AVM Glossary

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  • c

  • The required degree of confidence in a statistical test or confidence interval, commonly 90, 95, or 99 percent. A 95 percent confidence interval would mean, for example, that one can be 95 percent confident that the population measure (such as the median or mean appraisal ratio) falls in the indicated range.
  • A metric that seeks to identify how ‘close’ an estimate of value will be to the Reference Value.
  • See principle of conformity.
  • See principle of contribution.
  • The amount a component of a property contributes to the total market value. For improvements, contributory value must be distinguished from cost.
  • Part of a set of data set aside for testing the results of analysis.
  • 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.

  • d

  • Information expressed in any of a number of ways. "Data" is the general term for masses of numbers, codes, and symbols generally, and "information" is the term for meaningful data. "Data" is the plural of datum, one element of data.
  • The process of examining recorded data to ensure that each element of data is reasonable and is consistent with others recorded for the same object, such as a parcel of real estate. Data editing, which may be done by human beings or by computer, is essentially a mechanical process, distinct from verifying the correctness of the recorded information by calling or writing property owners.
  • The human (and sometimes computer) procedures employed to ensure that no information is lost through negligent handling of records from a file, that all information is properly supplemented and up-to-date, and that all information is easily accessible.
  • See assessment date.
  • The effective purchase date of an asset. From the date of acquisition, the asset must appear in the accounts and in financial statements, and depreciation, if any, must be recorded.
  • The date on which the sale is agreed. This is considered to be the date the deed, or other instrument of transfer, is signed. The date of recording can be used as a proxy if it is not unduly delayed as in a land contract.
  • The minimum loan amount for which the federal banking agencies require a real estate appraisal. In 2019, the de minimis threshold was increased to $400,000. All real estate-related transactions originated or purchased by a federally regulated lending institution where the loan amount exceeds $400,000 require a USPAP-compliant real estate appraisal performed by a state-licensed or state-certified appraiser.
  • Repairs and similar improvements that normally would have been made to a property but were not made to the property in question, thus increasing the amount of its depreciation.
  • In a fraction, the number by which another number (the numerator) is divided. For example, the denominator of 3/4 is 4.
  • A variable, such as sale price, the value of which is predicted by the values of other variables, such as location and finished living area. Such a variable may be said to depend on the other (independent) variables.
  • Loss in value of an object, relative to its replacement cost new, reproduction cost new, or original cost, whatever the cause of the loss in value. Depreciation is sometimes subdivided into three types: physical deterioration (wear and tear), functional obsolescence (suboptimal design in light of current technologies or tastes), and economic obsolescence (poor location or radically diminished demand for the product).
  • (1) The branch of the science of statistics that is concerned only with characterizing or describing a set of data (numbers). (2) By extension, the measures used to characterize a particular set of data. Compare inferential statistics.
  • See binary variable.
  • Data displayed, recorded, or stored in binary notation.
  • An image having numeric values representing tones. Each numeric value represents a different tone.
  • One of two formats of the sales comparison approach to value (the other being the Comparable Sales Method). In the direct market method, the market analyst specifies and calibrates a single model used to estimate market value directly using multiple regression analysis or another statistical algorithm.

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/)