What is the formula for determining the Price-Related Differential (PRD)?

The Price-Related Differential (PRD) is a crucial measure used in mass appraisal and property tax assessment. It helps assess whether lower-valued properties are assessed at a higher ratio to their market value compared to higher-valued properties.

The formula for PRD is defined as the mean of the assessment ratios divided by the aggregate ratio. The mean ratio reflects the average assessment ratio for a set of properties, while the aggregate ratio involves summing all the assessed values and dividing that by the sum of the market values. This gives an indication of overall assessment quality across different property types.

By using this formula, appraisers can determine if there is bias in property assessment, which can help ensure more equitable taxation and appraisal practices. The use of mean and aggregate ratios specifically allows for a clear comparison of the relationship between assessed values and market values within a given dataset.