Value Accuracy and Assessment Uniformity

The Assessor’s Office is audited annually by an independent auditor hired by the State Board of Equalization to ensure each county complies with the standards adopted by the Board for assessment level and uniformity. Colorado utilizes the Standards on Sales Ratio Analysis as adopted by the International Association of Assessing Officers (IAAO) for the criteria to measure compliance regarding assessment quality and uniformity.

Penalties for noncompliance require the Assessor to reappraise the affected properties again, with State supervision, and to pay the State for their costs of supervision. In addition, the county must levy taxes to "payback" any inappropriate school aid funding due to the inappropriately appraised properties.

Value Accuracy

Assessment quality, or value accuracy, refers to the degree to which a mass appraisal model accurately reflects the true market values of real property. To establish accuracy within economic areas, sale prices are compared to the actual values established by the mass appraisal model. The acceptable market level, as established by the State, is an actual value within +/- 5% of a sale price.

Value accuracy is measured using sales ratios, which are calculated by dividing the appraised actual value by the sales price. The middle, or median, sales ratio of all the sales in an economic area must be between 0.95 and 1.05. All neighborhoods within an economic area must additionally meet this standard for sales ratios.

Uniformity of Assessment

Assessment uniformity refers to the equitable treatment of properties within and between groups of properties. Testing for uniformity also involves the study of sales ratios. 

One measurement of market equity is the Coefficient of Dispersion (COD). This measures the homogeneity, or "sameness", within a group of properties by calculating a percentage of the average difference (absolute deviation) of all ratios in a group from the median sales ratio.  Some areas have a lot of variety, thereby having a higher COD, while others may have more similarity, indicating a lower COD. The law requires different COD levels depending upon the property type:

• All residential property must have a COD less than or equal to 15.99
• All other property, including vacant land, must have a COD less than or equal to 20.99.

An additional measure of assessment uniformity is the Price-Related Differential (PRD). This measure is calculated by dividing the mean (average) sales ratio for an area by the weighted mean sales ratio. Since these ratios are weighted by sales price, the PRD measures whether higher- and lower-value properties are being assessed equally. A PRD between 0.98 and 1.03 indicates an unbiased assessment, while a lower PRD indicates that higher-value properties are being relatively over-appraised and a higher PRD indicates that higher-valued properties are being under-appraised, relative to all properties in the group.