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- Minkowski MetricAny of a family of possible ways of measuring distance. Euclidean distance, a member of this family, computes straight - Line distances by squaring differences in like coordinates, summing them, and taking the square root of the sum. In mass appraisal model building, Minkowski metric usually refers to the sum of absolute differences (not squared) in each dimension, and resembles a "taxicab" or city block pattern. Other alternatives are possible, including the distance as calculated only for the dimension of greatest difference, but the city block distance is most common.
- ModeA measure of central tendency. (1) In an array of the values of a variable, the most frequently occurring value. (2) By extension for grouped data, the class with the greatest number of observations.
- ModelRepresentation or description of a system, theory, process, workflow or other phenomenon (e.g. model of an atom, an economic model). A model may attempt to represent how a system or other phenomenon works or functions. For example, computer models are representations of the various relationships among events, processes or values. A model is made up of one or more Methods.
- Model CalibrationThe development of the adjustments or coefficients from market analysis of the variables to be used in an automated valuation model.
- Model Preference Table®A Model Preference Table® ranks AVMs approved for use in a particular geographic area based on specific performance criteria. The sequence determines how an automated platform will order valuations from these sequenced models. An MPT® can be an element of a cascade.
- Model specificationThe formal development of a model in a statement or equation, based on data analysis and appraisal theory.
- Model ValidationThe process of demonstrating that an AVM or other econometric model produces results that are valid for a given application. This process involves both evaluating the AVM’s theoretical underpinnings as well as the sufficiency of the vendor’s data management and model calibration efforts. Back-testing the AVM’s outputs against benchmark values is also an important component of model validation.
- Moving AverageA statistic used to smooth the values of a variable when those values are erratic over distance or time, as in the case of land values and mortgage commitments. For example, a five - Block simple moving average of land values along a major street would assign to block 16 the average of the values for blocks
- MulticollinearityCorrelation among two or more variables. In regression analysis, high multicollinearity among the independent variables complicates modeling and will compromise the reliability of the resulting coefficients. If the multicollinearity is perfect, the multiple regression algorithms simply will not work and either an error message may result or the software may purge one or more of the problem variables.
- Multiple Listing Service (MLS)A computerized database subscription service used by real estate brokers and agents to share information about properties for sale. Hundreds of systems are located throughout the U.S. and Canada to serve local market areas.
- Multiple Regression Analysis (MRA)A particular statistical technique, similar to correlation, used to analyze data in order to predict the value of one variable (the dependent variable), such as market value, from the known values of other variables (called “independent variables’), such as lot size, number of rooms, and so on. If only one independent variable is used, the procedure is called simple regression analysis and differs from correlation analysis only in that correlation measures the strength of the relationship, whereas regression predicts the value of one variable from the value of the other. When two or(...)
- Multiplicative modelsA mathematical model in which the coefficients of independent variables serves as powers (exponents) to which the independent variables are raised or in which independent variables themselves serve as exponents; the results are then multiplied to estimate the value of the dependent variable.
- Multiplicative TransformationA transformation of a set of variables accomplished by multiplying a variable by one or more other variables. For example, room area is a multiplicative transformation of length and width.
- Multivariate Statistical TechniqueAny of a number of statistical analyses in which data (such as the information on a single property record card) containing a number of variables (such as lot size, number of rooms, and construction type) are analyzed to predict the value of some other variable. See multiple regression analysis.
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- Natural LogarithmSee logarithm.
- Neighborhood(1) The environment of a subject property that has a direct and immediate effect on value. (2) A geographic area (in which there are typically fewer than several thousand properties) defined for some useful purpose, such as to ensure for later multiple regression modeling that the properties are homogenous and share important locational characteristics.
- Neighborhood Analysis A study of the relevant forces that influence property values within the boundaries of a homogenous area.
- Net Assessed ValueThe official dollar value remaining on an assessment roll after deducting the amount of any applicable partial exemptions from the gross assessed value.
- Neural Network (ANN)A collection of mathematical models that emulate some of the observed properties of biological nervous systems and draw on the analogies of adaptive biological learning. An artificial neural network has several key elements: input, processing (calibration), and output. Other names associated with neural networks include connectionism, parallel distributed processing, neuro - Computing, natural intelligent systems, and machine learning algorithms.
- Non- sampling ErrorThe error reflected in ratio study statistics from all sources other than sampling error. While the non-sampling error is unavoidable due to the inefficiencies inherent in real property markets, the imperfections of the appraisal process, and the imperfections of conducting ratio studies, all practicable steps must be taken to minimize nonsampling error in ratio studies.
- Nonconforming Use(1) A use of property that does not comply with the applicable zoning ordinance. (2) Uses that differ noticeably from prevailing uses in a neighborhood are sometimes also referred to as "nonconforming."
- Nondisclosure StatesStates that do not disclose sales prices when county clerks real estate transactions. Unless a vendor has access to market data from an alternative source, AVM performance generally suffers in nondisclosure states. There are currently twelve nondisclosure states - Alaska, Idaho, Kansas, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Texas, Utah and Wyoming.
- Nonparametric StatisticA statistic whose interpretation or reliability does not depend on the distribution of the underlying data.
- Nonsampling ErrorThe error reflected in ratio study statistics from all sources other than sampling error. While nonsampling error is unavoidable due to the inefficiencies inherent in real property markets, the imperfections of the appraisal process, and the imperfections of conducting ratio studies, all practicable steps must be taken to minimize nonsampling error in ratio studies.
- Normal DistributionA theoretical distribution often approximated in real-world situations. It is symmetrical and bell-shaped; 68 percent of the observations occur within one standard deviation of the mean, and 95 percent within two standard deviations.
- Null HypothesisA hypothesis that one chooses to accept in the absence of sufficient evidence to the contrary.
- NumeratorIn a fractional expression, the number that is divided by some other number (the denominator). For example, 3 is the numerator of the fraction 3/4, 4 is the denominator.
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- Object of Tax(1) The objective element on which a tax is imposed. (2) The aims or purposes for which the tax is designed. Note: This term, as defined in (1) above, does not seem to be distinguished adequately from "measure of tax," "subject of tax," and "tax base." Such distinction as can be drawn is pedantic, and the use of the term in this sense is not recommended. It is also recommended that the term "purpose of tax" be substituted for the second usage given above. Compare measure of tax; subject of tax; tax base.
- Objective DataObjective data are variables for which the correct value can be verified. Examples include zoning, corner lot (yes or no), land area, and front feet.
- ObservationOne recording or occurrence of the value of a variable, for example, one sale ratio among a sample of sales ratios.
Sources:
a) AVMetrics
b) AVMs 201: A Practical Guide to the Implementation of Automated Valuation Models, Jim Kirchmeyer, 2008.
c) IAAO 2015, Glossary for Property Appraisal and Assessment, 2015. (2013 online: https://www.iaao.org/media/Pubs/IAAO_GLOSSARY.pdf )
d) Collateral Assessment & Technologies Committee, Summary of Definitions & Terms, 2006.
e) Joint Industry Task Force on AVMs, IAAO Standard on AVM Glossary, September 2003. https://www.iaao.org/media/standards/AVM_STANDARD.pdf
f) Appraisal Institute, Joint Industry Task Force on Automated Valuation Models, Work Group Terminology, 2005.
g) Merriam-Webster (https://www.merriam-webster.com/)