Appraisal and assessment terms pulled directly from the guideline documents in our library — USPAP and the IAAO Glossary for Property Appraisal and Assessment — each definition cited to its source and page. When a term is defined differently by more than one source, every definition is shown, not just one.
A
Accuracy
See Statistical Accuracy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Acknowledgment
A formal declaration attesting to the validity of the declarer’s signature, usually made in the presence of an authorized public official or a notary public. It verifies the authenticity of the signature but is not a verification of the truth of the contents of the document acknowledged.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Acquisition Cost
The purchase price of an asset. The cost may reflect a used purchase price, discounts, income tax deductions, and other adjustments appropriate for financial reporting. If installation and other associated costs are included, the term “total acquisition cost” may be used.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Acquisition Date
See Date of Acquisition.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Acquisition Value
The market value of property at the time it was acquired by the present owner.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Acre
A unit of imperial or US customary land measurement equal to 43,560 square feet, 160 square rods or 10 square chains. An acre is a measure under the Weights and Measurements Act of the British Empire and the United States. A parcel of 40,000 square feet is often referred to as a Builder’s Acre.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Acreage
Land larger than one acre that refers to a large parcel of land. The term acreage can be used to indicate a large parcel of land not necessarily measured in acres. Includes farms, timberland, recreational acreage, idle land, and waste land in rural locations. Excludes vacant platted lots that lie within or adjacent to a municipality and that usually carry a lot/block system designation rather than acreage. Separately assessed timber or mineral rights are omitted from this category.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Active System
1) A mechanical system used to produce heat or cooling. In agriculture an active system can be a hydroponic system, and 2) A remote sensing system measuring electromagnetic energy (EMR).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Actual Age
The number of years that have elapsed since the completed construction of an improvement; also referred to as historical age or chronological age. See Age, Chronological Age, Economic Life, Effective Age, Remaining Economic Life and Useful Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Ad Valorem
A Latin term translating to “based on value.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Ad Valorem Tax
The amount of property taxes levied based on the value of the property, or a proportion of the property value, subject to taxation. A tax that is measured by value. Note: This term is often used to refer only to property taxes or to general property taxes, although technically it is applicable to income taxes, ad valorem tariffs, special property taxes, etc. Adaptive Estimation Procedure (AEP) — A computerized, iterative, self — referential procedure using properties for which sale prices are known to produce a model that can be used to value properties for which sale prices are not known. Also called Feedback.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Addendum
A list of material added to the end of a document or publication.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Addition
1) A term sometimes used to denote a subdivision; 2) An increase in the value of fixed assets due to the acquisition of a new property or the enlargement of an old one; and 3) For land development, an extension of an existing subdivision that is developed at a later date, sometimes referred to as addition 1, 2, 3, or Unit 1, 2, 3, etc. Compare Betterment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 11
Additive Model
A model in which the dependent variable is estimated by multiplying each independent variable by its coefficient and adding each product to the constant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Additivity
The assumption that the marginal contribution of any one independent variable is unaffected by the other variables in the model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Address
1) A location, expressed in terms of a conventional spatial reference scheme, at which a property or person may be found; 2) In a computer file, a specific juncture of circuits in computer machinery at which information is stored in the form of magnetic polarities; 3) The name a programmer uses to refer to such a juncture. Note: For a file of human — readable information, one must establish rules about whether and how to record various relevant addresses, including the situs address, owner’s address, and mortgagee’s address.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Adjacent
To be near, close, or contiguous, in the neighborhood or vicinity of, or adjoining or contiguous to.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Adjoining
For land, means “next to” or “in contact with” and excludes the idea of intervening space.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Adjustable Rate Mortgage
A mortgage with periodic adjustments to its rate of interest to reflect market conditions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Adjusted Sale Price
The sale price that results from adjustments made to the stated sale price to account for the effects of time, personal property, financing, etc. See Price.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Adjustments
Modifications in the reported value of a variable, such as sale price. For example, adjustments can be used to estimate market value in the sales comparison approach by modifica- tions for differences between comparable and subject properties. Note: Adjustments are applied to the characteristics of the comparable properties in a particular sequence that depends on the method of adjustment selected. See Assess and Assessed Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Administrative Review
An analysis of an individual property, typically requested by a property owner, of an aspect of a property tax assessment (e.g., value, exemption) performed by a quasi-ju- dicial body with the authority to adjust or modify the assessment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Adverse Land Use
A land use that decreases the value of nearby properties, usually because the adverse use is incompatible with the uses of the neighboring properties. A garbage dump near a residential neighborhood is an example of adverse land use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Adverse Possession
The method of acquiring property ownership via the open, notorious, continuous, hostile, and exclusive occupation and continuous possession of (another’s) real property under an evident claim of title or right. Various states have requirements as to the length of time of occupancy necessary to establish adverse possession and other requirements such as payment of taxes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
AEP
See Adaptive Estimation Procedure.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Aerial
Relating to the air or atmosphere, being applicable in a descriptive sense to anything in space above the ground and within the atmosphere.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Aerial Film
A specially designed roll film available in many lengths and widths to fit aerial cameras. Emulsion types include panchromatic, infrared, color, and color infrared.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 12
Aerial Mosaic
A collection of aerial photographs whose edges have been matched manually or digitally to form a continuous image across an area of interest.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Aerial Photograph
A photograph of a part of the earth’s surface taken by an aircraft, drone, or other implement using a supported camera.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Aerial Triangulation
A process used in photogrammetric mapping that establishes the math- ematical relationships among control points and adjusts them as a network of locational values.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Affidavit
A document containing a statement of facts sworn to as correct by the person signing the document. After-Tax Cash Flow (ATCF) — The amount remaining after property taxes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Age
A generic term referring to the length of time a property has existed. See Actual Age, Chronological Age, Economic Life, Effective Age, Remaining Economic Life, and Useful Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Age/Life Method
A method of estimating accrued depreciation based on allocating a uniform percentage of value loss each year over the economic life of the improvement or personal property. The age/life method measures depreciation on the accounting concept of Straight-Line depreci- ation. See Accrued Depreciation, Economic Life, and Straight-Line Depreciation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Agents of Production
The four ingredients available for the production of goods and services that satisfy human wants: 1) Land; 2) Labor; 3) Capital; and 4) Management (coordination). Maximum value is attained when the four ingredients attain the state of equilibrium. See Principle of Balance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Aggregate Mean
See Weighted Mean.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Agricultural Property
Property used in the production of crops and/or other agricultural products, such as livestock, and agricultural support buildings. See Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Agricultural Value
The value of a property that is devoted to or available for the production of crops and/or other agricultural products, livestock, and agricultural support buildings, assuming that agricultural is the highest and best use of the property, or laws dictate current use is the highest and best use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
AIA
See American Institute of Architects.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Air Rights
A right to use and occupy the space lying above a stated elevation or within certain distances above the ground surface, in conjunction with specified spaces on the surface for the support of foundations.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Alienation
The transfer of an interest in property from one person to another.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Alley Influence
1) The effect of accessibility or proximity to a side or rear alley on the value of a lot or parcel; and 2) The increment of value resulting from accessibility or proximity to a side or rear alley. Allocation by Abstraction — A method of separating a whole property value into land and improvement components. The appraiser estimates the improvement’s replacement cost new, subtracts an appropriate amount for depreciation, and subtracts the remainder from the whole property value to estimate the land value. Allocation by Ratio — A method of separating a whole property value into land and improvement components, in which the appraiser develops proportions of land and improvement values for comparable properties and applies those proportions to the subject’s whole property value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 13
Alluvion
See Accretion.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Along
“Along a line” means on and in the direction of the line. “Along the road” means along the center line or thread of the road unless qualified as, for example, “Along the east side line of the road,” “Along a line” may be changing in direction by curves or angles. Avoid “with a line” or “on a line” where “along a line” is meant. The term “along” may mean “on”; thus “along” the shore means “on” the shore and includes the shores.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Alternative Hypothesis
A hypothesis suggesting a relationship between variables. The opposite of Null Hypothesis. See Hypothesis Test and Null Hypothesis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Altitude
The distance of a location above a reference surface. The most usual surface is sea level.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
AM/FM
Automated Mapping/Facility Management, a computer-based land information system used to produce, edit, archive, and correlate automated map features with non-graphic facility-re- lated design or operation attributes. See Land Information System.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Amendment
A change altering or adding to an agreement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Amenity
A feature of real estate that enhances its use or desirability. See Real Estate. American Institute of Architects (AIA) — An organization of architects that developed a standard form of documents between owners and contractors for use where the basis of payment is a stipu- lated sum. Revenue is recognized at project completion (i.e., It contains completed contract billing throughout the project).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Amnesty Tax
An act of pardon of tax liability by a legislative body.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Amortize
The process of repaying a loan or recovering a capital investment by means of a series of scheduled payments; typically includes interest charges and principal repayment in each of the scheduled payments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Amortized Mortgage
A mortgage whereby there is a reduction of principal by constant payments toward the principal balance, plus interest payments on the declining principal balance. There are required level constant payments, including principal and interest, with each payment applying first to the accrued interest, and the remainder reducing the principal. See Mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Ancillary Data
Subsidiary data used to define the area of interest, for example, topographic, administrative, or geologic data. Ancillary data may be digitized and merged with the primary image data to facilitate analysis. See Image.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
ANN
See Neural Network.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 14
Annex
To join a smaller, subordinate property to a larger or more dominant property. Includes expanding incorporated government with additional land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Annual Debt Service
The annual amount of income necessary to pay the principal and interest on a mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Annuity
A monetary benefit received at regular intervals for a specified period.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Anticipated Use Method
A valuation method used to appraise vacant land when the expected improvements to the land are specified and the total costs are estimated.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Anticipation
See Principle of Anticipation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appellant
A person who seeks review of an initial decision of a judicial or quasi-judicial body in a higher court.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Apportionment
The process of distribution and allotment into proportional allocations. See Allocation by Abstraction and Allocation by Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal
(noun) the act or process of developing an opinion of value; an opinion of value. (adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services. Comment: An appraisal is numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or numerical benchmark (e.g., assessed value, collateral value).
USPAP (2024 Edition), The Appraisal Foundation, p. 15
The act or process of developing an opinion of value; an opinion of value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Card
A card used by an assessor or appraiser on which typically is carried a sketch or photograph of a building, a description of its location, a list of the principal factors affecting its reproduction cost and depreciation, and the calculations by which such cost and depreciation are estimated. Note: The building appraisal card is frequently combined with the land appraisal card into a single document. In such an event, the combination card may be used for a composite appraisal as well as for a summation appraisal. Also called a Property Record Card.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Date
In ad valorem taxation, the date as defined by law to estimate a property’s value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Foundation
See The Appraisal Foundation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Level
The common or overall ratio of appraised values to market values. Three concepts are usually the level required by law, the true or actual level, and the computed level based on a ratio study. See Ratio Study.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Practice
valuation services performed by an individual acting as an appraiser, including but not limited to appraisal and appraisal review. Comment: Appraisal practice is provided only by appraisers, while valuation services are provided by a variety of professionals and others. The terms appraisal and appraisal review are intentionally generic and are not mutually exclusive. For example, an opinion of value may be required as part of an appraisal review assignment.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
Valuation services performed by an individual acting as an appraiser, including but not limited to appraisal and appraisal review. Only appraisers may offer services that are considered appraisal practice. See Appraisal, Appraisal Standards Board, The Appraisal Foundation, and Uniform Standards of Professional Appraisal Practice.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Principles
The concepts evolved from economic doctrine providing the foundation for the valuation process and highest and best use. See Highest and Best Use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Ratio
1) The ratio of the appraised value to an indicator of market value; and 2) By extension, an estimated fractional relationship between the appraisals and market values of a group of properties. See Level of Appraisal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Ratio Study
A ratio study using independent — expert single — property appraisals, and/or sales based on market value as indicators of market value. See Ratio Study.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 15
Appraisal Report
Any form of communication of a completed appraisal or appraisal review. See Appraisal. Appraisal - Sale Price Ratio — The ratio of the appraised value to the sale price, or adjusted sale price, of a property; a simple indication of appraisal accuracy. See Adjusted Sale Price, Appraised Value, and Ratio Study.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Appraisal Review
(noun) the act or process of developing an opinion about the quality of another appraiser's work (i.e., a report, part of a report, a workfile, or some combination of these), that was performed as part of an appraisal or appraisal review assignment; (adjective) of or pertaining to an opinion about the quality of another appraiser's work that was performed as part of an appraisal or appraisal review assignment.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
Appraisal Standards Board
The independent board of The Appraisal Foundation that develops, interprets, and amends the uniform standards of professional appraisal practice (USPAP).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Appraise
To make an estimate of value for property. See Market Value and Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Appraised Value
The estimate of the value of a property. See Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Appraiser
one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective. Comment: Such expectation occurs when individuals, either by choice or by requirement placed upon them or upon the service they provide by law, regulation, or agreement with the client or intended users, represent that they comply.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
The professionally skilled individual who estimates the monetary value of property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Appraiser Licensing and Certification
A procedure whereby appraisers gain permission from the United States, state, and territorial licensing agencies to practice without supervision by demonstrating appropriate (pre — licensing) experience and education skills and by agreeing to maintain and improve their skills and to conduct themselves in accordance with professional standards set by either The Appraisal Foundation’s Appraisal Standards Board or an appraisal organization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Appraiser Qualifications Board
The independent division of The Appraisal Foundation that establishes education, experience, and other criteria for licensing, certification, and reclassifi- cation of qualified appraisers. See Appraiser.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Appraiser's Peers
other appraisers who have expertise and competency in a similar type of assignment.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
Appreciation
Increase in value of a property, in terms of money, from causes other than addi- tions and betterments. Contrast Depreciation. See Addition and Betterment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Appurtenance
Real or personal property improvements that when attached or affixed become part of the real or personal property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Arbitrary Map
An office subdivision or map made by a title company, assessor, or others for their own convenience in locating property in an area in which all the descriptions are by metes and bounds. On this subdivision, the lots are given arbitrary numbers. See Assessing Officer, Metes and Bounds, and Subdivision.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Arithmetic Mean
See Mean. Arm’s-Length Transaction — A sale between a willing buyer and a willing seller that are unrelated parties, each of whom is reasonably knowledgeable about market conditions and under no undue pressure to buy or sell.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 16
Array
An ordered arrangement of data, such as a listing of sales ratios, in order of magnitude.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assemblage
The joining of parcels of land that are not necessarily contiguous resulting in an increase or decrease in value, but when they are contiguous and increase value, they may be considered plottage. See Parcel and Plottage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assembly Value
The increase of the value of a large parcel of land formed from a number of smaller parcels over the sum of the values of the unassembled parcels. See Assemblage and Parcel.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assess
Determining the value of property for ad valorem taxation. See Ad Valorem Tax and Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessed Value
The value placed on property subject to taxation at market value or some legally authorized fraction thereof. See Assess, Market Value, and Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessing Officer
Any property tax official with professional responsibilities.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment
See Assessed Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment Administration
Management and oversight of all aspects of ad valorem taxation. See Ad Valorem Tax and Assess. Assessment Administration Specialist (AAS) — A professional designation conferred by the International Association of Assessing Officers (IAAO) recognizing professionalism and compe- tency in administration of a variety of functions for property tax purposes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment Appeal
See Administrative Review and Assess.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment Base
The total of all the individual assessed values within a geographic area referred to as the tax base. See Assessed Value and Tax Base.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment Date
See Appraisal Date.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment District
See Assessment Jurisdiction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment Equity
The degree to which assessments bear a consistent relationship to market value. Relates to the fair and equitable treatment of individual properties. Requires that properties be appraised equitably with groups or categories (use classes, neighborhoods), and that each of these groups be appraised at the same level, or ratio, of market value. See Appraisal Ratio, Assess, Class, Equity, Level of Appraisal, Market Value, and Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Jurisdiction
The geographic area for the assessment of property for taxation. Generally consistent with the political boundaries of a state, county, city, or township. See Assess and Jurisdiction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Laws
Laws that require or permit assessors to appraise and assess property as though the property were subject to an enforceable restriction that forbade putting the land (or the entire property) to any use but the present one. Typically, there is no such permanent enforceable restriction, but assessors may nevertheless be required to assess certain property types, especially agricultural land, and to a lesser extent historic property, as though the restriction were real. In such instances, the sales comparison approach may be inapplicable, and a version of the income approach may be required. See Value-in-Use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
Assessment Level
The relationship between the assessed value of property and its market value, often expressed as a percentage. See Assess, Level of Assessment, Market Value, and Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Map
See Assess, Cadastral Map, and Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Progressivity
See Price-related Differential (PRD).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Ratio
See Appraisal Ratio and Appraisal Ratio Study.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Ratio Study
See Appraisal Ratio and Appraisal Ratio Study
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Regressivity
See Price-related Differential (PRD)..
