the use of sophisticated computer software (SPSS), MRA is used to establish what features of sold properties consistently add or detract from the values of sold properties.
The Assessment Branch maintains a database of information about each property through regular on-site inspections. This database information includes:
- recorded property characteristics
- building permits, site visits
- land title information
- rental and expense information
- sales data
With respect to sales data for use in the sales Comparison Approach, the Assessment Branch receives all ownership changes from the Information Services Corporation (ISC). The Assessment Branch validates these transfers and screens out those transfers that are not true property sales, and through sales verification validates the sworn values on these titles. This verification process includes cross-checking sworn title values against the indicated sale prices provided by the Multiple Listing Service (MLS), and through direct communication with purchasers and/or vendors as to conditions of sale.
Changes to your property's assessed value
Your property's assessment will change if new construction, upgrades, additions or demolitions were recorded for the property.
There could also be a change to your property’s assessment from a reassessment, which occurs every four years to update the market data and analyses used by the Assessment Office to value your property.