Real Estate Valuation Determination

Each year, the City Assessor determines the full and fair cash valuation of all real property and personal property estates for the purpose of taxation, M.G.L. Chapter 59, Sections 2A and 18. The Commissioner of Revenue triennially certifies whether the City Assessor is assessing property at full and fair cash valuation, M.G.L. Chapter 40, Section 56.

The determination of each parcel's full and fair cash valuation is accomplished by individual data collection concerning each specific property, the use of computer assisted mass appraisal techniques and finally, statistical analysis to check both the level of assessment and its uniformity. There are three recognized approaches to the determination of value: the sales comparison approach, the income approach and the cost approach.

The Assessor is on a nine-year cycle of property inspections as mandated by the DOR. This means that in any one year, over 5,000 properties will be inspected in order to comply with the complete inspection of all 47,444 taxable and exempt parcels within a nine-year cycle.

Residential Valuation

The Department of Revenue (DOR) requires the sales comparison approach for residential properties. The proposed formula, using quantitative and qualitative values, is entered into the VISION computer model, which calculates the valuations for all of the sale properties of the previous calendar year. Properties are sorted by neighborhood to verify each level of assessment (median assessment-to-sale ratio (ASR)) and the uniformity of assessments (coefficient of dispersion - COD). The style of home, price quartile and the time-of-sale are also similarly analyzed. The computer model is then adjusted and re-run multiple times to more accurately reflect the actual sale prices.

The median ASR of each separate group must be within five percent of the overall median ASR and the COD must be less than ten percent according to DOR standards. This process of valuation and statistical analysis is carried out annually by the Assessor. The DOR audits our methods and practices every three years according to statute.

Commercial & Industrial Valuation

Commercial and industrial properties are normally bought and sold based on their income producing capabilities. The income approach to valuation is the process of converting anticipated net income into an estimate of value. This approach to value is preferred by the DOR due to a lack of valid sales in this category of properties.

Physical inspections of commercial and industrial properties occur at the same frequency as residential properties. They are on a six-year cyclical re-inspection cycle. Statistical analysis of these properties is performed by grouping similar properties (fast food restaurants, convenience stores, etc.). Like properties can then be compared and analyzed using per square foot comparisons, while sorting for age and type of building construction. As with residential properties, this process is carried out annually and is reviewed and audited by the DOR every three years.

Income-Producing Properties Expense Reports

The assessor is required to assess all property at its full and fair cash value. The collection and analysis of rental data of income-producing properties is essential in the development of a fair and equitable valuation of your property and comparable properties. The information requested is for the assessor's use. It is not public record.

Please report only typical expenses; if a major repair was performed (i.e. roof replacement) do not report the full cost in one year.

• Apartments Expense Form
• Commercial & Industrial Expense Form
• Mixed Use Expense Form

Other Valuation Methods

The cost approach is utilized on unique properties, personal property and exempt property valuation. It is also used to check both the sales and income approaches.

Condominiums are valued by comparison of exhibited sales per square foot of comparable units in the preceding calendar year. Large apartment buildings and mixed-use properties are valued by a combination of the sales comparison and income approaches due to their inherent uniqueness.

Personal property is valued by the cost approach with most assets depreciating over an eight-year period down to a residual value-in-use of 20% of their original cost. The City of Worcester maintains over 5,000 personal property accounts.

Have a Question?

• Can my assessment change every year?

  Yes. The assessed value represents the estimate of market value of the property. The real estate market changes constantly. The assessments change based upon these changes in the real estate market. The assessments do not automatically go up or down every year. The changes in the assessment reflect the real estate sales from the appropriate time period.

• Do you review personal property values?

  Yes, all personal property accounts are reviewed as part of the revaluation. Each year, prior to March 1, all commercial entities subject to taxation in a city or town must submit a list of all their personal property that is not exempt from taxation by completing a Form of List (FOL). This list is available on our website.

• How did you inspect my property?

  There are 48,000 parcels of real estate in the City of Worcester. In accordance with Department of Revenue regulations, the City performed a thorough property review and inspection of all 48,000 parcels of real estate - both commercial and residential. City assessors and contracted appraisers inspected and reviewed the property in multiple ways, including through the use of technology as well as physical on-site inspections. Assessors also reviewed permits to capture any property improvements or upgrades. All of the data compiled from these reviews was then compared to data in the existing records, updated when discrepancies emerged, and recorded into a new assessment system purchased by the City.

  Multiple levels of review were performed by independent assessors and a contracted appraisal company to ensure that the accuracy and quality of the data was consistent. All of this information has been submitted to the Department of Revenue, which is now conducting its own Data Quality Study to further ensure that the process has been fair and equitable.

• How do I file an abatement with the City?

  As a rule, an application may be filed by the person to whom the tax has been assessed, or by the person acquiring title after January 1. The application for abatement must be filed (received by the Assessor) no later than thirty (30) days after the date on which the "actual" tax bill was issued. Application forms are available on our website or at City Hall, Room 209, Monday – Friday, 8:30 a.m. – 5 p.m.

  If your application is not filed timely, you lose all rights to an abatement and the Assessor cannot by law grant you one. To be timely filed, your application must be (1) received by the Assessor on or before the filing deadline or (2) mailed by United States Mail, first class postage prepaid, to the proper address of the Assessor on or before the filing deadline as shown by a postmark made by the United States Postal Service.

  The City has ninety (90) days to review, request information, inspect and make a determination.