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Review
See Administrative Review.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Review Board
A quasi-judicial panel that hears matters related to property assessment and property classification. Also known as the Board of Assessment Appeals, Valuation Adjustment Board, Board of Equalization, and Appraisal Review Board, and similar. See Administrative Review and Classification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment Roll
The basis on which property tax levies are allocated among assessable property within a taxing jurisdiction. A public record of the assessed value of every property in a taxing juris- diction. Often includes a parcel identification number (account number), name of owner of record, location address, mailing address, assessed value of land, assessed value of building, assessed value of other real property improvements, assessed value of personal property, and exemption codes. May be referred to as List, Grand List, Abstract, or other titles.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Assessment, Area-Based
One of a small number of non-market assessment valuation standards. A property is placed on the tax roll at a value reflecting the land area or the surface area (floor area) of an improvement. See Assess, Floor Area of Building, Improvements, Tax Roll,and Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment, Original
The official act of the assessing officer to discover, list, and value property for the purpose of ad valorem taxation for preparation of the assessment roll. See Ad Valorem, Assess, Discovery, Listing, and Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessment, Penalty
A charge, levy, tax, or fee added to the original amount of tax due. Typically, a sanction for failure to comply with specified legal requirements. See Property Tax Levy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 17
Assessor
See Assessing Officer.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Asset
Any item (tangible or intangible) having value to its owner; a source of wealth. For accounting purposes, it is expressed in terms of its cost, depreciated cost (net book value), or basis. May be capitalized to a balance sheet or expensed on an income statement when acquired. See Acquisition, Balance Sheet, Capitalization, Cost, Depreciated Reproduction Cost, Expense, Income Statement, Intangible Personal Property, Personal Property, and Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Asset, Current
An asset that is expected to be sold, exchanged, consumed, or disposed of in generally less than one year. Unrestricted cash or other assets held for conversion within a rela- tively short period into cash or other similar assets or useful goods or services. Usually, the period is one year or less, but for some items, such as accounts receivable in installments, the period may be longer by contract.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 18
Asset, Fixed
A property having an economic life greater than one year. Does not typically include current assets or inventory. Includes both real and personal property items. Fixed Assets is not synonymous with personal property. See Asset, Current; Economic Life; Personal Property; Property; and Real Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Assign
To transfer property or a specified interest in property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Assignment
a valuation service that is provided by an appraiser as a consequence of an agreement with a client.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
The transfer of any personal or real property or any rights in a property by, for example, a deed, lease, or mortgage. See Deed, Lease, Mortgage, Personal Property, and Real Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Assignment Conditions
Assumptions, extraordinary assumptions, hypothetical conditions, laws and regulations, jurisdictional exceptions, and other conditions that affect the scope of work.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
Assignment Results
An appraiser's opinions or conclusions, not limited to value, that were developed when performing an appraisal assignment, an appraisal review assignment, or a valuation service other than as an appraisal or appraisal review. Comment: Physical characteristics are not assignment results.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
Assume Plane Coordinates
A local plane coordinate system set up at the convenience of the user.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Assumption Fee
A lender’s fee for processing records when a new buyer assumes an existing loan.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Assumption of Mortgage
The conveyance of the remaining balance of an existing debt to the purchaser of a financed property. An assumption of a mortgage is an agreement in which the buyer accepts liability for repayment of an existing debt. Unless the seller is released, he or she remains liable for the payment of such debt.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
At
The place or location of an object not treated as definitively locative. It denotes nearness or proximity. A boundary of land described as “at” a road, without qualifying terms means “to the center of the road.” “To,” “on,” “at,” and “by” a stream, unqualified, means to the limit of private ownership.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
ATCF
See After-Tax Cash Flow.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Attachment
Property seizure by a court order.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Attestation Clause
The witness clause in a document that affirms the document is properly executed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Attribute
Characteristic of a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Auction
A method of marketing and selling property whereby participants bid on the property. See Absolute Auction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Audit
A systematic set of procedures used by an auditor to validate information provided by the property owner or to validate an estimated assessment. Often used in assessment administration to validate personal property assessments. An audit may be informal or a formal book audit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Audit Program
A systematic set of procedures used by an auditor as part of an ongoing activity to validate information received by a property owner or to validate an estimated assessment. Often assessing jurisdictions develop an audit program for personal property assessments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Audit Trail
A method of documenting all changes made to a set of books and records of the property owner by the auditor, leading to the final modified records on which assessments are based. An audit trail is generally used by personal property auditors to record all changes from accounting records to a personal property rendition (statement). Automated Valuation Model (AVM) — A mathematically-based model combined with databases of existing properties and transactions to calculate real estate values. AVM’s include proprietary algorithms, usually both a regression based model and repeat sales index, which are weighted and analyzed to generate a single-point value estimate. Accurate value estimates require high-quality data representative of the specific properties for which values are estimated.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 19
Auto-Mosaicking
Producing a single image from multiple overlapping images.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Average
The arithmetic mean. The central value of a numerical data set expressed as the sum of the values divided by the number of values in the data set.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Average Absolute Deviation
The arithmetic mean of the absolute deviations of a set of numbers from a measure of central tendency, such as the median. The average deviation of the numbers 4, 6, and 10 about their median (6) is (2 + 0 + 4) ÷ 3 = 2. The average deviation is used in computing the coefficient of dispersion (COD).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Average Tax Rate
Total taxes paid divided by the total base.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Average Total Cost
The total cost to produce something divided by the number of units produced.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
AVM
See Automated Valuation Model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Avulsion
The sudden and perceptible tearing away or separation of land by violent action of water.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Azimuth
A direction measured clockwise from a given meridian. B
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
B
Bailment
A transaction in which personal property is delivered by its owner (the bailor) to a second party (the bailee) into whose possession it is put for safekeeping or for some other temporary purpose or use with no intention that the title shall pass to the second party.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Balance
See Principle of Balance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Balance Sheet
An accounting financial statement that reflects a company’s assets, liabilities, and equity as of a specific date. Assets are equal to liabilities and equity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Balloon Mortgage
A mortgage not fully amortized at maturity and requiring a final lump sum payment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Band-of-Investment Analysis
A perspective on (and a technique for estimating) the discount rate. The discount rate is viewed as having two components, each weighted in proportion to typical financing terms for properties of the type in question. For example, if 75 percent loans are available at 9 percent interest and investors are known to seek a 14 percent return on equity, then the discount rate is 10.25 percent, that is, (0.75 + 0.09 = 0.0675) + (0.25 + 0.14 = 0.0350) = 0.1025 = 10.25 percent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 20
Base Map
See Map, Base.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Base-Lot Method
A method of appraising land parcels whereby each parcel to be appraised (base lot), and differences between the two in terms of location, size, shape, topography, and the like are analyzed by the appraiser in estimating the value of the lot to be appraised.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Baseline
A survey line running due east and west through the initial point of a principal meridian, from which township lines are established by the government survey.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Batture
A term used to denote a bed of sand, stone, or rock rising toward the surface of a body of water.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Bearing
Direction of a line measured as the acute angle from a reference meridian; usually expressed in the form “N 30° W” or “S 87° E.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Bearing Wall
A wall that supports a portion of a structure. Also called load bearing wall as it bears the weight load of the roof to foundation. Before-Tax Cash Flow (PTCF) — The amount remaining before property taxes. Often referred to a Pre-Tax Cash Flow.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Being
A portion of a deed that denotes a secondary call: “to the northeast corner of Brown’s land, being also a 2-inch iron pipe.” See Passing Call.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Benchmark
1) A term used in land surveying to mean a known point of reference; 2) In property appraisal, a property of known value and of known effective age and replacement cost; and 3) By extension, a model property to be used in determining by comparison the grade or quality class of other properties.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Beneficial Interests
The property interests resulting from equitable ownership in a property rather than legal ownership; for example, the interests of the beneficiary of a trust.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Beneficiary
1) The person for whose benefit property is held in trust; 2) The person to whom the proceeds of an insurance policy are payable upon the happening of the event insured against or the non-happening of the insured event.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Berm
A mound of earth that diverts or controls surface drainage flow, marks property bound- aries, or alters topography.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Beta Coefficients
Standardized regression coefficients that measure the relative importance of the independent variables in explaining or predicting the dependent variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Betterment
An expenditure on a fixed asset that increases its market value and extends the property’s economic life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Betterment Tax
See Special Assessment Area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Bias
a preference or inclination that precludes an appraiser's impartiality, independence, or objectivity in an assignment.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
The tendency of a statistic to overestimate or underestimate a parameter. Statistics describe a sample. A parameter describes an entire population.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Bill and Hold Goods
A type of inventory that has been invoiced but not shipped from the seller to the buyer.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 21
Binary Variable
Qualitative data items that have only two possibilities. Yes or No (for example, corner location) where 1=Yes, and 0=No. Also called Dichotomous Variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Blanket Mortgage
A mortgage covering more than one property; used in, for example, subdi- vision development and cooperative apartment ownership.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Blended Model
A model where more than one modeling technique is used in deriving the estimate of value. Typically, the technique involves running a hedonic model and a repeat sales index. The results are then compared and evaluated. Based on each result, the blended model reports a final estimate of value. In addition to the hedonic model and repeat sales index, many blended models also include the results of a tax-assessed value model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Block
A block is a square or portion of a city enclosed by streets, whether it is occupied by buildings or composed of vacant lots. In addition, blocks are often enclosed by the boundary of the subdivision.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Block Grants
Grants that are designated for a broad set of uses, such as economic development. They are not as restrictive as categorical grants with broader goals, more discretion, and fewer administrative requirements. However, block grants are not as flexible as revenue sharing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Blueprint
A detailed plan for the construction of physical components for improvements or personal property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Bonds
Certificates of ownership of specified portions of a debt due to be paid by a government or corporation to the holder(s), usually with a fixed rate of interest.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Book Audit
A detailed audit that entails comparing the cost of the assets as reported on the listing or declaration to the historical costs of the assets.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Book Value
See Net Book Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Boot
Money or an asset added to a trade in order to make it reflect the fair market value of the asset being traded.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Bootstrapping
Sampling with replacement from observed data to estimate the variability in a statistic of interest. A related form of resampling. Reasons for using a bootstrap approach include when there is no assumption concerning the distribution of the data, and that it can assess the variability of virtually any statistic.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Boundaries
The physical and/or man-made lines that define a parcel, subdivision, neigh- borhood, or district.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Bounds
The lines by which different parcels of land are divided. “Butts and bounds” or “butted and bounded” are phrases sometimes used to introduce the boundaries of land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Box Plot
A graphic representation of the distribution of a continuous variable with a qualitative variable (or quantitative variable with limited data values). They are excellent for revealing outliers and extremes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 22
Bracketing
A qualitative appraisal technique that compares properties similar to a subject property by ranking them either as superior or inferior to the subject. There are no explicit lump-sum dollar or percentage adjustments. The value of subject property is estimated by its relative position in the array of comparable sales between the next highest and next lowest comparable sale. British Thermal Unit (BTU) — A unit of heat required to raise one pound of water one degree Fahrenheit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Brownfield
A site whose use and value is affected by contamination or the potential of contamination.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
BTU
See British Thermal Unit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Budget
A formal written statement of the financial plan for an organization that details how resources will be used to accomplish an organization’s established goals and objectives.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Build-up Method
A method that yields an overall capitalization rate from two components. The building capitalization rate and the land capitalization rate are weighted by the percentage of property value each represents and then added together to yield an overall rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Buildable Unit
A unit of comparison used when the market indicates that a site is sold on a unit basis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Building Capitalization Rate
The sum of the recapture and return rates on an income-pro- ducing property. The rate applies only to the improved portion of a property. The ratio of building or improvement income to building or improvement value. It can be used to convert a single year’s building or improvement income into a building value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Building Classification Schedule
A table giving standard specifications of a number of different typical buildings, classified according to use (such as one-family dwelling or office building), type of construction (such as wood frame or steel frame), exterior wall materials (such as brick or stone), and other factors affecting reproduction cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Building Residual Technique
A capitalization technique used when land value is known and residual income to the building or improvement is capitalized to obtain the building or improvement value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Bundle of Rights
The six basic rights associated with the private ownership of property. They are; 1) The right to sell. 2) The right to lease or rent, 3) The right to use, 4) The right to give away, 5) The right to enter or leave (real property), and 6) The right to refuse to do any of these. Four rights removed from the bundle of rights in favor of government control are: 1) Taxation, 2) Eminent domain, 3) Police power, and 4) Escheat.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Buoyancy
The ability of tax yields to rise and fall with the economy and with revenue needs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Business Assets
Tangible and intangible resources that are employed by a business enterprise in its operation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Business Enterprise
an entity pursuing an economic activity.
USPAP (2024 Edition), The Appraisal Foundation, p. 15
A commercial, industrial, or service organization pursuing an economic activity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 23
Business Enterprise Value
A term applied to the concept of an intangible, non-realty component of a property’s value probably ascribable to supramarginal management competence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
Business Equity
the interests, benefits, and rights inherent in the ownership of a business enterprise or a part thereof in any form (including, but not necessarily limited to, capital stock, partnership interests, cooperatives, sole proprietorships, options, and warrants).
USPAP (2024 Edition), The Appraisal Foundation, p. 16
The value of assets after deducting liabilities. The interests, benefits, and rights inherent in business ownership.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
Business Premises
One type of situs that represents the more or less permanent location of personal property that is highly mobile in nature.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
But
“That which follows is an exception to that which has gone before” is the common meaning of “but” in a sentence. May mean “except,” “except that,” “on the contrary,” or “yet.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
Buttal
Mans along the ends of the land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
Buyer
1) One who purchases property; and 2) In real property sales, the grantee to whom property is transferred by deed or to whom property rights are granted by a trust instrument or other document.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
By
In a deed, “by a read” is construed as including the land to the center of the street, but “by the east side of a road” means “along with east side” and not “along the center line. “To,” “on,” or “by” a stream means to the limits of the grantor’s land. C
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
C
CAD
Computer Aided Drafting, a process for interactively creating, modifying, and manipu- lating geometric information. See Computer Aided Design.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
Cadastral Genealogy
A graphic depiction of the lineage or history of parcel.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
Cadastral Map
A scale map displaying property ownership boundaries and showing the dimen- sions of each parcel with related information such as parcel identifier, survey lines, and easements. Annotations on recent sale prices and land value are sometimes added. Cadastral Mapping Specialist (CMS) — A professional designation conferred by the International Association of Assessing Officers (IAAO) recognizing professionalism and competency in cadastral mapping techniques that support property valuation for tax purposes, property tax administration, and property tax policy. Cadastre (or Cadaster) — A term commonly used in Europe to denote an official register or inventory of all lands and/or buildings, giving the area, location, owner, and either the value or estimated gross or net yield of each. This list remains substantially unchanged for a number of years, except for names of owners, and serves more or less the same purpose as an assessment roll in the United States. An official register of quantity, value, and ownership of real estate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
CAE
See Certified Assessment Evaluator.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
Calibration
The process of estimating the coefficients in a mass appraisal model. Model cali- bration is the development of the adjustments or coefficients through market analysis of the vari- ables to be used in a mass appraisal model. Source: AVM Standard. See Mass Appraisal Model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 24
Call
Within a deed, the designation of visible natural objects, monuments, courses, distances, or other matter of description as limits of the boundaries. Locative calls are particular or specific calls exactly locating a point or line. Descriptive calls are general or directory calls that merely direct attention to the neighborhood in which the specific calls are to be found.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
CAMA
See Computer-Assisted Mass Appraisal. Canadian Mortgage and Housing Corporation (CMHC) — A Canadian crown corporation. Its mandate is to assist in housing for Canadians.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Canvass
Also called a “field canvass.” The practice of collecting the data needed in assessment operations by systematically going from property to property coding the specified information.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capital
Financial assets used as a source of financing for all business types. In accounting, the capital account is the net worth of a business at a specific point in time. It is the difference between capitalized assets and liabilities. May also be referred to as Owner’s Equity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capital Assets
All property generally having an economic life of greater than one year. Includes all property, whether movable or affixed, tangible, or intangible. Examples include land, buildings, plants and machinery, vehicles, furniture and fixtures, and goodwill.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capital Expenditure
Cash investments to acquire or improve an asset that will have a life of more than one year, as distinguished from cash outflows for expense items normally considered part of the current operations.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capital Gain
The profit realized through the sale of a property if the sale price of that property exceeds the cost of acquisition and of any improvements the seller has added.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capital Improvements
Improvements that include additions to the property made at any time.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capital Market
The interaction of buyers and sellers as they buy and sell long-term financial instruments, such as mortgages, bonds, and stock.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capital Structure
1) The manner in which a firm is financed, that is, the amount and kind of equity and debt that satisfies the need for funds; and 2) The financing mix of debt and equity. Note: Capital structure may be based on book values or market values.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capital Value
Current market value of immovable property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capitalization
1) Any rate used to convert an estimate of income to an estimate of market value; the ratio of net operating income to market value, and, 2) For the assessment of personal property and generally accepted accounting principles (GAAP), capitalization refers to the cost of an asset that is placed in the asset category of a balance sheet, rather than as an expense on an income statement. See Balance Sheet, Direct Capitalization, Income Approach, Income Capitalization, Income Statement and Yield Capitalization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capitalization of Ground Rent
Method of estimating land value in the absence of comparable sales. Applicable where there is an income stream; for example, to farmland and commercial land leased on a net basis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capitalization of Income
See Income Capitalization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 25
Capitalization Rate
The annual net operating income of a property divided by its value expressed as a percentage. It converts the estimated net operating income of a property to an estimate of market value. A capitalization rate is composed of: 1) A rate of return on the investment (interest); 2) A rate of return of the investment (recapture); and 3) Effective tax rate. For ad valorem assessments, the inclusion of the effective tax rate in the capitalization rate is referred to as a loaded cap rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Capitalized Cost
An accounting term expressing the total consideration expended necessary to acquire asset(s) and may include invoice cost, trade-in allowances, sales tax, freight, installation, and construction period interest.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Capitalized Leased Property
Property, which is intended for purchase by the lessee, subject to the requirements of a lease agreement. Considered as an asset by the lessee within the financial statements of the individual or organization. Often considered installment-sales agreements under the provisions of generally accepted accounting principles (GAAP).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Capitalized Value
The value of a property estimated by the income approach to value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Cardinal Direction
Direction is either due north, south, east, or west.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Cash Discount
A reduction in the billed amount to the purchaser if payment is made within a specified period of time or if the purchaser meets the provisions of the discount offered by the seller.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Cash Flow
See After-Tax Cash Flow and Before-Tax Cash Flow.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Cash-Equivalent Sale Price
The price paid in cash that reflects the fair market value of an asset after consideration of any favorable or unfavorable terms.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Categorical Grants
Grants that are designated for a particular use, such as development of municipal parks.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Categorical Variable
A categorical variable (sometimes called a nominal variable) has two or more categories, but there is no intrinsic ordering to the categories. For example, exterior wall type is a categorical variable having a number of categories (wood, brick, stucco, and composite) with no inherent order from highest to lowest. A categorical variable simply allows for the assignment to specific categories without any clear order.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Caveat Emptor
A Latin phrase meaning, “Let the buyer beware.” A common maxim stating that the buyer purchases at his or her own risk.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Center Line
Usually applies to the center of a street prior to widening or closing, i.e., the center line of the original street midway between the sides. To avoid ambiguous conditions, if the street has been narrowed or widened on one side or unequally, the center line should be defined.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Central Meridian
The central line of longitude used as the basis for the construction of many map projections. An example would be the meridian at the center of each universal transverse Mercator zone, which is numbered 500,000 meters and used as the reference for east-west measurements within the zone.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Central Tendency
See Measure of Central Tendency.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 26
Centralized Assessment
An assessment placed on property by an assessing officer whose juris- diction extends over two or more local assessment districts. Often utilized by state agencies for public utilities, aircraft, etc. Commonly referred to as State Assessed Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
CERCLA
See Comprehensive Environmental Response Compensation and Liability Act.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Certificate of Redemption
The evidence of buying back or redeeming a property by the owner after loss through a judicial sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Certificate of Sale
A certificate issued to the buyer at a judicial sale that entitles the buyer to a deed upon confirmation of the sale by the court.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Certificate of Title
A document typically issued by the government or a title company that states that the title to the property is believed to be clear or lists various encumbrances the property is subject to. Certified Assessment Evaluator (CAE) — A professional designation conferred by the International Association of Assessing Officers (IAAO) recognizing professionalism and competency in a wide range of matters covering property valuation for tax purposes, property tax administration, and property tax policy. Certified Public Accountant (CPA) — Accountants who, having met the statutory requirements of a state and having been registered or licensed to practice public accounting, are permitted by the state to call themselves certified public accountants and use the initials CPA after their names. Certiorari, Writ of — An order issued by a superior judicial or quasi-judicial body requiring an inferior judicial or quasi-judicial body to certify to the superior body the records of a case for judicial review.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Chain
A land measure of 66 feet, four rods, or 100 links.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Chain of Title
See Abstract of Title.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Change Principle
See Principle of Change.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Charges
Non-tax revenue from fees and reimbursements for current services used in the devel- opment of a nominal tax rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Chart
A planning tool that provides for simultaneous sequencing and scheduling.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Chart of Accounts
A complete list of every accounting category contained within the general ledger of the financial reporting documents of an entity. Often includes the account name and a numeric reference.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Chattel
A term that is synonymous with tangible personal property. See Personal Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Chattel Mortgage
A mortgage in which the security consists of tangible personal property. Note: A chattel mortgage usually takes the form of a bill of sale drawn in favor of the mortgagee with a clause defeating the transfer during compliance by the mortgagor with specified conditions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Chi-Square
A nonparametric test of statistical significance for categorical variables.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Chord
A straight line connecting the tangents of a curve.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 27
Chronological Age
The age of an item as measured from when the item was new to a spec- ified date. Often referred to as Historical Age. See Age, Economic Life, Effective Age, Remaining Economic Life, and Useful Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Circuit Breaker
A credit or rebate of specified amounts of property taxes incurred whenever such taxes exceed specified percentages or amounts of household income. In instances where renters are included, rent or rent equivalents substitute for property taxes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Class
A set of items defined by common characteristics; 1) In property taxation, property classes such as residential, commercial, agricultural, industrial, and personal property may be defined; 2) In assessment, building classification systems based on type of building design, quality of construction, or structural type are common; 3) Class use may be subject to regulation and/or law; 4) May have differing tax classes and tax (millage) rates.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Classification
The process of grouping items with common characteristics. See Class.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Classified Property Tax System
A system with either different statutory assessment levels or different tax mill rates for discrete property classes typically based on property use. Claw back — A provision in a property tax relief measure designed to recover some or all of the taxes forgone when it is found that the property or the taxpayer is not or never was qualified for the relief.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Client
the party or parties (i.e., individual, group, or entity) who engage an appraiser by employment or contract in a specific assignment, whether directly or through an agent.
