Measuring Equity

What are some of the things to look for when measuring equity?

When studying equity on a micro level, you would want to compare the subject property to other properties that are as similar as possible in at least the following:

• Use
• Location
• Size
• Quality
• Condition
• Amenities

Example

The subject property is a 1,500 square foot rambler style home of average quality in good condition built in 1990, located in Syracuse. You would want to perform an equity comparison in the following manner:

• Size ± 100 square feet
• Similar quality
• Similar condition
• Age ± 5 years
• Condition
• Located within a few block radius

Even after making comparisons on the above criteria, there can still be sizeable differences in the assessed value. The subject home may have a completely finished basement, a third car garage and a larger lot. The other homes used in the comparison may have an unfinished or partially finished basement, a two car garage or smaller lot. Hence, they would have a lower assessed value.

How is equity in assessment measured?

Each year, the Davis County Assessor’s Office and the Utah State Tax Commission perform an assessment/sale ratio study. This study is performed by taking assessed value and dividing it by the cash equivalent sale price of a property to find a ratio as compared to the sale price. The ratios are then compiled in a list by several different stratifications. The typical stratifications are use, political boundaries (cities), age or region. Then the study is analyzed for equity between stratifications.