What are the two components of a sales ratio?

The two components of a sales ratio are assessed value and sales price. The sales ratio is a metric used to compare the assessed value of a property to its actual sales price. This ratio helps in determining whether properties are being assessed fairly and consistently within a municipality.

When a property is sold, the sales price represents the market transaction value, while the assessed value is the value assigned by the municipal tax assessor for tax purposes. The sales ratio, therefore, is calculated by dividing the assessed value by the sales price, providing insight into the relationship between these two values.

This understanding is crucial for tax assessors as it influences property tax assessments and helps ensure equity in how properties are valued for taxation purposes.