USPAP (2024 Edition), The Appraisal Foundation, p. 16
Any party for whom a fee appraiser performs a service.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Closing
The act of finalizing a real estate transaction that executes and delivers mortgage or property title documents.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Closing Costs
Settlement fees and expenses incurred in transferring property ownership that are paid at the real estate closing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Closing Statement
A listing of incurred closing costs of the buyer and seller in closing a real estate transaction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Cloud on Title
Any claim, encumbrance, or lien that may impair the title to real property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
CMHC
See Canadian Mortgage and Housing Corporation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
CMS
See Cadastral Mapping Specialist.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
COD
See Coefficient of Dispersion.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
CODw
See Weighted Coefficient of Dispersion.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Coefficient of Concentration
The percentage of observations within a given percentage of the median. Typically used in assessment ratio studies. A high coefficient of concentration for low percentages, say 15 percent, indicates high performance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Coefficient of Correlation
See Correlation Coefficient. Coefficient of Determination (R2) — The proportion of the variation in the dependent variable accounted for by the variation in the independent variables. R2 varies between zero (no linear relationship) and one (perfect linear relationship). Coefficient of Dispersion (COD) — Expresses as a percentage the average deviation of the ratios from the median. The COD is used throughout the property assessment field as a measure of appraisal uniformity. Coefficient of Price-Related Bias (PRB) — Indicates the percentage by which assessment ratios change whenever values are doubled or halved. For example, a PRB of −0.03 means assessment levels decrease by 3 percent when value doubles. The PRB should range between −0.05 and +0.05. PRBs outside the range of −0.10 to +0.10 are considered unacceptable. Coefficient of Variation (COV) — A measure of relative variability. It is the ratio of the standard deviation to the mean. The COV is particularly useful when comparing results from two groups. For example, in an assessment ratio study, when comparing jurisdictions with widely varying levels of assessment, the COV provides a common basis for reviewing the relative level of assessment equity among the different jurisdictions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 28
Coincidence Line
See Line, Coincidence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 29
Collection Loss
Nonpayment of rent. Also known as Credit Loss. See Vacancy and Collection Loss.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 29
Color of Title
An appearance or claim of legal ownership that arises from a document.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 29
Commercial Paper
Short-term promise to pay issued by a corporation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 29
Commercial Property
Generally any non-industrial, non-single family residential real or personal property used in conjunction with a commercial enterprise. Includes real and personal property used as retail stores, convenience stores, restaurants, bars, supermarkets, discount stores, offices, medical offices, banking institutions, theaters, auto service establishments, hotels/motels, hospitals, etc.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 29
Common Area
The total area within a property that is not designed for rental or sale and is available for common use by all tenants and owners. Also known as Common Elements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 29
Common Equity
On the books of a corporation, the amount of common stock, plus premium on common stock, plus retained earnings, less reacquired common stock, less common stock expense, plus any additional paid-in capital associated with common stock. The equity interest in a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 29
Comparable Sales
In the appraisal profession often referred to as “comparables” or “comps.” Recently sold properties with similar value influencing attributes compared with the subject, i.e., the property being appraised.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 29
Comparative Unit Method
Estimates the replacement cost new of a property by using a cost per unit of comparison such as per linear foot, per square feet, per cubic feet, or for personal property, per production rate. An appraisal technique that totals direct and indirect costs and divides that sum by the appropriate unit of comparison. The result can then be applied to similar properties to estimate market value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Competition
See Principle of Competition.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Compilation
1) In cartography, the production of a new or revised map from an existing map, aerial photograph, survey, or other source material; and 2) In photogrammetry, the production of a map, chart, or portion thereof from aerial photographs and geodetic control data by means of photogrammetric instruments. Also called Stereo-Compilation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Composite Rate
An overall rate of blended or weighted averages of various rates of return expected for a single investment as represented by R in the Ellwood formula. See Mortgage-Equity Analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Compound Interest Table
A graphic presentation that specifies an interest rate and a compounding period and gives six functions of a dollar at various yearly or monthly intervals: 1) The future worth of $1 after one interval; 2) The future worth of the $1 deposited at the beginning of each interval; 3) The sinking-fund factor; 4) The present worth factor; 5) The present worth of $1 per interval; and 6) The amount to amortize. Comprehensive Environmental Response Compensation and Liability Act (CERCLA) — A federal environmental program administered by the Environmental Protection Agency (EPA). Computer-Aided Design (CAD) — A process for interactively creating, modifying, and manipu- lating geometric information. Computer-Assisted Mass Appraisal (CAMA) — A software package used by governmental agencies and assessing offices to establish real and personal property valuations for property tax purposes. It is composed of several applications that systemically value property. Often includes statistical analysis such as multiple regression analysis to assist the appraiser in determining the value of property for property taxation purposes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Concave
The inside of a curve; toward the center of the circle.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Concession
A benefit granted by a lessor or seller as an inducement to lease or purchase.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Condemnation
1) The exercise of the right of eminent domain to secure legal title to private property required for a public use; and 2) A declaration by a constituted authority to the effect that a structure is unfit for occupancy or dangerous to persons or other property, often accompanied by exercise of the police power to limit or prohibit occupancy or to require demolition of the structure. Note: The term “expropriation” is also used to convey the first of these meanings.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Condition
A qualitative measure of the overall desirability of a property’s physical improvements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 30
Conditional Sale
A sale, especially of chattels, in which the transfer of title is made to depend on the performance of a condition subsequent to the making of the sales contract and delivery of goods. Note: The most common condition is that the remainder of the purchase price be paid. Property held under a conditional sales contract may be repossessed without foreclosure proceeding, and the former holder has no equity of redemption.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Conditions
Restrictions created by a qualification by the grantor of a deed, upon breach of which the estate is defeated and reverts to the grantor (or heirs).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Condominium
A real property ownership concept in which one can own an undivided interest in a portion of the real property (typically called a unit) and own a shared interest with other unit owners in the public areas of the real property (the common elements).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Condominium Unit
The portion of real property owned individually in a condominium ownership concept (as opposed to the common elements in which ownership is shared with other unit owners).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Confidence Interval
A range of values calculated from the sample observations that are believed, with a particular probability, to contain the true population parameter (mean, median, COD). The confidence interval is not a measure of precision for the sample statistic or point estimate, but a measure of the precision of the sampling process.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Confidence Level
Indicates the probability with which the estimation of the location of a statis- tical parameter (for example, arithmetic mean) in a sample survey is also true for the larger popu- lation from which the sample is derived.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Confidence Score
The automated valuation model (AVM) confidence score is a value that indi- cates the level to which each of multiple AVM models “agrees” with the other estimated values for a given property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Consideration
The amount of money and other valuable goods or services on which a buyer and a seller agree to consummate a sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Consigned Goods
A type of inventory that is in the possession of a selling agent but owned by another party. The agent has no equity interest in the inventory. The selling agent is often compen- sated in the form of a sales commission paid by the owner of the inventory.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Consignment
1) A shipment of goods from one person (the consigner) to another (the consignee); and 2) (preferred) A bailment contract whereby one party (the consigner) places his or her goods in the possession of a second party (the consignee or factor) for the purpose of sale by the second party.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Consistent Use
See Principle of Consistent Use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Consolidation
See Assemblage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Constrained Variable
A variable with a value set to either a specific number or constrained to fall between a lower and upper bound. Typically used in valuation modeling techniques such as multiple regression.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 31
Construction Cost
The sum of direct costs of materials and labor plus contractors’ indirect costs to construct an improvement of real or personal property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Construction in Progress
1) Real property that is not complete; 2) Personal property not fully installed and in the process of going from inventory to fixed asset by installation, or the conversion of personal property realty by becoming a fixture; and 3) Personal property that has been acquired but not yet installed as of the date of valuation. Also known as Construction Work in Progress.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Construction Loan Mortgage
A short-term loan made for the purpose of financing new construction. Usually, the land is initial collateral for the loan, and provisions are specified in the mortgage for disbursing funds as the project develops. Improvements on land provide additional security for the lender as the loan amount increases.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Contiguous
Sharing a property boundary.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Contingent Fee
A fee determined by the results of the services to be performed or by other future events.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Continuous Data
Data that can take any value between two numbers, no matter how small. There are an infinite number of values regardless of scale. See Discrete Data.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Continuous Variable
A variable for which it is conceivable that, given any two observed values, a value lying between them may occur. For example, temperature and finished living area are continuous variables; quality class and number of fireplaces are not. See Binary Variable and Discrete Variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Contour Line
An imaginary line on the ground, all points of which are at the same elevation above or below a specified reference surface.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Contour Map
A topographic map that portrays relief by means of contour lines.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Contract for Deed
An agreement for the sale of a property in which the seller retains title until the buyer completes the contracted payments for the property. The agreement may be recorded; however, the conveyance of the property is not complete until all contractual obligations are fulfilled, at which time the deed for transfer of ownership may be recorded.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Contract Rent
The actual amount of rent that is specified in the lease.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Contribution
See Principle of Contribution.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Contributory Value
The amount a component of a property contributes to the total market value of the property. See Principle of Contribution.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Control-Ground and Geodetic
A system of points that are used as fixed references of position (horizontal) or elevation (vertical) or both. Ground control points are obtained from ground surveys. These points can be used to rectify the accuracy of cartographic products to the actual area on the ground that is represented. Geodetic control takes the size and shape of the earth into consideration. See Aerial Triangulation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Convex
The outside of a curve.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 32
Conveyances
Legal documents that transfer ownership or rights (interests) of property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Cooperative
A business entity, usually a corporation, that holds title to realty and that grants rights of occupancy to its shareholders by means of proprietary leases or similar devices.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Coordinates
Linear or angular quantities that designate the position of a point in a given reference system.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Copyright
The exclusive right granted by a government for a limited period to an author, composer, designer, or such, or his or her heirs, legatees, or assigns, to reproduce, publish, and sell copies of an original literary or artistic work.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Corner
In land surveying, a point on a land boundary at which two or more boundary lines meet.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Corner Influence
1) The effect of location at, or proximity to, the intersection of two streets upon the value of a lot or parcel; and 2) The increment of value resulting from such location or proximity. Found most often in commercial properties because of greater ease of entry and exit, accessibility to higher volume of traffic, and increased show-window and advertising space.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Corporation
A legal entity (business organization form) operating under a grant of authority from a state in the form of a charter and articles of incorporation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Corporation, Domestic
A corporation organized under the laws of a jurisdiction where it is located or doing business.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Corporation, Foreign
A corporation organized under the laws of some jurisdiction other than the jurisdiction where it is located or doing business.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Correlation Coefficient
Used to measure the strength of association between two variables. The most commonly used correlation coefficient, Pearson’s correlation (also called Pearson’s R) represented with a lowercase r, ranges from – 1.0 to +1.0, with 0 meaning there is no association between the two variables. A correlation coefficient of 1 means that for every positive increase in one variable, there is a positive increase of a fixed proportion in the other. For example, the number of bedrooms often increases with close correlation with increases in living area. A correlation coefficient of – 1 means that for every positive increase in one variable, there is a negative decrease of a fixed proportion in the other. For example, market value often decreases in correlation with increases in effective age. The absolute value of the correlation coefficient gives us the relationship strength. The larger the number, the stronger the relationship. For example, | – 0.65| = 0.65, which has a stronger rela- tionship than 0.40. The graphs below illustrate these relationships. It is 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 would generally explain or account for 81 percent of the weight.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 33
Correlation Matrix
A table showing correlation coefficients between sets of variables. Each variable in the table is correlated with each of the other values in the table. This allows you to see which pairs have the highest correlation. The following correlation matrix shows the correlation coefficients for a combination of eight variables: Variables Sale Nbhd4 Nbhd5 SF1st SF_Other Baths Grade LotSize Sale 1.0000 -0.4274 .2312 .5311 0.4914 .5937 -0.7165 0.2205 Nbhd4 -0.4274 1.0000 -0.6055 -0.4901 -0.0124 -0.3117 0.1402 -0.1657 Nbhd5 0.2312 -0.6055 1.0000 0.2930 0.0303 0.1469 -0.0759 -0.0156 SF1st 0.5311 -0.4901 0.2930 1.0000 -0.2383 0.3371 -0.1625 0.3193 SF_Other 0.4914 -0.0124 0.0303 -0.2383 1.0000 0.2999 -0.5856 -0.0484 Baths 0.5937 -0.3117 0.1469 0.3371 0.2999 1.0000 -0.3917 0.0927 Grade -0.7165 0.1402 -0.0759 -0.1625 -0.5856 -0.3917 1.0000 0.0956 LotSize 0.2205 -0.1657 -0.0156 0.3193 -0.0484 0.0927 0.0956 1.0000
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost
the actual or estimated amount required to create, reproduce, replace, or obtain a property.
USPAP (2024 Edition), The Appraisal Foundation, p. 16
The money expended in obtaining an object or attaining an objective; generally used in appraisal to mean the amount spent to acquire an asset (personal property) or the amount spent, including both direct and indirect costs, to construct a real property improvement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost Approach
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; and 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 depreciation; and (c) Adding the estimated land value. (The land value is most frequently determined by the sales comparison approach.)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost Index
A factor or multiplier used to adjust variations in construction costs over time; sometimes, by extension, a set of similar numbers showing the relative costs of construction in different geographic areas.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost Manual
A guide, containing pictures, specifications of structures, and cost schedules, used to help classify construction quality and estimate the cost of replacing a structure.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost of Capital
The required rate of return that investors expect for providing funds to a project. Cost-of -Development Method — A method of appraising undeveloped land, whereby an estimate is made of the probable proceeds to be obtained from selling the land as subdivided, developed parcels. The cost of so developing the raw land is subtracted from this estimate to obtain an estimate of the value of the raw land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost of Equity
See Equity Yield Rate. Cost of Goods Sold (Cost of Sales) — 1) In retail, the total cost of goods sold during a given accounting period is determined by ascertaining the invoice costs of the materials purchased, adding the value of the inventory on hand at the start of the fiscal period and subtracting the value of the inventory remaining on hand at the end of the fiscal period; and 2) In manufacturing, the cost of production of the items sold, such as raw materials, direct labor, and overhead.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost Schedules
Charts, tables, factors, curves, or equations intended to help estimate the cost of replacing a structure from a set of known factors such as quality class and structure size and height.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost Study
An economic evaluation of costs to develop the replacement cost new of real or personal property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost to Cure
Estimated cost to correct or replace a component within an item of real or personal property. The cost to remedy deferred maintenance or functional obsolescence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost Trend Factor
A multiplier developed to adjust costs to a specific point in time.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Cost, Construction
See Construction Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Depreciated Reproduction
See Depreciated Reproduction Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Direct
See Direct Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Hard
See Direct Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Historical
See Historical Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Indirect
See Indirect Costs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Original
See Original Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Overhead
See Overhead Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Soft
See Indirect Costs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Trended
See Trended Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Cost, Unit
See Unit Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 34
Coupon Rate
The rate of return specified on the face of a debt instrument (such as a bond) as opposed to the actual return (or effective yield).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Course
Direction of a line with reference to a meridian. Also, bearing or azimuth and length of a line considered together.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
COV
See Coefficient of Variation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Covenant
A word used in deeds for the purpose of creating restrictions; imports an agreement on the part of the grantee or subsequent grantees or heirs to make, or to refrain from making, some specified use of the land conveyed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
COVw
See Weighted Coefficient of Variation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 35
Credible
worthy of belief. Comment: Credible assignment results require support, by relevant evidence and logic, to the degree necessary for the intended use.
USPAP (2024 Edition), The Appraisal Foundation, p. 16
Credit
A claim for money or money’s worth that is enforceable by law, whether due or accruing and whether secured or not; for example, accounts receivable, notes, bonds, accrued interest and rent, and bank deposits, but not corporate stock. In accounting, the right-hand column of a double entry accounting system where debits equal credits.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Critical Value
A factor used to compute the margin of error. In hypothesis testing, a critical value is a point on the test distribution that is compared to the test statistic to determine whether to reject the null hypothesis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Cross Validation
A technique for validating an automated valuation model (AVM) where, iter- atively, a subset of sales is held out of the model and the model is re-fit to the remaining sales. The analyst could then examine either the predictive results for the subsets of holdout sales or the model coefficients over the various iterations.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Cross-tabulation
A two-way frequency distribution that shows the joint distribution of two variables.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Cubic Content of Building
A method of obtaining value typically used for multistory construction. Estimates the cost of the building based on its volume. Calculated by the length times width times height of the structure (L x W x H). It is then multiplied by the forecasted cost factor to arrive at the value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Cultural Details
Human-made features of the terrain. Included are such items as roads, buildings, and canals.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Curable Depreciation
That part of depreciation that can be reversed by correcting a deficiency.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Current Asset
See Asset, Current.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Current Liability
A debt normally due within one year. See Liability.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Curves
A continuously bending line without angles. 1) Center of line of a curve is the midpoint along the arc of the curve and is not the “center of the circle” describing the curve; 2) Parallel curves are curves that are concentric; 3) Radius of a curve stops at the arc of the curve. (A description intending to extend beyond the arc should state “and on the prolongation of the radius”); 4) Compound curves are tangent at the point of compounding (changing of radius); 5) Reverse curves are tangent at the point of reversal; and 6) Tangent curves have a common tangent where the curves meet.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
Customer Survey
A tool for gathering information on the public’s opinion of the assessment office. D
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 36
D
Data
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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Data Edit
The process of examining recorded data to ensure that each element of data is reasonable and 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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Data Integrity
The degree to which data sets remain unaltered after changes or updates are made in a database. The validity and accuracy of the information. Protected accurate information in a database to be used for analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Data Maintenance
The process of organizing and curating data. Properly maintaining and caring for data is essential to ensuring that data remain accessible and usable for their intended purposes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Data Management
An administrative process that includes acquiring, validating, storing, protecting, and processing required data to ensure the accessibility, reliability, and timeliness of the data for users.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Data Model
A generalized, user-defined view of data representing the real world. A description of the structure of a database. It describes how data are represented and accessed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Data Scraping
A technique using software programs that can analyze human-readable data, typically unstructured, from websites and store them in a structured data file. Collection methods included text filtering, analysis, and capture and image analysis and optical character recognition.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Data Steward
A term commonly used to identify an entity responsible for maintaining data in various map layers.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Database
An organized grouping of data within the structure of a database management system that has been defined by a particular use, user, system, or program.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
Date of Acquisition
The effective date of the purchase of an asset. The date that the asset is recorded into the books and records of the purchaser for financial reporting and tax purposes. Date of Sale (Date of Transfer) — For real property, the actual date of conveyance between grantor and grantee of the bundle of rights. Referred to as the execution date, which may or may not be the date of recordation. For personal property, the date that the buyer and seller convey the property in exchange for money or another item of value. Datum (Geodetic) — 1) A reference surface consisting of five quantities: the latitude and longitude of an initial point, the azimuth of a line from this point, and two constants necessary to define the reference spheroid; the basis for the computation of horizontal control surveys in which the curvature of the earth is considered (leveling); and 2) A level surface to which elevations are referred; usually, but not always, means sea level.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
DCF
See Discounted Cash Flow Analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 37
DCR
See Debt Coverage Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Debit
An accounting entry recording the creation of an addition of an asset or an expense, or the reduction or elimination of a liability, or item of net worth (capital). The left-hand side of a journal entry in a double-entry accounting system.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Debt
Money owed. Debt Coverage Ratio (DCR) — The ratio of net operating income to debt service, which is used to estimate the overall capitalization rate in direct capitalization. The formula for the overall capital- ization rate (OAR) is OAR = DCR × Annual debt cost × Debt percentage of capital structure.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Debt Rate
The interest rate on borrowed money.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Debt Service
The total payments of principal and interest on a mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Declaration
A statement by a property owner.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Declaration of Restrictions
A set of recorded restrictions that applies to a specific area or subdivision.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Declaration of Trust
A written acknowledgment by the legal titleholder to property specifying the property is held in trust for the benefit of another party.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Declining Balance Method
A method of accounting depreciation that allocates higher amounts of depreciation in the earlier years of an asset, on the premise that actual depreciation is greater during that time.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Declining Terminal Series
A projected income stream that declines progressively and system- atically and eventually ceases.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Decree
A judgment by the court in a legal proceeding.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Decree of Distribution
The judicial decision made by a probate court determining who is legally entitled to the real estate and personal property of a decedent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Deed
A document that when executed and delivered conveys an interest in or legal title to a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Deed Restriction
Limitations on property rights, typically on the use of a property, contained in a deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 39
Deed, Quitclaim
See Quitclaim Deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Deed, Recordation
See Recordation/Recording.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Deed, Special Warranty
See Special Warranty Deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Deed, Tax
See Tax Deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Deed, Trust
See Trust Deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Deed, Warranty
See Warranty Deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 38
Deferred Maintenance
Postponed maintenance and repairs to real or personal property that were not performed and have been delayed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 39
Degree
One 360th of the circumference of a circle.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 39
Degree of a Curve
Along railroads, the central angle of a curve subtended by a 100-foot chord on the curve. Along highways, usually, but not always, defined as the central angle subtended by a 100-foot arc of said curve. Degrees of Freedom (d.f.) — The total number of observations minus the number of independent constraints imposed on the observations. The easiest way to understand degrees of freedom conceptually is through an example: Consider a data sample of five positive numbers with no known relationship among them. This data sample then has five degrees of freedom. If four of the numbers in the sample are {3, 8, 5, and 4} and the average of the entire data sample is 6, then the fifth number has to be 10. It can be nothing else. It does not have the freedom to vary. The degrees of freedom for this data sample is 4. Therefore, the formula for degrees of freedom equals the size of the data sample minus one: DF = N — 1; where DF = degrees of freedom N = sample size Degrees of freedom are calculated to test the validity of various inferential statistical tests. Depending on the specific type of statistical analysis, degrees of freedom typically (but not always) relate to the size of the sample. Because higher degrees of freedom generally result from larger sample sizes, a higher degree of freedom provides a stronger likelihood of finding a statistically significant result.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 39