  A property owner has the right to appeal an abatement decision of the Assessor. Appeals are made to the Commonwealth of Massachusetts’ Appellate Tax Board, an independent administrative board under the direction of the Commonwealth. The property owner has 90 days from receipt to file with the Appellate Tax Board. Note, commercial property owners who did not file an income and expense form are unable to file with the Appellate Tax Board.

• How does an assessor determine values?

  Valuation is based on "full and fair cash value," the amount a willing and knowledgeable buyer would pay a willing and knowledgeable seller on the open market. The job of the Assessor is to determine the market value of every parcel of property in the City as of January 1.

  In practice, there are three universally accepted approaches to determining value: market, income and cost. The Assessor does not create value. Rather, he or she is responsible for discovering and reflecting the changes that are occurring in the marketplace.

  • Market Approach - market sales of similar properties which sold in the year prior to January 1 are analyzed, compared and adjusted to forecast what the property would sell for on January 1. When there are many sales, the market approach is the most accurate and dependable tool in the determination of value. Most residential property is valued by the market approach.
  • Income Approach - the income approach is most applicable to real estate that is normally bought and sold on the basis of its income-producing capabilities, such as retail stores, office buildings and industrial properties. This approach requires significant data such as rents, occupancy rates, operating expenses and investor requirements. This approach is most useful in valuing investment properties where sufficient market sales are not available. The income approach considers the income stream that a property is likely to produce for an investor over a definite period of time. The process of capitalization converts the future benefits of ownership into present worth or market value. The elements of capitalization are income (I), rate (R) and value (V). The income approach formula is expressed as follows: value equals income divided by rate (V - I/R).
  • Cost Approach - The cost approach involves an estimate of the current reproduction or replacement cost of the building, deducting an estimate of depreciation (or loss of value from any cause) and then adding an estimated value of land. Reproduction cost is the amount of money necessary to erect a new structure that is an exact replica of the existing building. This is appropriate in the case of recent construction. Replacement cost is the expenditure necessary to build a new building in utility to the original and able to serve as a substitute in function. It is more applicable to older buildings.
• How will I receive my assessment?

  Once the Department of Revenue notifies the City of preliminary certification, property owners will receive a copy of their parcel information and their assessed value in the mail. It will also be posted online.

• If my assessment increases, will my taxes increase?

  No. The valuation change will not be indicative of the tax change. Historically, taxes increase without revaluation through levy changes which require additional funding through property taxes. If all assessed values changed at the same rate the subsequent change in the tax rate would adjust the taxes so no increase or decrease would occur. Property values change at varying rates based upon market and physical changes, therefore taxes change relatively based upon the amount of change to each parcel.

• What does an assessor look at when determining values?

  An assessor looks at property the same way a potential buyer would look at a property. An assessor considers factors such as location, size, type, quality of construction, condition, number of floors/ levels, number of bedrooms, baths, fireplaces or types of heating systems, to name a few. An assessor also compares properties that have sold in the neighborhood.

• What does my assessment represent?

  The assessment is an estimate of market value. The definition of market value is the price a willing buyer would pay a willing seller in an open, competitive market, without any undue influences. The current assessment represents an estimate of market value as of January 1, 2017, for Fiscal Year 2018.

• What if I disagree with my assessment?

  We encourage you to call us at 508-799-1098 to discuss with an assessor. If a difference of opinion still exists, you may appeal your assessment by filing a timely abatement application. Reasons for filing for an abatement may be:

  • Overvaluation - The assessed value is too high compared to the actual real estate market.
  • Disproportionate Assessment - Property is assessed in excess of assessments of comparable properties.
  • Improper Classification - For instance, a property is classified as commercial land when it is actually residential land.
  • Statutory Exemption - The property is exempt from taxation based on use.
• What if the data about my property is wrong?

  You will receive your property record in the mail in the coming weeks once the Department of Revenue has certified our local assessed values. Your property record will also be available online for you to review at this time. If you believe the information gathered during the inspection and entered into the property record is inaccurate, we encourage you to contact the Assessor’s Office as soon as possible. You can contact us via phone at 508-799-1098 or by scheduling an appointment.

• What is a triennial revaluation?

  Massachusetts law requires the Department of Revenue (DOR) to review local assessed values every three years and to certify that they represent full and fair value. A revaluation is the most equitable way to accomplish this. A revaluation includes a complete review and analysis of existing property records and values in accordance with DOR regulations.

• What is the difference between an abatement and an exemption?

  An abatement is a reduction in a real estate valuation based on a correction to the assessed valuation. The only criteria the assessors examine on an abatement application are the accuracy of the property data and the market value of the property.

  An exemption is a reduction in a real estate tax based on an individual meeting certain qualifications set forth by the Commonwealth of Massachusetts. For example, being a disabled war veteran for a veteran’s exemption, or being blind for a blind exemption.

• What percentage of market value are the assessed values?

  Assessments represent 100% of market value as required by Massachusetts General Laws. The assessments for Fiscal Year 2018 present the estimate of market value as of January 1, 2017.

• When will I receive my assessment?

  The Commissioner of Revenue determines triennially whether assessed values in the City represent full and fair cash valuation for each class of real and personal property. The City cannot implement the levy allocation provisions of the Classification Act unless the Commissioner has certified that local assessments reflect full and fair cash value. When the assessments are completed, the Assessor submits a request for certification review to the Department of Revenue (DOR). The Bureau of Local Assessment within the DOR conducts a statistical analysis and performs a preliminary field review. If all of the standards have been met, the Bureau notifies the City of preliminary certification.