Methods and Metrics for Mass Valuation Quality Assurance

Mass valuation methods are used in a number of contexts to estimate the value of land and/or improved property. One of the major uses is in a statutory valuation setting where property values provide the basis for taxation assessments. The requirements for statutory valuations are that they are fair and equitable so that these characteristics also pertain to the taxes based on the valuations. This requirement extends across property zonings and across the region in which the taxes are to be levied. It is also preferable that statutory valuations are close to market values so that there is a reasonable level of transparency in the valuation process and the general public can have confidence in the statutory valuation outcomes.In the mass valuation process, it is very important that Quality Assurance (QA) is a major focus and that this is built into the process as a key element of quality improvement over time. This isn’t easy to achieve against the backdrop of a quite fluid and segmented property market.This paper will consider mass valuation methods and the development of metrics, appropriate to the particular method, to assure the quality of the mass valuations produced.Reference will be made to statutory valuation in New South Wales (Australia) where annual land valuations are produced for approximately 2.5 million properties. The State and Local Government taxes based on these land valuations generate in excess of $A7b ($US5.5) annually so it is critical that all stakeholders are confident in the outcomes.