Degressive Tax
A progressive tax in which the rate increases with the size of the base but by a decreasing increment. Note: Most progressive taxes are of this character in at least the higher brackets. Compare Progressive Tax, Proportional Tax, Regressive Tax System, and Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 39
Delineation
The visual selection and distinguishing of map-worthy features by outlining on a map or manuscript (as when operating a stereo-plotting instrument); also, a preliminary step in compilation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 39
Delinquent Taxes
Past due and unpaid taxes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 39
Delphi Forecasting
A type of forecasting where predictions are reconsidered after other experts comment on the original forecast. Several rounds of forecasting are carried out, and anonymous responses are aggregated and shared with the group after each round using a feedback technique. The experts are allowed to adjust their answers in subsequent rounds. Because multiple rounds of questions are asked and because each member of the panel is told what the group thinks as a whole, the Delphi method seeks to reach the “correct” response through consensus.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 39
Delta Angle
Angle at the center of a circular curve.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Demand
The amount of a commodity that consumers would purchase at a given price.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Demographics
Characteristics of human populations; for example, size, density, and distribution.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Denominator
In a fraction, the number by which another number (the numerator) is divided. For example, the denominator of 3/4 is 4.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Densification Survey
A control or cadastral survey that establishes accuracy or additional detail in an existing survey.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Density
The total number of specific items present within a designated unit of area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Dependent Variable
A variable whose value will change depending on the value of either one or several independent variables. It is also called the endogenous variable, because it demonstrates a reaction to changes in the independent (exogenous) variable. In valuation analysis, a dependent variable such as sale price is analyzed by testing various property-related variables representing either a property characteristic or some combination/transformation of property characteristics.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Depletion
A decrease in land value due to the removal of trees, minerals, or other such resources. Contrast Depreciation and Obsolescence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Depletion Rate
The periodic percentage rate at which a quantity is exhausted.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Deposition
A discovery device, conducted under oath outside a courtroom, by which one party asks questions of another party or witness.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Depreciable Cost
The amount of the cost to the current owner that is to be recovered or allo- cated in accounting depreciation. It may represent the current cost, including sales tax, freight, installation, and other costs associated with placing the asset into service, and less any estimated salvage value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Depreciated Reproduction Cost
The reproduction cost of a given property, less the estimated amount of accumulated depreciation on such property. See Reproduction Cost New.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Depreciation
Loss in value of an object from any cause, 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 obso- lescence (suboptimal design in light of current technologies or tastes), and economic (external) obsolescence (poor location or radically diminished demand for the product). See Accounting Depreciation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Depreciation Schedules
In mass appraisal, tables that provide typical loss in value at various effective ages for different property types. In accounting, a worksheet that summarizes the amount of annual and accumulated depreciation for each depreciable asset.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depreciation, Accelerated
An accounting term implying a method of accruing greater depre- ciation expense in the early years of a property’s life and less in the later years according to an established formula.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 40
Depreciation, Accrued
1) The amount of depreciation, from any and all sources, that affects the value of the property in question on the effective date of the appraisal; 2) In accounting, the amount reserved each year or accumulated to date in the accounting system for replacement of a building or other asset. When depreciation is recorded as a dollar amount, it may be deductible from total plant value or investment to arrive at the rate base for public utilities.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depreciation, Book
An accounting term referring to the total accruals recorded on the books of the owner of property summarizing the systematic and periodic expenses charged toward amor- tizing the investment of limited-life property over its expected life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depreciation, Curable
That part of depreciation that can be reversed by correcting deferred maintenance and by remodeling to relieve functional obsolescence. See Cost to Cure.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depreciation, Incurable
See Incurable Depreciation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depreciation, Observed Method
Requires the separation of elements of depreciation into cate- gories based on the causes of loss in value. A method not easily adaptable to mass appraisal, as the appraiser is required to identify the specific causes and individual measurementsof depreciation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depreciation, Physical
See Physical Deterioration.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depreciation, Straight Line
A method of writing off the cost of a property over the period of its expected economic life involving: (a) Equal annual debits to depreciation expense, each being equal in amount to an annuity that could be purchased for the price of the property (less the present worth of any anticipated scrap value) and that would have a life equal to the expected economic life of the property; (b) Decreasing annual credits to interest earned, each of which is equal to an assumed rate of return on the then depreciated book value of the property; and (c) Increasing annual credits to depreciation reserve, each of which is equal to the difference between the amount debited to depreciation and the amount credited to interest earned. Depreciation Method, Unit of Production — An accounting method of expensing the cost of an asset over the period of its expected economic life measured in terms of units of production rather than in years. The means of periodical charges measured by the number of units produced during the period, the sum of which charges are approximately equal to the original cost of the machine less any scrap value remaining at the end of the expected economic life. Referred to as Service Hours.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depth Curve
A graph of depth factors showing the estimated percentage relationships between the front-foot value of a given lot and the front-foot value of a lot of standard depth as the depth of the given lot varies. Note: Usually the depth of the given lot is plotted on the x-axis, and the percentage relationship between the front-foot value of the given lot and that of a lot of standard depth on the y-axis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depth Factor
The ratio of the estimated front-foot value of a lot of more or less than standard depth to the estimated front-foot value of a lot of standard depth.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 41
Depth Influence
1) The effect of increasing depth on the value of a lot or parcel having a given frontage; and 2) The increment or decrement of value arising from a depth greater or less than that of the standard lot. See Lot, Standard.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Depth Table
A schedule of depth factors containing the estimated percentage relationship between the front-foot value of parcel of land of any given depth and the front-foot value of a lot of standard depth. See Depth Factor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Descriptive Statistics
Statistics that summarize and organize characteristics of a data set. A data set is a collection of variables from either a sample or population.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Diazo Process
A means of reproduction using a coating of diazonium compounds that is decomposed by exposure to ultraviolet light and ammonia fumes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Differential Assessments
Assessments in a system of laws that require different classes of property to be assessed with different assessment ratios. The term “differential assessments” is usually reserved for systems in which the classes are broad and easily visible, such as classified property tax systems and use-value farmland assessment systems, although much the same effect is achieved by partial homestead exemptions, temporary exemptions to encourage rehabilitation or industrial location, and the like.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Differential Taxation
A legislated difference in effective tax rates between groups of properties classified according to use, value, or some other criterion. Differentials may be affected by applying different legal assessment ratios, tax rates, or both. Systems that provide differentials are generally known as classified property tax systems in the United States.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Digital Image Processing
Computer manipulation of the digital values for picture elements of an image. Digital Terrain Model (DTM) — A digital representation of the earth’s surface. Its construction includes a basic elevation model (i.e., a digital elevation model,) that is typically enhanced with break line data to accentuate abrupt changes in terrain features, such as pavement edges, road crowns, riverbanks, ridgelines, creek beds, and so on.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Digitization
1) The process of converting spatial information originally compiled on orthographic materials or base maps into digital form for incorporation into a geographic information system; and 2) Referencing of ground control points or lines to a remotely sensed image.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Digitizer
A device used for scanning an image and converting it into numerical picture elements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Digitizing Tablet
An electronic grid used for encoding digitized geographic features.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Diminished Utility
The difference in utility between a new improvement representing the highest and best use of the site and the existing improvement in its current condition.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Direct Capitalization
A method of converting a single year’s income into an estimate of value by dividing the expected annual net operating income by an overall capitalization rate. See Income Capitalization and Yield Capitalization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 42
Direct Cost
The cost that can be traced directly to the construction of an improvement; for example, cost of labor, materials, equipment, and permits used in the construction of an improvement. Referred to as Hard Cost. Contrast with Indirect Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Direct Equalization
The process of converting ratio study results into adjustment factors (trends) and changing locally determined appraised or assessed values to more nearly reflect market value or the legally required level of assessment. See Equalization and Indirect Equalization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Direct Tax
Taxes that are imposed on a person or property. Direct taxes include income, property, and sales taxes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Disclosure
Information provided to another party or the general public.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Discount Rate
A rate of return that converts future payments to present value. Referred to as Yield Rate. Discounted Cash Flow Analysis (DCF) — A yield capitalization technique used to estimate value of income — producing property by applying a discount rate to a series of income streams and a reversion to convert future benefits to present value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Discounting
Conversion of future benefits to present value. For example, the value of $100 due three years from now, assuming a 6 percent discount rate, is $100 1.063 = $83.96; the value of a perpetual annuity of $100 is $100/1.06 + $100/1.062 + $100/1.063 = $100/.06 = $1,666.67.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Discovery
1) The process whereby the assessor identifies all taxable property in the jurisdiction and ensures that it is included on the assessment roll; 2) The gathering of facts in preparation for litigation or administrative proceedings; and 3) For personal property, the process whereby the assessor identifies all taxable property in the jurisdiction and ensures that it is included on the assessment roll.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Discrete Data
Are either categorical (pass or fail) or count data (number of bedrooms). This type of data is often represented using bar charts or pie charts. Only a finite number of values are possible, and the values cannot be subdivided meaningfully. For example, the number of bedrooms in a house, as there cannot be a half bedroom.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Discrete Variable
A variable that may assume only a countable, and usually finite, number of values.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 43
Dispersion
Dispersion describes the degree to which a set of data is spread, typically around a measure of central tendency. The spread of a data set is described by a range of descriptive statistics including variance, standard deviation, and interquartile range. Spread can also be shown in graphs including dot plots, box plots, and stem and leaf plots.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Dissimilarity Function
An algorithm used to assign an index of dissimilarity (or similarity) to properties compared with a single subject property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Distance Between Points
Assumed to be the shortest possible horizontal distance unless otherwise specified.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Distressed Sale
A sale made to meet the immediate and pressing needs of the seller at whatever price the property will bring. Sale under duress.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Distributable Property
See Property, Distributable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Distribution-Free Statistics
A set of robust nonparametric methods whose interpretation or reliability does not depend on stringent assumptions about the distribution of the underlying population from which the sample has been drawn.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
District
An area within a city, county, or state set off from the surrounding territory for special reasons, such as school districts, voting districts, etc.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Dividend Yield
The ratio of cash dividends to cash invested.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Dividends
Equity investment income earnings. Domicile (or Domicil) — That particular locality wherein a person is legally deemed to have his or her true home or place of abode. Note: A person always has one, and only one, domicile. Domicile at one place is not lost until a new domicile is established elsewhere. In case one has more than one place of abode, domicile is determined with reference to one’s attitude rather than in accordance with one’s physical presence in one or other of such places. Dominant Estate (Affirmative Easement) — The parcel of land benefitted by an easement on another parcel of land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Doomage Assessment
An assessment placed on property immediately or at any time allowed by law, when there is reason to believe that delay in the normal assessment process will jeopardize the collection of property taxes. Also referred to as Jeopardy Assessment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Double Taxation
In general, the subjection of the same income or source of income, or both the income and its source, to taxation by the same governmental unit, or by coordinate governmental units, twice in the same tax period. Note: The courts generally recognize the existence of double taxation when a single object is taxed by the same governmental unit, or by coordinate govern- mental units, twice in the same tax period. Economists further recognize double taxation when both wealth and representative intangible property are taxed; when both property and property income are taxed; and when income is taxed to a corporation and subsequently to the stockholder upon distribution as dividends.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
DTM
See Digital Terrain Model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 44
Due
Where monuments or other deed terms do not limit the calls, “due north” means “astro- nomical north.” “Due north” as originally used meant “true north” as determined by a declination correction to a magnetic reading. The word has become ambiguous in meaning because of careless usage. If astronomical north is meant in a deed, use “astronomical north,” not “true north.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 45
Dummy Variable
Used in regression analysis to quantify categorical variables that don’t have any relationship. For example, the single variable exterior wall type may have mutually exclusive options coded in no specific order, such as 1=wood, 2=composite, 3=stone/brick. etc. If your dummy variable has only two options, 1=air-conditioning and 2=no air-conditioning, then this dummy variable is also a binary variable. E
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 45
E
E/P
See Earnings-Price Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Earnings
A general term embracing revenue, profit, or net income. Earnings-Price Ratio (E/P) — The ratio of earnings per share available to common stockholders of a company for an accounting period to the market price per share of the common stock of that company. The reciprocal of the E/P ratio is the price — earnings ratio (P/E). The E/P ratio is a direct capitalization rate for equity and not a yield rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 45
Earnings Statement
Referred to as an income statement. Also referred to as a Profit and Loss Statement. See Income Statement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 45
Easement
An interest in land created by grant or agreement that confers a right upon owners to some profit, benefit, dominion, or lawful use of or over the estate of another; it is distinct from ownership of soil.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 45
Easement in Gross
A right to use another’s property, usually for a specified purpose. Utility easements and railroad rights-of-way are examples of easements in gross.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 45
Easement, Appurtenant
1) The right to use another’s land as long as the first person owns a specified piece of property. The easement attaches to the specified property, not to the person who owns it; when the title transfers, the easement also transfers; 2) An encumbrance on property transferring rights to use the property to another parcel of land. May be perpetual or terminate after a period of time or upon a certain event. Easement by Necessity — Arises when an owner of land sells a portion of the property, and the purchaser cannot access that part of the property purchased without crossing the seller’s property. The purchaser may then acquire an easement over the seller’s property by judicial order. Easement by Prescription — Arises when a non-owner continuously and openly uses property over a period of time and is not impeded by the property owner. Must be ordered by a court.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 45
Economic Area
A geographic area, typically encompassing a group of neighborhoods, defined on the basis that the properties within its boundaries are more or less equally subject to a set of one or more economic forces that largely determine the value of the properties in question.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 45
Economic Life
The total number of years during which the improvements and/or personal property contribute to the total property value. Economic life is equal to the effective age plus the remaining economic life and is often referred to as the Total Economic Life. See Age, Chronological Age, Effective Age, and Useful Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Economic Obsolescence
See External Obsolescence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Economic Rent
See Rent, Economic.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Economies of Scale
Unit costs fall as the scale of production increases.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Effective Age
The age of a property based on the amount of observed deterioration and obsolescence, which may be less than, greater than, or equal to the chronological age. See Age, Chronological Age, Economic Life, Remaining Economic Life, and Useful Life. Effective Gross Income (EGI) — The potential gross rent, less vacancy and collection loss, plus miscellaneous (other) income. Effective Gross Income Multiplier (EGIM) — The factor that can be multiplied by the effective gross income to obtain the market value of a property. See Effective Gross Income (EGI).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Effective Date
the date to which an appraiser's analyses, opinions, and conclusions apply; also referred to as date of value.
USPAP (2024 Edition), The Appraisal Foundation, p. 16
Effective Interest Rate
The nominal interest rate divided by the number of conversion periods in one year. For example, if the nominal interest rate is 10 percent, the effective interest rate for quarterly compounding is 2.5 percent. See Nominal Interest Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Effective Tax Rate
The rate expressing the ratio between the current tax bill and the property value; the official tax rate of the taxing jurisdiction multiplied by the assessment ratio (statutory level of assessment). It is expressed as a percentage of market value. Differs from nominal tax rate when the assessment ratio (statutory level of assessment) is not 100 percent. The rate may be calculated either by dividing the amount of taxes by market value or by multiplying a property’s assessment level by the nominal tax rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Effective Yield
Actual percent return on an investment held to maturity in contrast to the stated, nominal rate of return promised or anticipated at the time of investment. For example: 1) A bond selling for more than its face value gives an effective yield less than the coupon (stated or nominal) rate; it trades at a discount; 2) A bond selling at less than its face value gives an effective yield greater than the coupon rate; it trades at a premium; and 3) Coupon reinvestment gives an effective yield greater than the stated/nominal rate of return.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
EGI
See Effective Gross Income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
EGIM
See Effective Gross Income Multiplier.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Egress
An outlet or exit from a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Elasticity
1) The responsiveness of supply and demand to changes in price. Supply or demand that changes rapidly in response to price changes is “elastic.” Supply or demand that changes slowly in response to price changes is “inelastic”; and 2) A measure of the responsiveness of tax yields to changes in economic conditions. The yield of an elastic tax increases rapidly in a growing economy. The yield of an inelastic tax increases slowly. Often measured by the formula: percent change in tax ÷ percent change in personal income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 46
Elevation
The distance of a point above a specified surface of constant potential; the distance is measured along the direction of gravity between the point and the surface.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Ellipsoid
A closed surface whose planar sections are either ellipses or circles.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Emblements
Annual crops.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Eminent Domain
The right by which a sovereign government or some person acting in its name and under its authority may acquire private property for public or quasi-public use upon payment of reasonable compensation, but without consent of the owner. The process is called condemnation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Encroachment
The unauthorized trespassing of an improvement on the domain of another person’s land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Encumbrance
Any limitation that affects property rights and value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Endogenous Variable
A variable explained by other variables within a model. When using regression models, appraisers are interested in understanding the relationship between one or more independent variables and a dependent variable such as sale price.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Engineering Breakdown Method
A detailed age/life method that can be used in conjunction with the quantity survey or unit-in-place methods of estimating replacement cost new.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Enterprise Zone
A designated area within an economically challenged area in which property owners are given favorable tax treatment and freedom from a number of planning constraints.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Entrepreneur
One who assumes the risks and management of an enterprise or business.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Entrepreneurial Incentive
A market-derived figure that represents the amount an entre- preneur expects or wants to receive as compensation for providing coordination and expertise and assuming the risks associated with the development of a project. Incentive is the forecasted reward entrepreneurs expect and is projected before completion of the construction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Entrepreneurial Profit
A market-derived figure that represents the amount an entrepreneur receives for his or her contribution to a project and risk; the difference between the total cost of a property (cost of development) and its market value (property value after completion), which represents the entrepreneur’s compensation for the risk and expertise associated with development.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Environmental Assessment
A report showing the results of an investigation into environmental contamination. This report is often required by environmental regulatory agencies to establish the extent of contamination. The depth of analysis depends on the type and extent of contamination suspected.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Environmental Contaminant
Any tangible substance or intangible occurrence that may degrade property, resulting in decreased utility or having an effect on value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 47
Equalization
The process by which an appropriate governmental body attempts to ensure that all property under its jurisdiction is assessed at the same assessment ratio or at the ratio or ratios required by law. Equalization may be undertaken at many different levels. When assessed values are not at the statutorily required level of assessment, the appropriate governmental body develops a multiplier to modify the assessed value to an equalized value. The multiplier is less than 1 when assessed values exceed the statutory level of assessment, and greater than 1 when assessed values are less than the statutory level of assessment. When the assessed values are determined to be at the statutory level of assessment, the equalization factor is 1.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equalized Values
Assessed values after the equalization process. See Equalization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equilibrium
The point at which the forces of supply and demand meet. The point of balance when the factors of production are used in the array of consumer goods that maximize consumer welfare. See Principle of Balance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equitable Ownership
The interest or estate of a person who has a beneficial right in property legally owned by another; for example, the beneficiary of a trust has equitable ownership in the trust property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equity
1) In assessment, the degree to which assessments bear a consistent relationship to market value. Measures include the coefficient of dispersion, coefficient of variation, and price-re- lated differential; 2) In popular usage, a synonym for tax fairness; 3) In ownership, the net value of property after liens and other charges have been subtracted; and 4) In accounting, the net worth of a business enterprise as reported on the financial statements of an entity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equity Capitalization Rate
Calculated by dividing one year’s equity cash flow by the equity investment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equity Dividend
See Before-Tax Cash Flow.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equity Dividend Rate
See Equity Capitalization Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equity of Redemption
A right recognized by courts of equity whereby a person who has transferred legal title to property as security for an obligation is permitted, after defaulting on the obligation, to retain possession of the property for such period as may be prescribed by law or by the court and to reacquire legal title to the property upon fulfillment of the obligation within such period.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Equity Yield Rate
The rate of return on equity capital.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Error
The difference between the actual value of a variable and the expected value of the variable exclusive of sampling problems. Errors may be positive or negative, although in common speech, taking the absolute value of the errors is sometimes implied.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Escheat
The right to have property revert to the state for nonpayment of taxes or when there are no legal heirs of someone who dies without leaving a will.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Escrow
Property or money deposited with a third party, to be held until the occurrence of an event or until the specified terms are completed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Estate
A present or future possessory interest in real estate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 48
Estate for Years
A possessory interest in land that cannot endure beyond a date specified in the conveyance or a date precisely determinable at the time the interest becomes possessory.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Estate in Severalty
Any estate held by a single person.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Estate of Freehold
Any one of the three types of possessory interests in land—fee simple absolute, fee tail, and estate for life—that in feudal times were granted only to freemen. Note: Estates of freehold are said to be estates of indefinite duration, and any other estate is said to be “less than freehold.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Estate Tax
A tax based on the value of the estate of a deceased person.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Estate, Leasehold
See Leasehold.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Estate, Life
See Life Estate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Estoppel
A legal principle that prevents a person from asserting a legal position that contradicts a position they have taken previously, especially when that statement was relied upon by others.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Et Al.
And others, and another.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Et Seq.
And following.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Et Ux.
And wife.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Et Vir.
