What formula is used to calculate the Aggregate Ratio?

The Aggregate Ratio is a critical measure in property appraisal, used to evaluate the relationship between assessed values and actual sales prices of properties. The correct formula calculates the Aggregate Ratio by taking the total assessed value of properties and dividing it by the total sales price of those same properties. This relationship helps appraisers understand how closely the assessments align with market values.

Using the formula of total assessment divided by total sales price provides a direct comparison that indicates whether properties are being over or undervalued in assessments. A ratio greater than 1 could suggest properties are under-assessed, while a ratio less than 1 might indicate over-assessment.

The other formulas presented are not applicable for calculating the Aggregate Ratio because they do not represent this relationship appropriately. For example, the division is critical to highlight the comparison between assessments and sales prices rather than mere addition or subtraction of values, which would not yield a meaningful ratio for appraisal purposes.