AVM Glossary

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  • The formal development of a model in a statement or equation, based on data analysis and appraisal theory.
  • The 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.
  • A 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
  • Correlation 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.
  • 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.
  • 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(...)
  • A 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.
  • A 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.
  • Any 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.

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/)