AVM Glossary

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  • A decrease in the value of a property occasioned solely by shifts in demand from properties of this type to other types of property and/or to personal services. Some of the principal causes of obsolescence are (1) changes in the esthetic arts; (2) changes in the industrial arts, such as new inventions and new processes; (3) legislative enactments; (4) change in consumer demand for products that results in inadequacy or over- adequacy; (5) migration of markets that results in misplacement of the property. Contrast depreciation, physical; depreciation, economic.
  • The act of taking or holding possession of property.
  • The principle that the cost of a resource for one use is the value of the resource in its best alternative use.
  • Instances of extreme undervaluation or overvaluation compared against a known value.
  • Observations that have unusual values, that is, they differ markedly from a measure of central tendency. Some outliers occur naturally; others are due to data or modeling errors.
  • (1) Goods produced by a firm. (2) The information returned by a computer to its user.
  • An improvement whose cost exceeds the cost of an alternative improvement by more than the excess of the present worth of the given improvement and the land over the present worth of the alternative improvement and the land, often because a structure is too large or too costly for the most profitable use of the site. Contrast underimprovement.
  • The rights to the use of property, to the exclusion of others.

  • p

  • The apparent displacement of position of a body with respect to a reference point or system of coordinates, caused by moving the point of observation.
  • Numerical descriptive measure of the population, for example, the arithmetic mean or standard deviation. Parameters are generally unknown and estimated from statistics calculated from a sample of the population.
  • A statistic whose interpretation or reliability depends on the distribution of the underlying data.
  • A contiguous area of land described in a single legal description or as one of a number of lots on a plat; separately owned, either publicly or privately; and capable of being separately conveyed.
  • A numeric or alphanumeric description of a parcel that identifies it uniquely. Assessors use various systems, many with common features. A growing number of these systems include geocoding. In the thirty states where it exists, the Public Land Survey System, authorized by the United States Government in 1785, is often a basis for parcel identification.
  • An analysis of one unit of the economy in light of constraints imposed by economic forces outside the unit. An example would be a highest and best use analysis of vacant land where the land use is limited by zoning.
  • An interest (in property) that is less complete than a fee simple interest.
  • An AVM Performance Metric that measures a combination of accuracy and precision. The PPE is the percentage of properties for which the AVM predicts selling prices to within +/- a given percentage. The complement of the Failure Rate.
  • The building block of all accuracy-related performance metrics. Analysts calculate percentage error in the following manner: Percentage Error = (AVM Value – Benchmark Value x 100%) / Benchmark Value
  • The values that divide a set of data into specified percentages when the data are arrayed in ascending order. The tenth percentile includes the lowest 10 percent of the values, the twentieth percentile includes the lowest 20 percent of the values, and so forth.
  • A cause of depreciation that is a loss in value due to ordinary wear and tear and the forces of nature.
  • A software solution that automates an organization’s AVM selection rules and valuation acceptance criteria. This technology is particularly useful for implementing a cascade and ensuring enterprise-wide compliance with collateral valuation policies.
  • A single numerical value that can be used to estimate a population parameter. It is calculated on the basis of information collected from a sample. Point estimates are generally constructed to provide the best unbiased estimate of the population parameter consistent with the sample data. However, the point estimate is only an estimate and is unlikely to have the same value as the population parameter. (See confidence interval and reliability for discussion of precision of the sampling process.)
  • A line chart.
  • Combining two or more strata to form one regression model.
  • All the items of interest, for example, all the properties in a jurisdiction or neighborhood; all the observations in a data set from which a sample may be drawn.
  • The hit rate for an AVM that is in a second or subsequent position within an AVM cascade expressed as the percentage of AVM valuations returned relative to the number of properties submitted to that AVM (i.e., those properties where the preceding AVM(s) did not return a usable value).
  • See Price-related bias. Also see Price-related differential (PRD).
  • See Price-related differential.
  • The dispersion of a model’s valuation errors, with greater dispersion being considered less precise, and lower dispersion being considered more precise. Mean and median absolute error, standard deviation and forecast standard deviation are all measures of an AVM’s precision.
  • The Predicted Residual Sum of Squares (PRESS) predicted value is the (regression) model’s predicted value of the ith observation in the training dataset, obtained by fitting the original regression model with the ith observation withheld.
  • The amount asked, offered, or paid for a property. (See USPAP for additional comments.)

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/)