How is the Deviation from the Average Ratio computed?

The computation of the Deviation from the Average Ratio is integral in determining the difference between the actual selling prices and what would be anticipated based on typical sales patterns. To compute this deviation, the correct formula utilizes the Sales Ratio, which is the ratio of the sale price of a property compared to its assessed value, and the Median Ratio, which reflects the midpoint of the sales ratios in a set of transactions.

By subtracting the Sales Ratio from the Median Ratio, you obtain how much the actual sale deviates from a central measure of typical sale ratios in the market. A positive result would indicate that the Sales Ratio is below the median, suggesting that the property sold for less than expected on average, while a negative result would imply the opposite.

This process is particularly useful in appraisal practices to assess the fairness of property valuations compared to others in the same market segment. This specific calculation helps appraisers identify potential discrepancies in property sales that may need further investigation.

The other formulas mentioned do not accurately represent how the deviation is quantified in this context, as they involve incorrect arithmetic operations or do not focus on the appropriate comparisons needed to determine deviation effectively.