Levels of assessment for all areas of St. Louis County are monitored through the use of sales ratio studies. These studies are conducted annually by the County Assessor's Department and the Minnesota Department of Revenue.
Sales ratio studies are based on current real estate transactions. Basic data for these transfers are taken from Certificates of Real Estate Value, which are required to be filed with the County Auditor whenever real estate is sold. Each transaction is screened by the assessor in order to exclude those which do not represent an open market sale between a willing buyer and seller within the study period.
The studies are based on classification. Residential properties are grouped together, as are other classes such as commercial or rural vacant land.
Each open market sale is placed in the appropriate study and sorted according to its sales ratio. A sales ratio for a property is found by dividing the assessor's market value by its sales price.
|EXAMPLE: A property with a sales price of $100,000 and a current market value of $90,000 would have a sales ratio of 90,000/100,000, or 90%.
At the end of a study period, the assessor analyzes all the sales included in the study. The individual sales ratios are ordered from lowest to highest and the median ratio, or middle ratio, is determined. The median ratio is used to measure the level of assessment for a study area.
|EXAMPLE: In this sales ratio study consisting of 7 sales, the median ratio is 98%.
In general, if the median ratio falls between 90% and 105%, the level of assessment is determined to be acceptable. If the median ratio falls outside this range, and there have been at least six sales during the study period, market values within the study area will be adjusted by the assessor or the Minnesota Department of Revenue.