When the Board conducts a revaluation, it must determine fair cash (market) value for every property in town. Market values are determined by analyzing the sale prices and characteristics of properties that sold during the year, which precedes the revaluation date. If there are insufficient arm’s length sales during that year to form a statistically valid baseline, additional months backward and forward may be added. The assessment date each year is January 1st, however, any new construction, additions, etc. are based on what is there on June 30th of that year.
Massachusetts’s law allows two popular methods for establishing market values for non-rental residential properties. The first method, “the market adjusted cost approach,” is the approach that is currently used in Manchester. This approach establishes the value by adding the market value of the land and the cost of construction a similar house/condo unit at current market prices, adjusted for depreciation, condition, market appeal and other factors. The market value of the land is determined from recent sales.
The second method is “comparable sales,” or “market approach,” as it is also called, employs several sequentially performed steps. The first step entails a statistical analysis of recent sales. The analysis determines the influence of property characteristics - such as square footage of the residence, style of building, neighborhood, lot size, number of bathrooms, quality of construction - on a property’s market value. This analysis indicates which features and characteristics of a property add to market value. These factors are not constants, they may differ from year to year as market conditions and preferences change.
The Board reviews the assessed value for each property to determine if the valuation for each parcel is supportable. If necessary, the assessors recheck the data, and adjustments may be made. Adjustments could also be made for influence factors (street traffic, flood zone, noise, waterfront, scenic views, etc.) before setting the fair market value for each property.