AVM Glossary

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  • r

  • A study of the relationship between appraised or assessed values and market values. Indicators of market values may either be sales (sales ratio study) or independent “expert” appraisals (appraisal ratio study). Of common interest in ratio studies are the level and uniformity of the appraisals and assessments.
  • Replacement cost new or reproduction cost new.
  • Replacement cost new less depreciation or reproduction cost new less depreciation.
  • The physical parcel of land and all improvements permanently attached. Compare real property.
  • According to the federal banking agencies’ appraisal regulations, a real estate appraisal must comply with USPAP (unless safety and soundness requires adherence to stricter standards); be written and contain sufficient information for the lender to engage in the transaction; contain an estimate of market value; and be performed by a state-licensed or state-certified appraiser.
  • For certain transactions (e.g., those that are below the de minimis), the federal banking regulators allow lending institutions under their jurisdiction to obtain a real estate evaluation in lieu of an appraisal. According to the “Interagency Appraisal and Evaluation Guidelines,” evaluations must include the effective date of the valuation; describe the real estate collateral, its condition, as well as its current and projected use; describe the information source(s) used in the analysis; describe the analysis and supporting information; and provide an estimate of the real estate’s(...)
  • The various kinds of deeds whereby real property is conveyed. Compare conveyances.
  • See property.
  • To make images or data available for inspection simultaneously with their acquisition.
  • (1) Any tangible thing whose fee ownership constitutes real property, that is, land or improvements. (2) A synonym for real estate.
  • The result obtained when 1 is divided by a given number. For example, the reciprocal of 4 is 0.25. Factors are reciprocals of rates.
  • The final step in the valuation process wherein consideration is given to the relative strengths and weaknesses of the three approaches to value, the nature of the property appraised, and the quantity and quality of available data in formation of an overall opinion of value (either a single point estimate or a range of value). Also termed "correlation" in some texts.
  • The source of the Reference Value (e.g. 1004, 2055, sales price).
  • The value against which the AVM predicted value will be compared against.
  • See multiple regression analysis.
  • The coefficient calculated by the regression algorithm for the data supplied that, when multiplied by the value of the variable with which it is associated, will predict (for simple regression) or help to predict (for multiple regression) the value of the dependent variable. For example, in the equation, Value = $10,000 + $5,000 × number of rooms, $5,000 is a regression coefficient.
  • The line on a graph that represents the relationship defined by the regression coefficients. For example, the line from the relationship given in the definition of regression coefficient would cross the y - Axis at the value $10,000 and would go up $5,000 for each movement of 1 to the right. This example illustrates one of the subtleties required in understanding regression analysis: in fact, there is no line, because the independent variable is not a continuous variable, but it is easier to talk about the relationship by pretending that the variable is continuous and represent the(...)
  • See assessment progressivity (regressivity).
  • See price - Related differential.
  • Real estate investment trust; combines capital of many investors to acquire or finance real estate through formation of a corporation whose shares are traded in a market.
  • The phenomenon whereby knowledge of the value of one variable tells you something about the probable value of another. (See correlation.) Relationships may be positive (an increase in the value of one variable implies an increase in the value of the other variable) or negative (a change in the value of one variable implies a change in the other direction for the value of the other variable). Independence of two variables means that there is no relationship between them.
  • In a sampling process, the extent to which the process yields consistent population estimates. Ratio studies typically are based on samples. Statistics derived from these samples may be more or less likely to reflect the true condition in the population depending on the reliability of the sample. Representativeness, sample size, and sample uniformity all contribute to reliability. Formally, reliability is measured by sampling error or the width of the confidence interval at a specific confidence level relative to the central tendency measure.
  • As of the appraisal date, the number of years in the future over which the operation of an asset is anticipated to be economically feasible; often expressed as a percentage of the total economic life (REL %).
  • To improve a structure by changing its floor plan, functions, or characteristics.
  • Repeat Sales analysis aggregates changes in value and statistical means for properties sold more than once during a specified period of time in a given geographic area. For example, in a zip or postal code area, estimate market-level housing price changes. If an individual property has not been substantially changed since its last sale, this analysis matches each pair of sales transactions (thus the name "repeat sales"). The amount of appreciation (or depreciation) is calculated from the time of the first sale to the second and so on, providing an estimate of the overall appreciation of(...)
  • Repeat sales models examine the sales prices of the same property at two (or more) points in time, thus accounting for the affects that spatial factors and individual property characteristics have on market value. Examples include the OFHEO’s House Price Index and the S&P/Case-Shiller® Home Price Indices.
  • In the cost approach, replacement cost new less physical incurable depreciation.
  • The cost, including material, labor, and overhead, that would be incurred in constructing an improvement having the same utility to its owner as a subject improvement, without necessarily reproducing exactly any particular characteristics of the subject. The replacement cost concept implicitly eliminates all functional obsolescence from the value given; thus only physical depreciation and economic obsolescence need to be subtracted to obtain replacement cost new less depreciation (RCNLD).
  • A sample of observations from a larger population of observations, such that statistics calculated from the sample can be expected to represent the characteristics of the population being studied.
  • (1) A domicile. (2) A domicile at which a person is actually dwelling. (3) A dwelling place, whether or not it constitutes a domicile (preferred). Note: Ordinarily, in the law of taxation, "residence" means "domicile" unless a contrary meaning is specified or is indicated by the context.

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/)