And husband.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Euclidean Distance Metric
A measure of Straight-Line distance between two points. In property valuation, it is used to find the nearest neighbor or similar property based on an index of dissim- ilarity between property location or attributes. When using multivariate selection, the squared difference is divided by the standard deviation of the variable so as to normalize the differences.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Exception, Excepting
Withdraws a part of the rights described as granted, and which would pass but for the excepting clause. Excluded from the deed or grant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Exemption
An exclusion of part or all of the value of a category of property from taxation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Exemption, Homestead
See Homestead Exemption.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Exogenous Variable
A variable not explained by other variables within a model. Exogenous vari- ables are typically determined outside the model. Unlike endogenous variables, it is not possible to manipulate exogenous variables. A variable representing time is an example of an exogenous variable in a model estimating sale price. Whereas a variable such as living area is possibly influ- enced by quality, a variable representing time is not influenced by other variables in the model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Expectancy Theory
A theory of motivation developed by Victor Vroom that relates to how a person will evaluate and choose a behavior based on their desired reward.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Expense
The cost of operations that are incurred to generate revenue. In accounting, generally chargeable against revenue for a specific period of time.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Expense Account
An accounting record maintained for categorizing expenses of a particular type for a specified period of time.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 49
Expense Ratio
See Operating Expense Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Expert Witness
One who is qualified to render testimony on a specialized topic.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Exponent
A symbol usually written to the right and above an expression to indicate particular mathematical operations. For example, 62 means 6 × 6, or 6 squared. Fractional exponents indicate inverse operations; for example, an exponent of 1/2 signifies a square root. Exponents are also called powers. Valuation models make use of the following properties of exponents: A number raised to the exponent 0 is always 1.00; zero raised to any power is zero; any number raised to the power 1 is itself. Negative numbers cannot have exponents less than 1.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Exposure Time
an opinion, based on supporting market data, of the length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.
USPAP (2024 Edition), The Appraisal Foundation, p. 16
Expropriation
See Condemnation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
External Obsolescence
A type of temporary or permanent depreciation caused by negative factors outside of the property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
F
Factor
A numeric value that can be divided or multiplied to produce another numeric expression. Organized numbers that can be identified to produce a numeric component that can be mathe- matically utilized to produce a statistical result.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Factor Analysis
An exploratory technique applied to a set of observed variables that seeks to find underlying factors (subsets of variables) from which the observed variables were generated. For example, sale price is influenced by underlying variables such as property characteristics both within and outside the property boundaries. The underlying variables are the factors.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Fairness
See Equity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Fannie Mae
See Federal National Mortgage Association.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
FAR
See Floor Area Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
FASB
See Financial Accounting Standards Board.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Feasibility Analysis
a study of the cost-benefit relationship of an economic endeavor.
USPAP (2024 Edition), The Appraisal Foundation, p. 16
A study of the cost-benefit relationship of an economic endeavor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Feature
Points, symbols, lines, and areas on a map representing natural and man-made geographic features. An object in a geographic or spatial database with a distinct set of characteristics. Federal Home Loan Mortgage Corporation (FHLMC) (Freddie Mac) — An organization that facil- itates secondary residential mortgages, for savings and loan associations, to increase availability of residential mortgage financing. Federal Housing Administration (FHA) — A government-backed institution that provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single-family homes, multifamily homes, residential care facilities, and hospitals. Federal National Mortgage Association (FNMA) (Fannie Mae) — A quasi-governmental agency that purchases mortgages from originators; intended to increase liquidity in the home mortgage market.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 50
Federalism
Form of government in which power is constitutionally divided between a center or national government and states or regional centers.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Fee
1) A charge imposed by a government for the performance of a specific nonproprietary act that is made in recognition of the special benefit conferred by such act, or the special cost incurred thereby, and in an amount intended to be substantially equal to or less than the incurred cost; 2) A form of compensation for occasional personal services, especially of public officers or professional persons, measured in terms of services performed rather than in terms of time required for their performance; and 3) An abbreviation of one of the fee estates in property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Fee Appraisal
See Single Property Appraisal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Fee Simple
See Fee Simple Absolute.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Fee Simple Absolute
An estate of infinite duration, freely alienable. The most complete ownership in real estate possible, although still subject to the four powers of government. May still be subject to other private encumbrances or restrictions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Fee Simple Condition Subsequent
Ownership interest that gives the grantee fee simple title to property so long as a specified event occurs. If the specified event does occur, the grantor has the right to regain title to the property. (Example: “Grantee owns the property in fee simple absolute, so long as it is used for residential purposes.”) Usually must contain the words “so long as” in the deed or may be interpreted as a fee simple determinable and not a fee simple on a condition subsequent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Fee Simple Determinable
Ownership interest that gives the grantee fee simple title to property unless or until a specified event occurs. As opposed to a fee simple on a condition subsequent, if the specified event does occur, the grantor automatically regains title to the property. (Example: “Grantee owns the property in fee simple absolute, provided that it is used for commercial purposes.”)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Feedback
See Adaptive Estimation Procedure.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
FHA
See Federal Housing Administration.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
FHLMC
See Federal Home Loan Mortgage Corporation (Freddie Mac).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Fiduciary
Any person who occupies a position of special trust in certain of his or her relationships to another person or persons; for example, an administrator, executor, guardian, receiver, or trustee.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Field Canvass
See Canvass.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 51
Field Review
The practice of reviewing the accuracy of assessment data by viewing the subject property, validating measurements, amenities, and other relevant data.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
FIFO
See First-In, First-Out. Financial Accounting Standards Board (FASB) — An independent organization that establishes financial account standards for public and private companies. See Generally Accepted Accounting Principles.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Finished Goods
A type of inventory existing as the end stage of manufacturing. Finished goods is the end result of combining raw material with labor, capital, processing time, and other compo- nents of production. Intended to be subsequently sold. First-In, First-Out (FIFO) — An accounting procedure used to measure the cost of unsold inventory, including inventory carried over from the prior year. This method is more reliable than last-in, first-out (LIFO) because it assumes that the goods on hand are the most recently purchased items and that the earliest purchased goods have been sold. May be used for income tax purposes and is the method generally used by assessors for ad valorem taxation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Fiscal Capacity
A measure of the own-source revenues a state could raise if it had a “represen- tative tax system” and applied the national average tax rate to its own amounts of the major sources of taxes and charges.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Fiscal Comfort
An index that combines fiscal capacity and fiscal need measures into a single measure. Determined from the ratio of fiscal capacity to fiscal need.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Fiscal Federalism
An approach to federalism that emphasizes the nature of the goods and services that government provides and derives the structure of government from that analysis. Sometimes the term is used in a more general sense to refer to the financial analysis of federal systems of government.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Fiscal Year
The accounting period covering 12 successive calendar months, which differs from a 12-month calendar year. Annual budgets, income tax accounting, and accounting reports are closed to develop financial reporting documents.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Fixed Asset
See Asset, Fixed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Fixed Expense
A recurring expense that does not fluctuate with occupancy, such as taxes and insurance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Fixture
An article of personal property installed or attached to real property in such a manner that it is considered to be a part of the real property. The three tests to determine whether an article is a fixture are typically: 1) Extent of annexation to the real property (cannot be removed without substantial damage to the real property; 2) Extent to which the article is a logical contri- bution to and enhancement of the real property; and 3) Intention of the parties that the article is part of the real property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Flat Tax
A tax with a single rate applying to all income for a specified tax-exempt level. Note that the existence of a tax-exempt level of income means that the burden of the tax can still be progressive.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Floor Area of Building
Total area of the horizontal surface of all floors above grade measured to the center of party walls and to the outside surface of external walls. Floor Area Ratio (FAR) — Indicates the correlation between the plot area on which the building is contracted and the allowable building floor area. A higher floor area ratio implies an urban or denser construction. FAR guidelines are determined by municipalities and differ from one locality to another.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 52
Floor Planned Goods
A type of inventory that is in the possession of a business for sale and in which the possessor has no equity interest. Usually a lending institution, such as a bank, will make the money available to the business and use the goods being floored as collateral. Assessors in jurisdictions that assess inventories must be careful to look for this type of property since it may not be reported by the business and may not be easy to locate on accounting records.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Flowchart
Any of a number of kinds of graphic descriptions of an algorithm showing the oper- ations, data flow, equipment, and so on.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
FNMA
See Federal National Mortgage Association (Fannie Mae).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Forced Sale
A sale made pursuant to law; usually an auction sale that is involuntary on the part of the owner.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Foreclosure
The legal process by which a lien on a property is enforced, typically by forfeiture of the property due to nonpayment of property taxes or a mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Forfeiture
Loss of property without compensation based on a violation of law, breach of obli- gation, or a stipulated restriction on the owner.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Fractional Appraisal Method
Estimating value of individual components of a property rather than value of the entire system or unit as a single operating entity. See Undivided Interest.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Fractional Assessment
A percentage of a full value as prescribed by law.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Fractional Section
A subdivision of a township containing more or less than 640 acres of land. Typically, accounting for the overage or deficiency in acreage is done on the north and/or west side of a section, and fractional sections are found on the north and/or west side of a township.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Franchise
1) A privilege or right that is conferred by grant of government on an individual or a group of individuals; and 2) Usually an exclusive right to furnish public services or to sell a particular product in a certain geographical area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Freddie Mac
See Federal Home Loan Mortgage Corporation (FHLMC).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Free Boundary
A boundary that is not limited by a call for a monument; for example, “thence north 12° east, 120 feet.” “Thence north 12° east, 120 feet to Brown’s south line” is not a free boundary.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Freehold
General category of estates that includes the fee simple absolute and life estates.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 53
Freight In
Freight paid on incoming shipments, treated as an element of cost of goods received.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 54
Frequency Distribution
A table showing the number or percentage of observations falling in the boundaries of a given set of classes. Used in ratio studies to summarize the distribution of the individual ratios.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 54
Front Line Managers
Managers whose main task is to supervise and coordinate the activities of the line employees.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 54
Frontage
The extent of a parcel of land along a street, road, river, or other traffic artery that the parcel is said to face.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 54
Functional Obsolescence
The loss of value in a property improvement due to impairment, deficiency in design, changes in style, taste, technology, needs, and demands. Can be either curable or incurable. Functional obsolescence exists when a property suffers from poor or inappropriate architecture, lack of modern equipment, wasteful floor plans, inappropriate room sizes, inadequate heating or cooling capacity, deficiencies, and so on. It is the inability of a structure to perform adequately the function for which it is currently used.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 54
Functional Organization
A method of organizing personnel and practices under which the primary division is what is done to achieve the goals of the organization (such as producing the assessment roll) rather than where the activities are done. The latter method is called geographical organization. Functional organization of assessment usually means that special divisions are responsible for appraising properties by type: personal property, residential property, agricultural property, commercial property, industrial property, and vacant land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 54
Functional Utility
The overall usefulness and desirability of a property. The criterion is whether the improvement efficiently satisfies the wants and needs of the marketplace.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 54
Furlong
A land measure of 1/8 mile or 10 chains or 40 rods. Future Worth of $1 — The amount to which one dollar will grow at compound interest over a specified number of years at a specified interest rate. Future Worth of $1 Per Period — The amount to which a series of equal periodic payments will accumulate at compound interest for a specified number of years at a specified interest rate. G
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 54
G
GAAP
See Generally Accepted Accounting Principles.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
Gantt Chart
A bar chart that is used in project management. Each element or task of a project is represented by a horizontal bar. The bars are placed on the chart according to a time scale. The left end of each bar indicates when the task is expected to begin. The length of each bar indicates the expected duration of the task. The right end of each bar indicates when the task is expected to be completed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
GCP
See Ground Control Point.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
General Data
A category of data that includes trends that affect value and might occur on the national, regional, and neighborhood levels. These data also include physical (environmental), economic, governmental, and social forces that affect value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
General Journal
An accounting tool used as the “book” of original chronological entry for all financial transactions and sorted into the accounts of similar transactions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
General Ledger
A book of accounts in which all the transactions of a business enterprise are classified in detail or in summary as final entry from original (chronological) postings.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
General Property Tax
1) Originally, an ad valorem property tax that, in contemplation of law, was administered uniformly with respect to all tangible and intangible property (with the exception of a few classes specifically exempt) and that involved a uniform rate throughout each tax district; and 2) Currently, the remnants of such a tax after its continued curtailment through classification, exemptions, use — value assessment laws, and special property tax laws applicable to various types of personal property. Compare Classified Property Tax System, Special Property Tax, and Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
General Revenue
Government funds raised through taxation for any purpose. Generally Accepted Accounting Principles (GAAP) — The accounting standards adopted by the U.S. Securities and Exchange Commission (SEC) that are the basis for financial reporting, codified by the Financial Accounting Standards Board (FASB) into a single authoritative source.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
Geo-economic Area
1) The environment of a subject property that has a direct and immediate effect on value; and 2) A geographic area (in which there are typically fewer than several thousand properties) defined for some useful purpose, such as to ensure for later multiple regression modeling that the properties are homogeneous and share important locational characteristics.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
Geo-economic Area Analysis
A study of the relevant forces that influence property values within the boundaries of a homogeneous area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
Geocode
A code (numerical or text) used to locate or identify a point, such as the center of a parcel.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
Geodesy
1) The science concerned with determining the size and shape of the earth; and 2) The science that locates positions on the earth and determines the earth’s gravity field.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
Geodetic Control Network
A system of monuments that are used as reference points in calcu- lating, through triangulation, the location of other points on surveys and maps.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
Geodetic Densification
The augmentation of additional ground or geodetic control points to an existing control network of data points.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
Geodetic Surveying
A survey system that takes the earth’s curvature into account and is therefore used primarily to survey very large areas.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 55
Geographic Coordinate System
A method of locating a point on the earth’s surface based on its distance from each of the two intersecting grid lines knows as x and y axes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
Geographic Coordinates
A system of spherical coordinates that define the positions of points on the earth. The declinations and polar bearings in this system are the geographic latitudes and longitudes, respectively. See Coordinates. Geographic Information System (GIS) — 1) An overall term encompassing the entire field of computerized mapping; and 2) Also generally considered as a specific subset of the overall field. The GIS can: a) Answer what exists at a specific location. The location can be described using place name, ZIP code, latitude and longitude, or other location systems; b) Find locations satisfying spec- ified conditions (e.g. undeveloped parcel of land zoned for light industry, at least 10 acres in size, within railroad access); c) Spot changes in area over a certain period of time; d) Find patterns (for example, it could test the hypothesis that proximity to PCB — laden transformers is a factor in the incidence of cancer in children); and e) Could model various scenarios (for example, if 10 inches of rain fell in a certain watershed, it could indicate where flooding would occur and at what hour).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
Geographic Organization
A method of organizing personnel and practices under which the primary division is where the activities are done. Geographically Weighted Regression (GWR) — A technique for weighting sales based on their distance to the subject property. In effect, a unique equation is generated for each subject property or group of properties in the same x–y grid.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
Geographic Position
Or geographic coordinate, is a system for defining the position of points on the earth, such as a northing and easting position based on a state plane coordinate system.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
Geoid
A theoretical figure of the earth using a continuous surface that is perpendicular at every point to the direction of gravity. The geoid would coincide with the ocean surface if the latter were undisturbed and affected only by the earth’s gravity field.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
Geometric Mean
A measure of central tendency computed by multiplying the values of all of the observations by one another and then taking the result to an exponent equal to one divided by the number of observations. The geometric mean is particularly appropriate when a typical rate of change is being calculated, such as an inflation rate or a cost index.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
Georeferenced
To associate something with locations in physical space. The term is commonly used in the geographic information system (GIS) field to describe the process of associating a physical map or raster image of a map with spatial locations on the ground.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 56
GIM
See Gross Income Multiplier.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Ginnie Mae
See Government National Mortgage Association (GNMA).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
GIS
See Geographic Information System. Global Positioning System (GPS) — A network or constellation of satellites and receivers used to find a location on earth.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Globe
A spherical body.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
GNMA
See Government National Mortgage Association (GNMA).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Going Concern Value
The value all assets including real estate, tangible and intangible personal property within, or assemblage into, used to operate an economically viable business. The value of an entire property in active service and with an established clientele, as distinguished from its value immediately before being put into service or upon retirement from service.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Goodness-of-it Statistics
A statistical estimate of the amount, and hence the importance, of errors or residuals for all the predicted and actual values of a variable. In regression analysis, for example, goodness-of-fit indicates how much of the variation between independent variables (property characteristics) and the dependent variable (sales price) is explained by the independent variables chosen for the model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Goods
A type of inventory, which is tangible personal property that is exclusively held by the owner for resale. See Goods Held for Sale (Resale). Goods Held for Sale (Resale) — A type of inventory in the hands of a manufacturer, wholesaler, distributor, or retailer, after having been passed through various channels/levels of trade, that is exclusively held by the owner for resale. The appraisal of goods held for sale or resale must reflect the full — accrued costs at the level of trade where the goods are located. See Goods.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Goods in Process
A type of inventory placed into the manufacturing process whose elements have begun to change from its original form. Direct and indirect labor and other elements of expense have accrued in the conversion or manufacturing process, thereby adding to the value of the raw materials.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Goods in Transit
See In-Transit Goods.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Goodwill
An intangible property that has the favor, prestige, good name, clientele, or integrity that a business has acquired beyond the mere value of its tangible assets.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Government Lot
A partial section of land established, measured, and computed by the public land survey stem (PLSS). May be referred to as Fractional Lot or Fractional Section. Government National Mortgage Association (GNMA) (Ginnie Mae) — A government-owned and government — financed agency that subsidizes mortgages through its secondary mortgage market and issues federally insured mortgage-backed securities. This agency falls within the Department of Housing and Urban Development.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 57
Government Rectangular Survey System
A ground survey authorized by the Continental Congress in 1775 and by subsequent acts; conducted in 30 states in which the land was divided into townships approximately six miles square, each township normally containing 36 sections and each section normally containing 640 acres. See Public Land Survey System.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
GPS
See Global Positioning System.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
GPS Coordinates
A system of locating land on or above the earth through triangulation of satellite signals.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grade
See Classification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Graduated Tax
A progressive tax in which certain brackets of wealth or income (or of whatever else constitutes the tax base) are established, with a fixed or proportional increase in tax within each bracket.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grand List
See Assessment Roll.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grandfathered Use
A use that was lawfully established and maintained but that no longer conforms to the use regulations of the current zoning where the property is located.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grant
The transfer of real property by deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grantee
One who acquires property by voluntary conveyance; buyer.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grantee Index
Lists alphabetically the name of every grantee who appears on a deed recorded for the year the index covers.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grantor
One who voluntarily conveys property, whether by sale, gift, lease, or otherwise; seller.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grantor Index
Lists alphabetically the name of every grantor who appears on a deed recorded for the year the index covers.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Graticule
A network of lines on a map representing geographic parallels and meridians.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Green Building
A building that is designed, constructed, or operated to reduce or eliminate negative impacts on the environment by way of energy efficiencies and the conscious preservation of natural resources.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Grid
A uniform system of rectilinear lines superimposed on aerial photographs, mosaics, maps, charts, and other representations of the earth’s surface; used in defining the coordinate positions of points.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
GRM
See Gross Rent Multiplier.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Gross Assessed Value
The official dollar value listed on an assessment roll, including any partial exemptions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 58
Gross Domestic Product
The aggregate annual flow of a country’s wealth, measuring value of output as the sum of spending by consumers, investors, and government, or as the sum of factor incomes. Gross Income Multiplier (GIM) — A capitalization technique that uses a ratio between the sale price of a property and its potential gross income. It is a factor that can be multiplied by the potential gross income (PGI) to obtain the market value of a property. Referred to as the Potential Gross Income Multiplier (PGIM).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Gross Leasable Area
Total area of a building designed for tenants’ occupancy and exclusive use. It is measured from the center of party walls to the outside wall surfaces. It can include areas such as lobbies, basements, mezzanines, washrooms, and janitor closets. It excludes stairs, elevator shafts, flues, vents, stacks, pipe shafts, and vertical ducts if they serve more than one floor. Gross Rent Multiplier (GRM) — A factor that can be multiplied by the potential gross rent of a property to obtain the market value. It is the ratio between the sale price of a property and the monthly economic rent. See Rent, Economic and Potential Gross Rent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Gross Lease
See Lease, Gross.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Ground Area Coverage
Complete aerial photographic coverage of an area by conventional photog- raphy with parallel flight lines and stereographic overlap between exposures in the line of flight. Ground Control Point (GCP) — Points on the surface of the earth with known coordinates as represented by some geographic grid reference system.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Ground Area of Building
Total area of a building measured at mean grade to the center of party walls and the outside surfaces of external walls. It excludes patios, open decks, courts, steps, or shafts, as well as areas under open porches, eaves, cornices, and similar projections.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Ground Rent
The rent paid for the right of use and occupancy of land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Guide Meridians
The north-south axes on a map that are counted east and west of the principal meridian.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
GWR
See Geographically Weighted Regression. H
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
H
Habendum Clause
The first part of a deed that follows the legal description and limits and defines the rights that the grantee is to have in the property conveyed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Hack
A mark on a tree made by cutting out two horizontal V notch wells into the live wood.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Hard Cost
See Direct Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Harmonic Mean
The reciprocal of the arithmetic mean of the reciprocals of each value in the data set. The harmonic mean ratio is less affected by extreme values in the data set than the arith- metic mean or the geometric mean.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 59
Hectare
Equal to 2.471 acres.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
Heterogeneous
Unlike; without interrelation. The opposite of homogeneous.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
Heteroscedasticity
Exists when the variance of the error term in a regression equation is not constant. Specifically, the standard deviations of a predicted (dependent) variable vary across different values of an independent variable. Regression analysis assumes constant variance for all values of a given independent variable. If a residual plot shows an increasing or decreasing wedge or bowtie shape, nonconstant variance i.e., heteroscedasticity exists.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
Hierarchy of Needs Theory
A theory of motivation developed by Abraham Maslow that states that human beings have five basic needs: physiological, safety or security, social, esteem, and self-actualization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
High-Water Mark
The line that water impresses on the soil by covering it for sufficient periods of time to deprive it of vegetation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
Highest and Best Use
The appraisal principle that requires evaluation of all physically possible, legally permissible, financially feasible, and maximally productive (most profitable) uses of a property to determine the use that provides the owner with the highest net return on investment in the property. Highest and best use is evaluated as if vacant land, and as improved.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
Highway Right of Way
Normally a highway or road right of way is the limit of property acquired to build the highway. It is usually marked by monuments or fences. Right of ways for roads where no property was acquired originally is normally the limit being used as a road.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
Histogram
Bar chart or graph of a frequency distribution in which the frequencies of the various classes are indicated by horizontal or vertical bars whose lengths are proportional to the number or percentage of observations in each class.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
Historical Age
See Chronological Age.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 60
Historical Cost
The cost of acquisition of a property by its present owner, plus the cost of any additions and betterments made by such owner, whether or not such costs represent prudent investments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Hit Rates
The number of times the model or cascading models return a usable value estimate. Not a measure of how well the models fit the data but a measure of the relative success of a model in providing a usable result. Systems with high hit rates often result in a lower cost per valuation because of the wider area of property they may be used on.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Holding Period
The length of time an investor expects to own a given property before selling it to someone else.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Homestead
A building occupied by the owner of the freehold and his or her family with the primary intention of making it their home, together with the parcel of land on which it stands and the other improvements appurtenant to it. Note: This is a term variously defined by several states and for several purposes. Most definitions pertain to the exemption of property from levy and sale and, as such, are not concerned with the nature of the estate that a householder owns in his or her home. The above definition, which is intended only for purposes of homestead tax exemption laws, requires further elaboration to indicate what constitutes a family, what constitutes occupancy primarily as a home, how large a parcel of land can be included as part of the homestead, and what constitutes an improvement appurtenant to the home. There is as yet no substantial agreement on these points among the states.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Homestead Exemption
An exemption removes part of the value of the property from taxation and lowers the property taxes. Generally requires an application with the assessor’s office or taxing jurisdiction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Homogeneous
Possessing the quality of being alike in nature and therefore comparable with respect to the parts or elements; said of data if two or more sets of data seem to be drawn from the same population; also said of data if the data are of the same type (that is, if counts, ranks, and measures are not all mixed in together).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Homoscedasticity
The opposite of heteroscedasticity, homoscedasticity exists when the variance of the error term in a regression equation is constant. In other words, the error term is the same across all values of the independent variables. The assumption of homoscedasticity is fundamental in linear regression analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Horizontal Control
Control stations whose grid coordinates have been computed on plane surveys; known points can be converted to coordinate values.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Horizontal Coordination
Coordination between the various positions in an organization that share equal responsibilities.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Horizontal Equity
Individuals/households in equal economic situations should be treated the same. In property assessment, properties of the same value should be valued the same. See Vertical Equity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 61
Horizontal Inequity
Different treatment for identical situations. For example, properties in one neighborhood with a higher level of assessment compared with the level of assessment for similar properties in a comparable neighborhood. See Vertical Inequity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
Hoskold Premise
A technique of capitalization that involves a split rate method: a “speculative risk rate” for profit and a “safe rate” for a sinking fund to account for the recovery of invested capital. The present value of the income stream is measured by a combination of the two rates.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
Household Goods
Normal furnishings, appliances, utensils, and other tangible personal property used primarily in the residence by owners, residents, and/or guests. Often exempted from property taxation. Household goods may lose their status as an exempt property if converted to a business enterprise.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
Hue
Any pure color from the visible light spectrum (yellow, orange, blue, red, violet, green) or any mixed color from the visible light spectrum where neither color is dominant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
Hybrid Model
A model with (that incorporates both) additive and multiplicative components. See Additive Model and Multiplicative Model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
Hydrographic Map
A map showing a portion of the water of the earth, including shorelines, the topography along the shores and the submerged portions, and as much of the topography of the surrounding country as is necessary for the purpose intended. Also known as Hydrological Map. See Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
Hyperspectral
Camera systems able to record many spectral wavelength bands (up to several hundred) extending from ultraviolet to visible, beyond infrared.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
Hypothesis Test
Method for testing inferences about specific parameters using statistics and sample data. See Alternative Hypothesis and Null Hypothesis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
Hypothetical Condition
a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Comment: Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.
