Determining Fair Market Value
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.
State Certification
The assessors are required to ensure the accuracy of the assessment data. The Board must obtain state certification every 3 years verifying that the property valuations meet the state criteria for fair market value. The proposed assessments are provided to the DOR for statistical testing and confirmation. The DOR checks the assessed values for accuracy - both sold and unsold properties - by comparing them to actual property sales.
Overall, regardless of the method used, the statistically derived estimates must fall within a ten percent range of actual selling prices (properties are grouped by various categories, such as neighborhood or building style) in order to satisfy state guidelines. Once approved by the DOR, the new assessments are mailed to the taxpayers.
The Assessors are also required to do Interim year adjustments in the years between recertification, to make sure values stay within 10% of market value.
Each annual property tax bill is calculated by multiplying the assessed value of the property by the current tax rate. The tax rate is expressed in dollars per thousand of value. The tax rate in Manchester is the same for both residential and commercial properties. Property taxes are due in four quarterly installments. The first and second tax bills of a fiscal year state the estimated tax, whereas the third bill is the actual tax bill. It is usually mailed to taxpayers in December. The third and fourth tax bills show the current assessment and the residential tax rate.
The tax rate is determined by the size of the town budget for the fiscal year (July 1st through June 30th). The budget is decided each year at the Annual Town Meeting. Taxpayers are encouraged to attend Town Meeting and to vote on budget items, thereby setting budgets and, indirectly, the tax rate.
IF YOU HAVE ANY QUESTIONS, PLEASE CALL THE ASSESSORS OFFICE.
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