ASSESSMENT-SALES RATIO STUDIES
§ 603.31. Market value conversion indexes.
(a) The basic data used in determining the market value conversion indexes are real property transfers reported monthly by the various counties. Reference should be made to Chapter 609 (relating to duties and responsibilities of county officials).
(b) The conversion indexes may not include transfers in which selling prices are not bona fide, such as any of the following sales:
(1) Between relatives.
(2) Between corporations and affiliates.
(3) Sales involving special reservations or agreements.
(4) Transfers motivated by special need or speculation.
(5) Transfers with personal property involved in the consideration.
(6) Sales involving charitable, religious, or governmental organizations.
(7) Forced sales.
(8) Other transfers with circumstances that knowingly would distort selling prices.
(c) In other transfers, selling prices may be bona fide, but reported assessments may not be comparable for assessment-sales ratios purposes. For example, the property sold may be a portion of a larger tract, but the reported assessment includes the entire tract; or the sale may include a newly constructed building not yet assessed when reported. Such transfers will be rejected or the comparable assessments ascertained.
(d) Besides facts reported by counties and staff investigators, other precautions will be taken by the Board to eliminate questionable transfers. Non bona fide selling prices and noncomparable assessments tend to result in extreme assessment-sales ratios. Consequently, transfers with extremely low or high ratios of assessments to selling prices will be rejected. This policy is based on periodic studies and operates on the premise that the particular extreme ratio transfers would have been rejected anyway had the facts been reported or ascertainable.
(e) There is another policy used relative to selling prices which tends to promote conservatism and realism in Board market values. Periodically, selling prices will be compared with market values on the same properties, as appraised by independent appraisers when available.
(f) In recent years, the comparisons of this section show that long-range concepts of worth of professional appraisers tend to be more conservative than current short-range selling prices. Consequently the Board, uniformly statewide, will discount its aggregate sales values of properties in arriving at aggregate market values for school subsidy purposes.
Notes of Decisions The State Tax Equalization Board, as part of its method to determine the common level ratio, develops market value conversion indexes using data from transfers of property in which there are bona fide selling prices. In re Armco, Inc., 515 A.2d 326 (1986); appeal denied 533 A.2d 714 (Pa. 1987).
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