AVM Glossary

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  • A statistical phenomenon (and a technique for estimating its strength) whereby knowledge of one fact about a thing implies some knowledge of a second fact about that thing. For example, because the volume and weight of water are correlated, knowing that a quantity of water is one gallon also means knowing that its weight is eight and one-third pounds. Linear correlation, the kind most often encountered, means that an increase in one factor in some proportion (say, a doubling) changes the other in the same proportion. With curvilinear correlation, as between the radius and the area of a(...)
  • A statistic that characterizes two or more sets of numbers and, when squared and multiplied by 100, gives the percentage strength of the (linear) relationship between the two sets of numbers. For example, if the coefficient of correlation between measures of the height and weight of a group of people were 0.9, then one would deduce that knowing the height of someone (loosely speaking) would explain (or account for) 81 percent of the weight.
  • The table of numbers used to display the correlation coefficients for each pair of variables when three or more variables are thought to be correlated.
  • (1) One of the three approaches to value, the cost approach is based on the principle of substitution – that a rational, informed purchaser would pay no more for a property than the cost of building an acceptable substitute, with like utility. The cost approach seeks to determine the replacement cost new of an improvement less depreciation plus land value. (2) The method of estimating the value of property by: (a) estimating the cost of construction based on replacement or reproduction cost new or trended historical cost (often adjusted by a local multiplier); (b) subtracting(...)
  • The geographic counties and municipalities in which an AVM is functional or performs acceptably.
  • A credible appraisal is one that is worthy of belief. A credible appraisal provides support, by relevant evidence and logic, for the opinion of value. A credible report will effectively inform and convince the intended user of "the completeness, accuracy, adequacy, relevance, and reasonableness of the report, given law, regulations, or intended user requirements applicable to that work."
  • A statistical procedure to assess how well a model, fit using a training dataset, predicts outcomes in a holdout dataset, drawn from the same population as the training dataset.
  • Appraisals that reflect contemporary market values rather than market values at some point in the past. Currency is commonly taken to be implicit in the term market value.

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/)