The appraisers are trying to do a sales ratio study. They need accurate information to do the study with. If the sale of your house had other considerations that are not part of the real property, such as furniture left in the house, appliances left that normally would be taken (fridge for instance), or the seller fronted some of the buyers costs and then built it into the price of the house........... they need to back these numbers out of the price paid for the house, to make the study more accurate.
A sales ratio study basically takes the price of houses that sold at legitimate arms length transactions, and compares them to the price the appraiser/assessor had previously placed on the property. This number is the focus of the study, it shows the appraiser if they have all properties in an area (subdivision, city, county, etc) overpriced, under priced or on par with the sale prices, on average. It uses algorithmic formulas that generate several numbers that show how closely the values came to a line when graphed out (COD or coefficient of dispersion), and if high priced houses were overpriced or if low priced houses were under priced (PRD or price related differential).
Sales ratio studies are a necessary part of the property mass appraisal process used by appraisers and assessors for taxation. In Georgia the county chief appraisers, and in larger counties, staff appraisers also, will do the studies and then the State Department of Audits sends in a auditor to do an official study. He will pull property records and go out and see if the property appraiser for the county did a good job of appraising the property to standards set by the state, and then take the sales information, and preform a study, which is the official numbers for that county for that year.
Property appraisers in Georgia live and die by those studies. In GA the assessment ratio is 40%. If the official study shows the property values are between 38% and 42% then you are OK. Get below 38% and down to 36% then the state still says you are OK but if you don't work to improve the numbers, the next year you probably will have slipped below 36%.
At 38% and up, the public utilities pay their taxes at 40%. Get below 38% and the public utilities pay at ACTUAL percentage. For a county with a rail yard, a power generating plant, large telephone switching station/transmission facility, that can mean tens or hundreds of thousands of dollars in tax revenue gained or lost.
In GA, get below 36% and the state will not accept the tax digest. They must accept it, and issue a letter of collection, in order for the county and cities and schools and other taxing authorities to collect taxes. Below 36% the county has to sue the state in court asking for authority to collect. The court will allow collections only after the county has signed a consent order in which they agree to conduct a complete revaluation of ALL TAXABLE property, both real and personal, and they can only collect at 85% of the full taxes owed, until the revaluation is finished, at which point they can go back and collect the rest. This can take a year or more, and cost the county dearly.
The county I'm in, it took about 5 years before the state released us from the consent order requirements. Its an ugly thing. People get fired, everyone gets upset, its just better to keep your numbers in the norm.
A sales ratio study involving raw land and no improvements is also difficult. Standing timber is not taxed in Georgia, it is taxed at the time of harvest. If the appraiser suspects that the value of trees was included in the price of land, then they try to determine what the trees are worth so their value can be backed out of the price.
Charles