USPAP (2024 Edition), The Appraisal Foundation, p. 16
Conditions contrary to known facts that help identify the prospective value of a parcel, given specified constraints. I
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 62
I
IAAO
International Association of Assessing Officers.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
IDW
See Inverse Distance Weighting.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Image
The representation of a scene as recorded by a remote sensing system. Although image is a general term, it is commonly restricted to representations acquired by non-photographic methods.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Image Enhancement
Any one of a group of operations that improves the detectability of the targets of interest. These operations include, but are not limited to, contrast enhancement, edge enhancement, spatial filtering and noise suppression, and image sharpening.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Imagery
Collectively, the representations of objects reproduced electronically or by optical means on film, electronic display devices, or other media.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Improved Land
Land that has been made more valuable by the addition of labor or labor and capital. See Agents of Production.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Improvement to Land
Designed to enhance a site’s utility for general use (fill, water, and waste- water lines, for example) or to reshape the land’s natural contours for more specific use (stock tanks, for example). Any publicly constructed improvement that does not fulfill a specific use—such as curbs, gutters, and sidewalks—constitutes an improvement to land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Improvements
Buildings, other structures, and attachments or annexations to land that are intended to remain so attached or annexed, such as sidewalks, trees, drives, tunnels, drains, and sewers. Any physical enhancements to raw land with the intention of increasing its value. A structure erected on the property constitutes one very common type of improvement, although other actions, such as those taken to improve drainage, are also improvements. Although such cases are rarely intentional, “improvements” can conceivably diminish the value of the land; note, however, that easements restricting the use and value of land are not considered improvements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
In Personam
Against a person. Note: A property tax is said to be in personam when it is a charge against a person, collectable out of any of his or her property or income, rather than a lien against the property subject to the tax. Some taxes are both in rem and in personam.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
In Rem
Against a thing. A legal term derived from Latin that means “against the thing” and is used when property itself, rather than a person, is formally liable for the property tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
In-Transit Goods
A type of inventory in the hands of a common carrier or other similar carrier that are being transferred from one location to another. Usually these goods are moving by some conveyance from one point to another and, if traveling interstate, are controlled by the Interstate Commerce Commission in the U.S. Based on federal law, in most such situations, the assessor cannot assess the goods if they have not reached their final destination.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Inadequacy
The inability of a property to yield a reasonable return on the value of the land and the reproduction cost of the improvements (less accumulated physical depreciation) because of its lack of capacity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Inadequate Rate of Return
A percentage of income to investment that does not allow a company both to service debt and to earn the required rate of return for shareholders and bondholders.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Incidence
Usually refers to the persons who ultimately bear a tax burden, as opposed to the persons on whom the tax is initially imposed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Income Approach
One of the three approaches to value that converts expected economic benefits of owning a property into value through a direct capitalization method or yield capital- ization process. Also called Income Capitalization Approach.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 63
Income Capitalization
The conversion of annual net operating income and expected rate of return into an estimate of market value. Components include income, rate, and value. They can be used interchangeably using the IRV formula. See Direct Capitalization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Income Capitalization Approach
See Income Approach.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Income Incidence
The determination of the percentage of a person’s income that is devoted to paying a tax. For a given tax, if this percentage rises (falls) as income rises, the tax is considered progressive (regressive).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Income Statement
A financial reporting document that shows an entity’s revenues and expenses during a specific revenue period.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Income Stream
The series of payments (usually net income payments) receivable from an investment over the life of the investment. The series, of course, may be of any conceivable nature, including a constant series of equal payments (level), a series of decreasing payments that decrease by equal amounts each period (arithmetically decreasing), a series of increasing payments that grow larger each period at a constant rate (geometrically increasing), and so on.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Income Tax
A tax levied on the net income of an individual. In most cases these are broad-based and include income from labor and other sources, but the Census definition includes distinctive taxes on income from interest or dividends.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Increasing/Decreasing Annuity
An income stream with the characteristics of a systematic change in income, either increasing or decreasing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Incumbrances
Includes liens on real property such as taxes and assessments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Incurable Depreciation
A part of depreciation for which it is not economical to correct the condition, and if corrected, the cost of correcting the condition exceeds the value added. A defi- ciency or defect in design in which the cost to cure exceeds the increase in value. See Obsolescence and Physical Deterioration.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Indemnification
Bonds established to provide security against future costs resulting from previ- ously existing contamination; usually provided by the seller to facilitate a sale of contaminated property. To guaranty reimbursement for a loss or damage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Indemnify
See Indemnification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Independent Appraisal
See Single Property Appraisal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Independent Variable
A variable that is manipulated to test its impact on a dependent variable. A change in the independent variable may directly cause a change in the dependent variable. Any effect on the dependent variable is typically measured and recorded. In valuation analysis, independent variables are typically selected because of the expectation they will influence dependent variables.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Index Map
A small scale map showing locations (typically in a grid) of larger scale maps, photos, or supporting information for a given region or location of interest.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Indirect Capitalization
See Yield Capitalization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 64
Indirect Costs
Costs other than labor and materials incurred during construction. These include architectural and engineering fees, ad valorem taxes, and property carrying costs (interest on construction loans, financing costs, developer’s risk insurance), environmental studies, sales and leasing commissions, marketing fees, and professional and administrative expenses. Also known as Soft Costs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Indirect Equalization
The process of computing hypothetical values that represent the over- sight agency’s best estimate of market value, given the legally required level of assessment. It allows proper distribution of intergovernmental transfer payments between state, provincial, and local governments despite different levels of assessment among jurisdictions and/or property classes. It is a tool to provide proper funding and fair apportionment of the tax base in a jurisdiction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Indirect Tax
Taxes that are imposed on a commodity that are then shifted to the household. A tax that is intended to have its incidence on some person other than the one on whom it is levied; for example, an import duty or a sales tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Individual Income Tax
See Income Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Industrial Property
Generally any real or personal property used in a manufacturing activity, including production, assembly, or processing of products from raw materials, or fabricated parts. Includes factories, wholesale bakeries, dairy plants, food-processing plants, automotive manufac- turing plants, mills, mines, quarries, etc.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Inferential Statistics
Inferential statistics allow for predictions based on a representative sample of characteristics from a larger population. In other words, it allows one to make assump- tions about a larger (population) group, using a smaller portion from the same. There are two main applications for inferential statistics: 1) Estimating parameters. Using statistics from a sample (for example the sample mean) to say something about a population parameter (i.e., the population mean), and 2) Hypothesis tests. Use of sample data to answer questions about the population. See Descriptive Statistics.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Infrared Film
Photographic film sensitized to record near infrared wavelengths beyond the red end of the light spectrum; also sensitive to blue and ultraviolet light and must be used with a red filter to screen out these wavelengths. Infrared Radiation (IR) — Pertaining to or designating that portion of the electromagnetic spectrum lying between the red end of the visible spectrum (about 0.7 micrometers) and an indefinite upper boundary sometimes arbitrarily set at 1,000 micrometers, the lower limit of the microwave region of the spectrum.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Infrared Scanner
An instrument for obtaining thermal infrared imagery through line-scanning techniques.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Infrared Thermal Sensing
Line-scanning techniques using infrared scanners with detectors. Usually, the imagery is obtained from selected portions of the 3- to 14- micron region of the spectrum.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Ingress
Access or entrance to a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 65
Initial Point
Independent points of origin established across those portions of the United States covered by the public land survey system.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Innocent Landowner
A landowner who purchased property subsequent to contamination, but who had no knowledge of and did not contribute to the contamination. The landowner must have made all “appropriate inquiries” into the property prior to purchase. Purchasers who qualify as innocent landowners are not liable under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Insolvent
Being incapable of meeting current debts.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Installed Cost
Capitalized cost and other costs necessary to achieve normal utility of assets within an operating unit but not including maintenance or other operating expenses. It should include repairs that extend the life of the asset.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Installment Contract
A purchase contract in which payment is made in prescribed install- ments that are usually forfeited if default occurs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Instrument
A formal legal document such as a deed, contract, will, or lease.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Intangible Personal Property
Property that has no physical existence beyond merely represen- tational, nor any extrinsic value; includes rights over tangible real and personal property but not rights of use and possession. Its value lies chiefly in what it represents. Examples include corporate stock, bonds, money on deposit, goodwill, restrictions on activities (for example, patents and trade- marks), and franchises. Note: Thus, in taxation, the rights evidenced by outstanding corporation stocks and bonds constitute intangible property of the security holders because they are claims against the assets owned and income received by the corporation rather than by the stockholders and bondholders; interests in partnerships, deeds, and the like are not ordinarily considered intangible property for tax purposes because they are owned by the same persons who own the assets and receive the income to which they attach.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Intangible Property
(Intangible Assets) nonphysical assets, including but not limited to franchises, trademarks, patents, copyrights, goodwill, equities, securities, and contracts as distinguished from physical assets such as facilities and equipment.
USPAP (2024 Edition), The Appraisal Foundation, p. 16
Interactive
Possessing the quality of being able to get reactions to proposals or instructions one at a time rather than merely all at once at the end of a session; usually said of a kind of computer system. Interactive Valuation Application AVM [Appraiser-Assisted] — This is a mathematical model application, or a set of applications, that is/are developed, calibrated, and checked by analysts. This provides estimates of value that are reviewed and used by valuer.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Intercept
Graphically, the point at which a line, such as a regression line, intersects the axis on which the dependent variable is represented; the value of the predicted variable when the value of all the other values in the model is 0; the constant b0. It defines the y–intercept (the y–coordinate of a point where a line, curve, or surface intersects the y–axis). It is the value of y when the value of x is equal to 0. Interest (Interest Rate) — The premium paid for the use of money; a (rate of) return on capital; the equilibrium price in money markets. The interest rate usually incorporates a risk factor, an illiquidity factor, a time-preference factor, an inflation factor, and potentially other factors. See Discount Rate. Interest (Interest Transferred, Interest Acquired) — The ownership rights of a person in a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 66
Intergovernmental Revenue
Revenue that is received from other governments such as grants, payments, shared revenues, and payments in lieu of taxes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Internal Controls
The elements of a system for monitoring performance and ensuring integrity that are employed more routinely than procedural audits and are often performed automatically.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Internal Rate of Return
See Equity Yield Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Internal Rate of Return for Equity
See Equity Yield Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Interprogram Efficiency
The allocation of resources to a given governmental program that provides greater net benefits than if those resources were allocated to any other program. Interquartile Range (Interquartile Deviation [IQR]) — The result obtained by subtracting the first quartile from the third quartile; 50 percent of the observations fall within the IQR.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Intersector Efficiency
The incremental spending that provides greater net benefits than could be obtained if the resources were left with individuals and organizations in the private sector.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Intestate
The state of having died without leaving a valid last will and testament.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Intraprogram Efficiency
When resources are used to maximize net benefits for any given program.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Intrinsic Value
1) The inherent worth of a thing; and 2) Value that remains when cost to cure a contamination problem exceeds original market value. See Value-in-Use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Inutility
An accounting concept that measures cost and capacity to estimate a loss in value. Often used by non-appraisers as evidence of obsolescence. However, inutility calculations are often inconsistent with appraisal methods of determining any loss in value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Inventory
A group of personal property items whose value is exhibited by value-in-exchange, as ownership is exclusively for the purpose of sale, rather than use. Property that is used occasionally is not inventory, as inventory is solely held for resale. Inventory includes goods held for sale (resale), raw materials, goods in process, finished goods, supplies, consigned goods, bill and hold goods, floor planned goods, and in-transit goods. See Bill and Hold Goods, Consigned Goods, Finished Goods, Floor Planned Goods, Goods Held for Sale (Resale), Goods in Process, In-Transit Goods, and Raw Materials.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Inventory, Perpetual
An inventory that is kept up to date by recording and valuing additions to stock and withdrawals therefrom as they occur. Synonymous with “running inventory.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Inventory, Physical
An inventory that is determined on a periodic basis by observation, actual count, weight, or measure of all items on hand. Inverse Distance Weighting (IDW) — A method of estimating the value of a response variable (say, elevation or sale price) by taking a weighted average of known values at surrounding points.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 67
Investment Analysis
A study that evaluates the relationship between acquisition price and anticipated future benefits of a real estate investment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Investment Holding Period
The length of time that typical investors generally hold an investment of a specified type.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Investment Trust
A type of investment company that sells its stock and invests the money received in stocks and bonds of other companies, real estate, or other investments. Investment trusts can be open-end or closed-end. See Real Estate Investment Trust.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Investment Value
The worth of an investment property to a particular investor. Investment value may or may not coincide with market value depending on the requirements of the specific investor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Investment Yield
The rate of return on capital that is generated from an investment over a period of ownership, including both income and resale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Inwood Coefficient
A factor used to obtain the present worth of a level stream of income; also known as the Present Worth of $1 Per Period factor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Iowa Type Curve
A classification of survivor curves by their basic mathematical shape into three families of, respectively, 6, 7, and 5 curves; hence the alternate designation of “Iowa 18 type curves.” Type survivor curves are used to smooth original survivor curves, to help determine the probable life of single units and as a means of checking the adequacy of the depreciation reserve balance or of estimating an adjustment factor in the appraisal procedure.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
IR
See Infrared Radiation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Irregular Lot Valuation Table
A valuation table whose purpose is to convert the actual frontage of irregularly shaped parcels to effective front footage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Irrevocable
That which cannot be recalled or revoked.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
IRV
A mnemonic (formula) for the basic equation of the income approach: Income = (Capitalization) Rate × Value. Value = Income / Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
Iteration
One repetition or repeated cycle in a process of estimating values as close as possible to actual values by repeated approximations. The results of each approximation are used in the next one. J
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 68
J
Jeopardy Assessment
See Doomage Assessment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Joint Estate
See Tenancy, Joint.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Joint Tenancy
See Tenancy, Joint; Tenancy by the Entirety; and Tenancy in Common.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Joint Tenants
An estate owned by two or more persons in equal shares created by a single transfer. Upon the death of a tenant, the surviving tenant takes the entire property, and nothing passes to the heirs of the deceased.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Judicial Review
A review by a body that is part of the organized judiciary.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Judicial Sale
1) A sale made under the process of a court having competent authority to order it, by an officer duly appointed and commissioned to sell, as distinguished from a sale by an owner in virtue of his right of property; and 2) A court action that enforces a judgment lien by selling property to pay a debt.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Junior Mortgage
A lien on a property that is subordinate to any other prior mortgage claims.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Jurisdiction
1) The right and power to interpret and apply the law; also, the power to tax and the power to govern; and 2) The territorial range of authority or control.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Juxtaposition of Numbers
Figures used in a description that have differing units; for example, “thence easterly along the north line of lot 21, 21 feet” can easily be changed to “2,121 feet or 2121 feet.” Insertion of a phrase such as “thence easterly along the north line of lot 21, a distance of 21 feet” is better. K
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
K
Kilometer
Unit of length equal to 1,000 meters. Equals 0.6214 statute miles.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Kriging
A family of algorithms for interpolating or estimating the value of a response variable from known values at different points on an x – y surface.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Kruskal-Wallis Test
Used to determine if there is a statistically significant difference among the medians of three or more independent groups. This test is the nonparametric equivalent of the one-way analysis of variance (ANOVA) and is typically used when the normality assumption is violated. The Kruskal-Wallis test does not assume normality in the data and is much less sensitive to outliers than the one-way ANOVA. Often used to analyze assessment ratios from three or more classes of property as an indication of significant differences among multiple classes of property. When only two classes are being compared, the appropriate test is the Mann-Whitney test.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
Kurtosis
A statistic that indicates the sharpness of the peak of the distribution of a data set. L
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 69
L
Land
1) In economics, the surface of the earth and all the natural resources and natural productive powers over which possession of the earth’s surface gives man control; and 2) In law, a portion of the earth’s surface, together with the earth below it, the space above it, and all things annexed thereto by nature or by man.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land Combination
Combining two or more parcels of land into a single parcel. May be required when developing a large area of land for improvements. May be governed by the Land Division Act or requirements of a governmental entity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land Contract
A contract for the sale of a property in which the seller retains title until the buyer completes the contracted payments for the property. The contract may be recorded; however, the conveyance of the property is not complete until all contractual obligations are fulfilled, at which time the deed for transfer of ownership may be recorded. See Contract for Deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land Cover
The biophysical materials covering the surface of the land, including soil, water, vegetation, and human cultivation activities.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land Description Systems
Organized, uniform written descriptions of the physical boundaries of property rights; commonly referred to as legal descriptions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land Division
Separating land into two or more parts. May be governed by the Land Division Act or statutory requirements of a governmental entity. The total value of land may increase when divided into individual smaller parcels.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land Grant
A legal document in which the federal government conveys land title to an individual.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land Ratio
The ratio of land area to building area. The land ratio can be an important factor in grouping properties for income approach appraisal by means of direct sales comparisons.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land Ratio Method
A technique used to estimate the value of property from a knowledge of normal net income, the discount rate, the remaining economic life of a property, the value of the building, the income path attributable to the building, and the income path attributable to the land. The technique estimates total value by discounting the income stream attributable to the land and adding the result to an independent estimate of the value of the building.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Land Residual Technique
A value ascribed to land when the building value is known and when there are no unimproved land sales to support land value. For this technique to be valid, the building must be new (the improvements can be hypothetical) and must represent the highest and best use of the land. The information needed to use the land residual technique includes: 1) Net operating income; 2) Improvement value; 3) Proper discount rate; 4) Property recapture rate; and 5) Effective tax rate. See Abstraction Method, Discount Rate, Effective Tax Rate, Net Operating Income, and Recapture Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Land Split
See Land Division.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Land Value
The amount for which vacant land with the same location, area, shape, physical characteristics, and allowable uses would sell in the open market.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Land Value Tax
An ad valorem property tax measured by the value of land exclusive of any improvements thereon. Last-In, First-Out (LIFO) — An accounting procedure used to measure the cost of unsold inventory, including inventory carried over from the prior year. This method is less acceptable than first-in, first-out (FIFO) because it assumes that the goods on hand are the earliest purchased items, and that the more recently purchased goods have been sold. May be used for income tax purposes but would rarely reflect inventory value for property tax purposes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Land, Improved
The ground or base of property that has been partially or fully developed for use or continued improvements. Land can be improved by changing the zoning requirements, erecting a building or structure, establishing utility (gas, water, electric) hookups, and installing access features or roadways. Land, Parcel of — See Parcel.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land, Patented
Land formerly owned by a state or national government as part of the original public domain that has been voluntarily conveyed by such government to a private owner by a proceeding authorized by general statute, the conveyance being evidenced by an instrument known as a “land patent.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land, Platted
Land that has been surveyed and divided into marketable lots delineated on a plat; applied especially to urban land used or intended for use as building sites. Land Capitalization Rate (Rl) — The ratio of land income to land value; can be used to convert a single year’s land income into land value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 70
Land-to-Building Ratio
The proportion of land area to gross building (improvement) area. For a given use, the most frequently occurring ratio will be that of a functioning economic unit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Land-to-Improvement/Building Ratio
See Land-to-Building Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Latitude
The angular distance north or south of the equator, measured in degrees along a meridian, as on a map or globe.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Law of Variable Proportions
Often called law of decreasing returns or the law of proportion- ality. States that when the quantity of one productive service is increased by equal increments, while the quantities of other productive services remain fixed, the resulting increment of product will decrease after a certain point.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Layer
Set of related geographic features, such as streets, parcels, or rivers, and the attri- butes (associated characteristics of those features) logically organized into groups that can be displayed independently.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Leadership
The art of acting and conducting business in a way that causes people to want to follow.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Lease
A written contract by which the lessor (owner) transfers the rights to occupy and use real or personal property to another (lessee) for a specified time in return for a specified payment (rent).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 71
Lease, Graduated Rental
A long-term lease with increases or decreases (specified in a step-up or step-down clause) in the rent that are to take effect at established intervals at set amounts or at amounts to be reached by subsequent appraisal and arbitration.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lease, Gross
A lease under the terms of which the lessor (landlord) receives stipulated rent and which includes the expenses of operating and maintaining the leased property. Contrast Net Lease.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lease, Ground
A lease conveying possessory interest in land exclusive of any improvements constructed thereon.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lease, Net
See Net Lease.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lease, Percentage
A lease in which the consideration is measured by or dependent on the oper- ating earnings or sales of the business using the leased property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lease, Proprietary
A type of lease used by tenant-shareholders in a cooperative apartment; the tenant purchases a specific number of shares of stock to occupy a unit, then makes monthly payments for operations and debt service.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lease, Sandwich
A lease that lies between the fee title and a subsequent lease. For example, A leases to B and B to C; the first of these leases is a sandwich lease. The lessee in a sandwich lease is not the person using the property. The lessor may or may not be the owner of the fee; if it is a sublease, he or she is not.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lease, Step-Up
A lease that calls for set increases in rent at specified intervals.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lease, Straight
A lease that calls for a set amount of rent to be paid periodically over the term of the lease.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Leaseback Sale
The transfer of building, land, or personal property to a buyer under a special arrangement to simultaneously lease it back to the original builder/seller, usually involving a long-term triple net arrangement with options to renew the lease.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Leased Equipment
Items of a particular purpose that are allowed to be used by someone other than the owner through periodic lease payments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Leased Fee Estate
A landlord’s interest in real property under a lease that includes the rights to receive rental payments and to take possession of the property after the lease term ends. See Reversion.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Leasehold
A tenant’s interest in real property under a lease. Sometimes called a Leasehold Estate or Leasehold Interest.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Leasehold Improvements
Items of personal property such as furniture and fixtures associated with a lessee (the tenant) that have been affixed to the real property owned by a lessor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Legal Description
A delineation of dimensions, boundaries, and relevant attributes of a real property parcel that serve to identify the parcel for all purposes of law. The description may be in words or codes, such as metes and bounds or coordinates. For a subdivided lot, the legal description would probably include lot and block numbers and subdivision name.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 72
Lessee
The person receiving a possessory interest in property by lease, that is, the owner of a leasehold estate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Lessor
The person granting a possessory interest in property by lease, that is, the conveyor of a leasehold estate, the holder of a leased fee estate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Level Annuity
A pattern of income in which the amount of income does not change during the term of the annuity, and the income is received in equally spaced and regularly scheduled payments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Level of Appraisal
The common, or overall, ratio of appraised values to market values. Three concepts are usually of interest: 1) The level required by law; 2) The true or actual level; and 3) The computed level, based on a ratio study. See Level of Assessment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Level of Assessment
The common or overall ratio of assessed values to market values.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Level of Trade
Refers to the production and distribution stages of a product. They are the: 1) Manufacturing level; 2) Wholesale level; 3) Retail level; and 4) Consumer level. Personal property should be assessed at the trade level at which it is located. See Uplift Factor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Level Perpetual Annuity
A pattern of income in which both the property’s value and income are expected to remain constant into perpetuity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Leverage
The effect of borrowed funds on investment return.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Levy
See Property Tax Levy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Liability
An amount that is owed by one person to another. Used to include obligations of a business entity to its owners, employees, and creditors. Liability accounts are included on the balance sheet for accounting purposes. Assets are equal to liabilities and net worth (equity). See Asset, Balance Sheet, Equity, and Net Worth.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
LiDAR
See Light Detection and Ranging.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Lien
1) The legal right to take or hold property of a debtor as payment or security for a debt; and 2) Any legal hold or claim, whether created voluntarily or by operation of law, that a creditor has on all or specified portions of the property owned by a person indebted to him.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Lien Date
The date on which an obligation, such as a property tax bill (usually in an amount yet to be determined), attaches to a property, and the property thus becomes security against its payment. Often synonymous with Appraisal Date.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Life Estate
An interest in property that lasts only for a specified person’s lifetime; thus, the owner of a life estate is unable to leave the property to heirs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Life Estate Per Autre Vie
Life estate in which the ownership interest is measured not by the owner’s life but by the life of another person.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Life Tenant
The recipient of a life estate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Life, Economic
See Economic Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
Life, Physical
See Physical Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 73
LIFO
See Last-In, First-Out. Light Detection and Ranging (LiDAR) — An airborne collection system that uses a scanning infrared laser sensor comprising a transmitter and receiver, global positioning system (GPS) receiver and an inertial navigation system (INS) unit to obtain the geospatial x, y, and z coordinate value of ground surface points. This data can be used to develop very accurate digital elevation, surface, and terrain models. These models can form the base for orthoimagery and geospatial analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Limits on Assessment Increases
A form of tax and expenditure limitation applicable to all local governments in the state, in which an upper limit is placed on the dollar value of assessments, on the dollar amount of assessment increases, or on the rate of the assessment increase.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Limits on General Revenue or Expenditure Increases
A form of tax and expenditure limitation, applicable to all local governments in the state, in which an upper limit is placed on the dollar value of increases in revenues gathered or on expenditures made, or on the rate of increase in revenues gathered or expenditures made.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Line Graph
A type of graph that plots statistics for one variable (usually a continuous variable) against values for a noncontiguous variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Line, Base
See Baseline.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Line, Coincidence
Synonymous with preferred term Merge Line. See Coincidence Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Line, Merge
See Merge Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Line, Property
See Property Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Line, Range
See Range Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Line, Township
See Township Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Line-Item Budgeting
A style of budgeting designed to achieve financial control and minimize opportunities for corruption by controlling spending.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Linear Model
The relationship between one dependent variable and one or more independent variables. Unknown parameters (population) are estimated. The response or dependent variable assumes the errors are independent normal random variables with a mean of zero and constant variance. The coefficients for each independent variable are used to predict the dependent variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Linear Regression Analysis
A kind of statistical analysis used to investigate whether a dependent variable and a set of one or more independent variables share a linear correlation and, if they do, to predict the value of the dependent variable on the basis of the values of the other vari- ables. Regression analysis of one dependent variable and only one independent variable is called simple linear regression, but it is the word simple (not linear) that distinguishes it from multiple regression analysis with its multiple independent variables.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Linearity
The assumption that the marginal contribution to value of an independent variable is constant over the entire range of the variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 74
Link
A one hundredth of a surveyor’s chain, a linear measure of 66 hundredths of a foot, or 7.92 inches.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Liquid Assets
Assets that can quickly be converted into cash.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Liquidation Value
The estimated gross dollar amount that could be typically realized at a properly conducted public auction held under forced conditions and under present-day economic trends.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Liquidation Value-in-Place
The estimated proceeds of a forced sale of an entire facility or property. For personal property items the assets remain in the location of the business entity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Liquidity
The ease with which an asset may be converted into cash.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Lis Pendens
A notice of a pending suit. A person dealing with property after a lis pendens has been recorded takes the property subject to the decree of a court.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
List, Grand
See Assessment Roll.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
List, Tax
See Assessment Roll.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Listing
The process by which the assessor ensures that records for the taxable property iden- tified during discovery are preserved with integrity, available for use in valuation activities, and ultimately reflected in the assessment roll.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Littoral Rights
Rights held by owners and users of land adjacent to or abutting oceans, gulfs, and lakes. See Riparian Rights.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Loan Constant
See Mortgage Constant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Loan Term
The length of time over which a loan must be repaid. Loan-to-Value Ratio (M) — The portion of the investment financed by the mortgage or debt. It is the complement to the amount financed by equity. It is the relationship (often a percentage) between the amount of a mortgage and the value of the security pledged for the mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Local Multiplier
An adjustment to replacement or reproduction cost new or historical cost to reflect local costs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Locally Assessed Property
Property for which the assessed value is set by the assessing official of the local jurisdiction within which the property is located.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Location
The numerical or other identification of a point (or object) sufficiently precise so the point can be situated. For example, the location of a point on a plane can be specified by a pair of numbers (plane coordinates), and the location of a point in space can be specified by a set of three numbers (space coordinates). However, location may also be specified in terms other than coordi- nates. A location may be specified as being at the intersection of two specific lines by identifying it with some prominent and known feature (for example, “on top of Pikes Peak” or “at the junction of the Potomac and Anacostia Rivers”). Location Value Response Surface Analysis (LVRSA) — A mass appraisal technique that involves creating value influence centers, computing variables to represent distances (or transforma- tions thereof) from such points, and using the variables in a multiple regression or other model to capture location influences. Implementation of the technique is enhanced by the use of a geographic information system. Some geographic information systems permit the value influence centers to be displayed and measured as a three-dimensional grid surface, the results of which can be likewise used in calibration techniques to arrive at the contribution of location based on the model specification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 75
Location Variable
A variable, such as the distance to the nearest commercial district or the traffic count on an adjoining street, that seeks to measure the contribution of locational factors to the total property value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Log
Linear Relationship — A correlation between two variables such that if the value of one variable changes by a certain percentage, the value of the other changes by a certain amount. Logarithms permit multiplication to be done by means of adding logs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Logarithm
The number that, when used as an exponent for another number (called the base), results in a third number of some practical interest (called the antilogarithm). There are two bases. The base 10 produces what are called common logarithms, and the base 2.71828 (e) produces natural logarithms.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Long-Lived Items
Items that are the basic structure of a building and are not usually replaced during economic life. For example: foundation, roof structure, and framing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Long-Term Debt
See Long-Term Liability.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Long-Term Liability
The unpaid balance of notes, bonds, and other evidence of debt payable after one year from the date issued, plus any unamortized debt discount and debt expense and any reacquired long-term debt. An obligation or debt, such as a mortgage, that will not mature for generally more than one year. Considered long-term debt.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Longitude
A linear or angular distance measured east or west from a reference meridian on a sphere or spheroid.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Lot
A plot of land, generally a subdivision of a city, town, or village block, represented and iden- tified by a recorded plat.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Lot and Block Survey
A plat in which a larger parcel of land is subdivided into small units for the purpose of sale. Conveyances need to refer only to the lot, block, and plat book designation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lot and Block Survey System
A system used to describe small parcels of land, primarily urban, using in most cases a section or plat number or name, and a lot number.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lot Coverage Ratio
The relationship between the improved portions of a lot (including buildings, patios, decks, driveways, etc.) as compared with the total area of the lot.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lot Line
The line shown on the map creating the lot. A lot line is permanent and does not change with street openings.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lot Line Revision
An adjustment or reallocation of property between two or more lots or parcels of land that does not create a new lot or parcel of land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lot Split
A division of an existing lot, whether developed or not, into two or more lots. See Land Division.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lot, Corner
A lot located in the angle formed by two intersecting streets.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Lot, Government
One of the non-rectangular areas into which sections not evenly or approx- imately divisible into square 40-acre tracts were divided in the course of the government survey.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Lot, Inside
A lot sufficiently far from the intersection of any streets to be assumed to be free of corner influence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Lot, Irregular
A lot that is not a conventional shape.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 76
Lot, Restricted
A lot whose owner is restricted as to its use or sale by the terms of a private contract or by operation of law; for example, a lot upon which construction is restricted to resi- dential buildings of an approved style and of a minimum cost. Note: Restrictions are ordinarily created by zoning laws and ordinances or by private contract on the deeding of property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lot, Standard
A lot that is selected as the standard in size, shape, grade, and alley influence, usually because it is representative of the majority of lots within a given area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lot, Through
A lot fronting on two streets that are parallel, or that run in the same general direction. Synonymous with Merged Lot. Note: The term “through parcel” is more appropriate if the parcel was formed by assemblage of two lots with a common rear line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Low-Water Mark
The line to which a body of water receded, under ordinary conditions, at its lowest stage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lower of Cost or Market
1) An inventory accounting concept that states that the present value of inventory is based on the lower of either historical cost or current selling price; and 2) The accounting theory stating that property is recorded into the books and records at the lowest amount. If the price paid (cost) is lower than market value, the entry into the accounting records is the price paid. If the price paid (cost) is higher than market value, the entry into the accounting records is the market value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Luminance
The intensity of light per unit area of its source.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
Lump-Sum Grant
A grant that does not depend on how much the recipient government spends on a particular service.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
LVRSA
See Location Value Response Surface Analysis. M
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 77
M
Macro-Identification
A method of studying an entire manufacturing process by identifying the major components contributing to the design capacity of a plant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Macroeconomics
The economics of the economy as a whole—the forces causing recession, depression, and inflation together with the forces resulting in economic growth.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Magnetic Declination
A deviation of the direction of the needle from astronomic north.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Magnetic Meridian
The north direction that a magnetic compass needle points to at any given location. It is a deviation of the direction of the needle from astronomic north. An imaginary line connecting the magnetic north and south poles.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Maintenance
Maintaining or preserving a property. Resources are expended that preserve the asset in order to achieve the intended economic life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Management
The coordination and administration of tasks to achieve a goal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Management Rate
A rate that reflects the costs of managing the property. This management rate is added to the risk rate, the safe rate, and the non-liquidity rate to yield the return rate in the summation method.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Mandates
Federal regulations that impose costs on state and local governments. There are also state mandates on local governments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Mann-Whitney Test
A test in inferential statistics that seeks to determine whether the differ- ences in values between two sets of observations from any population are statistically significant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Manuscript Map
The original drawing of a map as compiled or constructed from various data (such as ground surveys or photographs).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Map
A representation (usually on a flat medium) of all or a portion of the earth or other celestial body, showing the relative size and position of features to some given scale or projection; also, a representation of all or part of the celestial sphere. A map may emphasize, generalize, or omit the representation of certain features to satisfy specific requirements. Maps are frequently categorized and referred to according to the type of information they are designed primarily to convey, to distin- guish them from maps of other types. 1) Topographic maps represent the horizontal and vertical positions of features; distinguished from a planimetric map by the addition of relief in measurable form. A topographic map uses contours or comparable symbols to show mountains, valleys, and plains, and in the case of hydrographic charts, symbols and numbers to show depths in bodies of water; 2) Control maps portray relief by means of contour lines; 3) Planimetric maps present only the horizontal positions for the features represented; distinguished from a topographic map by the omission of relief in measurable form. See Map, Base; Cadastral Map; Hydrographic Map; and Manuscript Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Map Book and Page System
A system for parcel identification in which a code (usually numeric) is used to identify each parcel. Each code contains four elements: 1) The volume or book of maps in which the parcel is to be found; 2) The page on which it is to be found; 3) The block; and 4) The individual parcel on the block.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Map Projection
A mathematical model used to transform positions on the surface of the earth, which is curved, onto a flat map surface. An orderly system (mathematical model) to portray all or part of the earth, which is an irregular sphere, on a planar or flat surface. Some distortions of conformality, distance, direction, scale, and area always result from this fitting process. Examples include the Mercator and the Lambert Conformal Conic Projection.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Map Scale
The ratio of a distance on a photograph or map to its corresponding distance on the ground. Scale may be expressed as a ratio, 1:24,000; a representative fraction, 1/24,000; or an equivalence, 1 in. = 2,000 ft.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Map Scale, Fractional
A fractional scale is the ratio that any small distance on the map bears to the corresponding distance on the earth. It may be written in the form of a fraction (1/100,000) or as a proportion (1:10,000). Fractional scales are representative in any linear unit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Map, Aerial
A map constructed on the basis of aerial photographs. See Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Map, Base
A map with points of reference and other physical features to facilitate data plotting. See Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 78
Map, Land Value
A map that shows all streets, watercourses, railroads, and other principal features, and the unit — foot values, square — foot values, or acre values assigned to all land in the area covered. Synonymous with Equalization Map and Base Value Map. See Map. Map, Lot and Block — A map of an urban area showing the division of land into lots and blocks, with dimensions. See Map. Map, Planimetric — A map that shows only the horizontal positions of the features represented. See Map, Topographic.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Map, Tax
A map drawn to scale and delineated for lot lines or property lines or both, with dimensions or areas and identifying numbers, letters, or names for all delineated lots or parcels. See Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Map, Topographic
A map showing the horizontal and vertical locations of natural and artificial features. See Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Margin of Error
A measure of the uncertainty associated with statistical estimates of a parameter. A margin of error is a key component of a confidence interval. It reports a “plus or minus” percentage or proportion quantity in a confidence interval at a specified level of probability (typically 95 percent). See Confidence Interval.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Marginal Cost
The change in a firm’s total costs per unit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Marginal Physical Product
The change in total output of a firm resulting from a one-unit change in the employment of a resource, holding the quantities of other resources constant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Marginal Revenue
The change in a firm’s total revenue per unit in its sales level. Marginal revenue equals price in pure competition only.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Marginal Tax Rate
The proportion of the last dollar of income taxed by the government.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 79
Marginal Unit
The unit last added to any economic process.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Marginal Utility
The change in the total utility to a consumer that results from a one-unit change in the consumption level of an item.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Marginal Utility Theory
A theory of consumer choice that says that consumers will maximize welfare by allocation of their budget such that the marginal utility per dollar is equalized across all purchased goods.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Mark-up
An amount added to a cost in calculating a selling price to account for overhead and profit. Marshall Valuation Service (MVS) — A cost manual used for developing replacement costs and depreciated values of improvements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Market
1) The topical area of common interest in which buyers and sellers interact; and 2) The collective body of buyers and sellers for a particular product.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Adjustment Factors
These factors reflecting supply and demand preferences are often required to adjust values obtained from the cost approach to the market. These adjustments should be applied by type of property and area and are based on sales ratio studies or other market analyses. Accurate cost schedules, condition ratings, and depreciation schedules will minimize the need for market adjustment factors.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Analysis
A study of the supply and demand metrics within a specific area for a specific type of property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Analyst
An appraiser who studies real estate market conditions and develops mathe- matical formulas that represent those market conditions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Approach
See Sales Comparison Approach.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Area
See Economic Area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Condition Adjustment
A factor to reflect price changes in relation to the time the property sold and the date of valuation. These factors account for changes in market conditions between the time a comparable sold and the effective date of the appraisal. Market Delineation (Segmentation) — The process of defining a geographic area to identify supply and demand characteristics that affect the property’s ability to serve uses for which it is designed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Price
See Price, Market. Compare with Market Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Rate of Return
The typical return on an investment in a given type of property in a given market. It is distinct from the actual rate of return indicated by a property’s actual income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Rent
See Rent, Economic.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Value
A value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the value definition that is identified by the appraiser as applicable in an appraisal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Market Value Standard
A requirement of law or practice that the assessment ratio of all prop- erties be equal to 100 percent of market value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 80
Marketability
1) The ease of which a property could be sold based on the desirability of the property; 2) The extent to which a property is free of encumbrances that would preclude the owner’s ability to sell the property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
MAS
See Mass Appraisal Specialist.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Mass Appraisal
The process of valuing a group of properties as of a given date, using standard methods, employing common data, and allowing for statistical testing. Source: IAAO Standard on Mass Appraisal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Mass Appraisal Model
A mathematical expression of how supply and demand factors interact in a market. For purposes of appraisal, a representation (in words or an equation) that explains the relationship between value or estimated sale price and variables representing factors of supply and demand. Source: IAAO Standard on Mass Appraisal. Mass Appraisal Specialist (MAS) — A professional designation conferred by the International Association of Assessing Officers (IAAO) recognizing professionalism and competency in with a wide range of property types, property appraisal and assessment administration issues, and property tax policy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Matching Grants
A grant that provides a certain amount for each dollar spent by the recipient government. For example, a 50 percent matching grant would provide $1 to the recipient government for each $1 it spent on a particular function.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Matte Fi
A coating or texture on the surface of polyester fi. Commonly used with cadastral maps because of dimensional stability, ink adherence, erasing quality, translucence, and strength.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Matte Print
Print made on photographic paper with a dull finish more suitable for pencil or ink annotations than a glossy print but less suitable for interpretation than a semi-matte print.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Mean
A measure of central tendency. The result of adding all the values of a variable and dividing by the number of values. For example, the mean of 3, 5, and 10 is 18 divided by 3, or 6. Also called arithmetic mean.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Mean High-Tide Line
The average height of the tide between all the lowest high tides and all the highest tides.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Meander Corner
Location on a map where a meander line intersects with a regular section line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Meander Line
A traverse of a body of water for the purpose of determining the size and location of the body of water. Meander lines do not represent boundary lines; the body of water where it exists represents the true boundary lines.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Measure of Central Tendency
Single values representing the center point of a set of data. Common measures of central tendency are the mode, median, arithmetic mean, and weighted mean.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 81
Mercator Projection
One of several mathematical projections of the curved surface of the earth on an imaginary cylinder that is then flattened. The original Mercator projection was on a cylinder the axis of which was in a north-south direction. Transverse Mercator projections are on imag- inary cylinders with an east-west orientation. Transverse Mercator projections are more common than the original Mercator projection. In addition to the universal transverse Mercator (UTM) projection, there are the modified transverse Mercator system (MTMS) and the state transverse Mercator (STM) system.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Merge Line
An imaginary line dividing a through lot or parcel into two parts, along which, corner and alley influence being ignored, the value of the land is at its minimum and is the same whether the depth be calculated from one street or the other. Note: It is customary to locate the merge line of a rectangular through lot at a point at which the ratio of its distances from the two streets is equal to the ratio of the respective unit-foot values of the two streets. This formula, however, does not produce results consistent with the above definition when used in conjunction with any of the standard depth tables.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Merge Point
Any point on the merge line. See Merge Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Merger
Union of two or more entities; absorption of a lesser entity by a greater one.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Meridian
A north-south line from which longitudes are referenced. All lines intersect the equator (as well as other latitudes) and converge at the North and South Poles.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Meridian Line
Meridian line is any line running due north and south. Since meridian lines converge at the North Pole, no two meridian lines are parallel. Practically, within the limits of a property survey all lines shown as north and south are considered parallel.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Meridian, Grid
A line of a map grid parallel to the line representing the central meridian. See Meridian Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Meridian, Principal
A true meridian from which range lines are established by the government survey. Contrast Baseline. See Meridian Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Metes and Bounds
Measurement of angles and distances; a description of a parcel of land accomplished by beginning at a known reference point, proceeding to a point on the perimeter of the property being described, and then tracing the boundaries until one returns to the first point on the perimeter, usually a corner. The angles are described by reference to points of the compass, and the distances are described in feet or chains; curves are treated as arcs on a circle. A description of real property starting at a known point and describing the bearings and distances of the lines forming the boundaries of the property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 82
Micro-identification
The process of finding the individual characteristics of equipment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Microeconomics
The economics of units, such as firms and neighborhoods, of an economic system (as opposed to macroeconomics, which studies the economy as a whole).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Microwave Region
Commonly, that region of the electromagnetic spectrum in the wavelength range from 1 micrometer to beyond 1 meter.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Middle Managers
The level of management whose job it is to take the goals and strategies developed by the top managers and put them into practice.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Mill
One mill is one-thousandth of one dollar or one-tenth of one cent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Millage
A tax rate expressed as mills per dollar. Also known as Mill Rate. For example, a 2 percent tax rate is $2 per $100, $20 per $1,000, or 20 mills per dollar. One mill is one-thousandth of one dollar or one-tenth of one cent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Mineral Rights
The right to extract ore, petroleum, or other minerals from a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Ministerial Duty
A duty prescribed by law that can be discharged without the exercise of official discretion or judgment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Minkowski Metric
A method of measuring distance used in the automated comparable sales process to quantify the similarity of each candidate property to the subject property. Once the distance is calculated for each candidate property, they are sorted from lowest to highest. The properties with the smallest distances, or largest comparability, are closest to the subject property. If all attributes of the subject property and candidate property match exactly, the distance will be zero. The Minkowski Metric is interpreted as the average percent difference of the candidate property from the subject property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Minute
A one-sixtieth of a degree of the circumference of a circle.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Miscellaneous Revenue
See Revenue.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Mission Statement
A broad, comprehensive statement that describes the fundamental purpose, aims, and values of an organization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Mixed Use
Instances in which a single tract of land includes multiple use-types. Also known as Multiple Use Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
MLS
See Multiple Listing Service.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Mode
A measure of central tendency; 1) In an array of the values of a variable, the most frequently occurring value; and 2) By extension for grouped data, the class with the greatest number of observations.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Model
A representation of how something works. For purposes of appraisal, a representation (in words or an equation) that explains the relationship between value or estimated sale price and variables representing factors of supply and demand.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 83
Model Calibration
A process used to develop adjustment factors based on market analysis that identifies specific factors with an actual effect on market value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Model Deployment
The application of a finalized model to data (existing or new), typically in a platform outside of the statistical package used to specify, calibrate, and develop the model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Model Specification
A process used for identifying and defining the property characteristics used in a valuation model and how they related mathematically with one another.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Money Market
The interaction of buyers and sellers of short-term credit instruments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Monument
Tangible landmarks indicating boundaries. 1) Physical monuments are existing features such as a stone, stake, tree, hill, ocean, river, or lake, but not the line of an adjoiner. 2) Natural monuments are naturally occurring objects such as a lake, river, tree, boulder, or hill. 3) Artificial monuments are man-made objects such as a stake, fence, or set stone, etc. 4) Record monuments are an adjoiner property called for in a deed, such as a street or particular parcel of land. Frequently the boundary line of the adjoiner is referred to as the record monument; actually, the entire property, rather than the line, is the monument. Physical monuments may or may not mark a record monument. In court reports, record monuments are often referred to as natural monuments. 5) Legal monuments are any monument controlling in a legal description. It is often limited in meaning to be synonymous with record monument.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Moratorium
A period of suspension of legal remedies or rights commonly used by local government agencies.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
More or Less
In their ordinary use they are to be taken as words of caution, denoting some uncer- tainty in the mind of one using them and a desire not to misrepresent. When used in connection with quantity and distance, “more or less” are words of safety and precaution, intended merely to cover some slight or unimportant inaccuracy. If “125 feet more-or-less to the point of beginning” is used in a deed, the “more or less” indicates that the 125 feet is an informative term, whereas, “to the point of beginning” is the controlling term. “About 12 acres more-or-less is indefinite and should be avoided since the word “about” is very broad in meaning.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Mortgage
A contract under the terms of which the legal, but not the equitable, title to a specific property of one person (the mortgagor) is conditionally conveyed to a second person (the mort- gagee) as security for the payment of a debt or performance of some other act. Note: In some states, legal title to mortgaged property passes to the mortgagee on execution of the mortgage; in others, legal title passes when the debt secured by the mortgage is in default; in still others, the mortgage is simply a lien, and legal title does not pass until foreclosure proceedings have been completed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Mortgage Capitalization Rate
See Mortgage Annual Constant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage Coefficient
A component of the basic rate in the Ellwood variant of mortgage-equity analysis. Mortgage Constant (RM) — Annual debt service expressed as a percentage of the initial principal amount of the loan; also called Mortgage Capitalization Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage Yield Rate
See Mortgage Interest Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Balloon
See Balloon Mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Mortgage, Blanket
See Blanket Mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Mortgage, Chattel
A mortgage in which the security consists of tangible personal property. Note: A chattel mortgage usually takes the form of a bill of sale drawn in favor of the mortgagee with a clause defeating the transfer during compliance by the mortgagor with specified conditions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Mortgage, Direct Reduction
A debt secured by real estate that is repaid in periodic, usually equal, installments that include repayment of part of the principal and the interest due on the unpaid balance, such as a level-payment, fixed-rate, fully amortizing mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 84
Mortgage, Equitable
A lien on property established by a court when the technical requirements of a mortgage are not met, but the intent was that the lender have a mortgage on the property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, First
The mortgage that has the highest priority for repayment over all other liens on a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Insured
A mortgage insured by a party other than the borrower that satisfies the balance in the event of default by the mortgagor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Junior
A lien on a property that is subordinate to any other prior mortgage claims.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Open-End
A mortgage that permits the mortgagor to borrow additional money, with certain conditions, under the same mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Package
A mortgage that covers both personal and real property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Purchase Money
A mortgage given to the seller from the buyer to secure the unpaid purchase price of the sale of the property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Real
A mortgage in which the security consists of real property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Second
A mortgage that ranks after a first mortgage in precedence. Legal priority determines whether they are specified as a first, second, third, or so on, mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage, Wrap-Around
A junior or second mortgage that has a face value of both the amount it secures and the balance due under a first mortgage. Mortgage Annual Constant (Rm) — The ratio between the annual payments of principal and interest on a mortgage to the original amount borrowed. It can be found by dividing the annual debt service by the amount borrowed or by multiplying the partial payment factor by the number of conversion periods in one year. Also known as the Mortgage Capitalization Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgage-Equity Analysis
A technique used to estimate the value of a property from a knowledge of the equity yield rate, typical mortgage terms (including the interest rate, the loan-to-value ratio, the term of the loan, and the amortization provisions), the holding period, and the percentage by which the property will appreciate or depreciate over the holding period. The solution is reached by using the Ellwood formula. Mortgage Interest Rate (Ym) — The rate of return to the lender when there are not points or other charges to increase the lender’s yield rate. It is a compound interest rate and can be used to calculate the mortgage annual constant. Also known as the Mortgage Yield Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 85
Mortgaged Fee Interest
The borrower’s ownership interest in a mortgaged property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
Mortgagee
The person who lends money in a mortgage transaction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
Mortgagor
The person who borrows money in a mortgage transaction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
Motivation
A state of mind that causes an individual to voluntarily behave in a way that ensures the accomplishment of a goal. Movables (or Movables) — In civil law states, a term used instead of, and more or less synony- mously with, the term “personal property.” All things that are subject to ownership other than land and land improvements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
Moving Average
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 14 – 18; it would assign to block 17 the average of the values for blocks
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
MRA
See Multiple Regression Analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
Multicollinearity
Occurs when there are high correlations between two or more variables. In regression analysis, multicollinearity often causes misleading results. Multiple Listing Service (MLS) — 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. Multiple Regression Analysis (MRA) — Also known as Multiple Regression. It is a statistical tech- nique used to analyze data in order to predict the value of one variable (the dependent variable), such as market value, from the known value of other variables (independent variables), such as lot size, number of rooms, and so on. If there is one independent variable used, the technique is known as simple regression. With two or more independent variables the technique is referred to as multiple regression. See Linear Regression Analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
Multifamily
Includes each residential property that contains two or more living units, including duplexes, apartment houses, and cooperatives that are assessed as a single entity. The category encompasses street-level stores and doctors’ offices in apartment buildings but excludes motels or hotels. Residential (Non-Farm)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Multiplicative Model
A mathematical model in which the coefficients of independent variables serve 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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
Multipurpose Cadaster
A digital cadastral map rich in cadastral data and associated land data and features to support the mission-critical functions and advanced analytics of the assessor. Also provides a comprehensive platform for the spatial framework for the geospatial data of other governmental agencies and private entities.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 86
Multispectral
Camera systems sensitive to more than one spectral wavelength band.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 87
Multispectral Scanner
A nonphotographic imaging system that uses a rotating mirror and a fiber-optic bundle sensor. The mirror sweeps from side to side and sequentially records brightness values (that is, signal strengths) on magnetic tape for successive pixels, one swath at a time. The forward motion of the sensor platform carries the instrument to a position along the orbital path where an adjacent swath can be imaged. Multivariate Statistical Technique (Model) — Any of a number of statistical techniques used to analyze more than two variables simultaneously. See Multiple Regression Analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 87
Municipal Notes-Short
term promises to pay issued by local governments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 87
MVS
See Marshall Valuation Service. N Naïve Forecasting — An estimating technique in which the last period’s actuals are used as this period’s forecast, without adjusting them or attempting to establish causal factors. Assuming that historical relationships hold constant, this year’s revenues are a constant function of last year’s revenues.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 87
N
NAPL
See Non-Aqueous Phase Liquids. National Map Accuracy Standards (NMAS) — For horizontal accuracy maps at publication scales larger than 1:20,000, 90 percent of all well-defined features, with the exception of those unavoidably displaced by exaggerated symbolization, will be located within 1/30 inch (85 mm) of their geographic positions as referred to the map projection; for maps at publication scales of 1:20,000 or smaller, 1/50 inch (50 mm). For vertical accuracy, 90 percent of all contours and eleva- tions interpolated from contours will be accurate within one-half of the basic contour interval. Discrepancies in the accuracy of contours and elevations beyond this tolerance may be decreased by assuming a horizontal displacement within 1/50 inch. National Priorities List (NPL) — The list of sites determined to pose enough risk to become Superfund sites.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 87
Natural Monopoly
A monopoly, or a single producer of a good, that arises due to economies of scale throughout the relevant range of production of the good. This results in a continually declining average total cost to produce, with the least expensive way to produce the good being a single producer.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 87
Navigation System, Doppler
In general, any navigation system that makes use of the measured shift in frequency to determine the velocity of the receiving system relative to the signal source and, from these measurements, the location of the receiver.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 87
Navigation System, Inertial
Any navigation system in which gyroscopes or accelerometers are used to provide a coordinate system that has a fixed orientation with respect to the distant galaxies.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 87
Navigation System, Satellite
1) A system used for the navigation of satellites; and 2) A system having beacons or transponders placed on satellites rather than at fixed points on land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Neat Line
On a map of the earth’s surface, a line that marks the limits of a specific area in precise measurements; commonly encloses the map, legend, scale, title, and other information; serves as the (imaginary) link to an adjacent map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Needs Analysis
A systematic planning process through which the various essential consider- ations are identified and evaluated. It can provide an in-depth understanding of what can and cannot be accomplished.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Neighborhood
See Economic Area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Neighborhood Analysis
A study of the relevant forces that influence property values within the boundaries of a homogenous area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Neighborhood Binary Variable
A binary is one of two possible variables used in a valuation model to quantify the effects on value of distinct neighborhoods.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Neoclassical School
A school of management that arose in response to the classical school and emphasized a focus on human behavior.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Net Assessed Value
The official dollar value remaining on an assessment roll after deducting the amount of any applicable partial exemptions from the gross assessed value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Net Book Value
The value of a fixed asset according to the balance sheet. It is the cost of the fixed asset less book (accounting) depreciation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Net Income
See Net Operating Income (NOI). Net Income Multiplier (NIM) — A factor that can be multiplied by the net income (NOI) to obtain the market value of a property. It is the relationship between value and net operating income. Net Income Ratio (NIR) — The ratio of net operating income to effective gross income. It may also be expressed as a percentage of potential gross income. It is the complement to the operating expense ratio (OER) and can be found by the formula 1 – OER. See Effective Gross Income, Net Operating Income, Operating Expense Ratio, and Potential Gross Income. Net Leasable Area (NLA) — The area within a building or structure that is actually occupied by an individual tenant. Net leasable area does not include any of the common areas, such as lobbies and restrooms, shared by other tenants.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Net Lease
A lease in which the landlord (lessor) receives a stipulated rent amount and the tenant (lessee) pays all operating expenses and taxes attributable to the property. A net lease produces net income to the lessor. Net Operating Income (NOI) — The amount of income remaining after operating expenses are subtracted from effective gross income. See Capitalization Rate, Effective Gross Income, Income Approach, Operating Expenses, and Potential Gross Income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 88
Net Profit
Excess of revenue over operating expenses.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
Net Rent
See Rent, Net.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
Net Worth
The aggregate of the equities representing proprietary interest; the excess of the going-concern value of assets over liabilities to outsiders; in the case of a corporation, the total of paid-in capital and retained earnings; in a sole proprietorship, the owner’s capital account; in a partnership, the sum of the partners’ capital accounts. Used in accounting for financial reporting. Included on the balance sheet. Assets are equal to liabilities and net worth (equity).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
Net Worth Tax
An ad valorem property tax based on the difference between the total assets and total liabilities of the taxpayer. Note: This is a tax that is used in a number of countries but not in the United States. Neural Network (ANN) — A collection of mathematical models that emulate some of the observed properties of biological nervous systems and draw on the analogies of adaptive biological learning. An artificial neural network has several key elements: input, processing (calibration), and output. Other names associated with neural networks include connectionism, parallel distributed processing, neurocomputing, natural intelligent systems, and machine learning algorithms.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
Neutral/Neutrality
Refers to a tax that does not distort economic decisions. Closely related to the concept of efficiency, the situation in which patterns of consumption maximize the general welfare of society. A common economic objective that has to do with designing the property tax so that it does not distort economic decisions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
Nexus
The legal question of what constitutes sufficient presence in a state or jurisdiction to be held responsible for paying or collecting a tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
NIM
See Net Income Multiplier.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
NIR
See Net Income Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
NLA
See Net Leasable Area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
NMAS
See National Map Accuracy Standards.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
NOI
See Net Operating Income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
Nominal Data
Qualitative variables without a natural order, such as property class, location, building style, etc. See Ordinal Data.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
Nominal Interest Rate
The stated interest rate on an annual basis. The nominal interest rate is the same as the effective interest rate only when there is annual compounding. See Effective Interest Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 89
Nominal Tax Rate
The rate expressing the ratio between the current taxes and the property assessment; the official tax rate of the taxing jurisdiction. Differs from effective tax rate when the assessment ratio (statutory level of assessment) is not 100 percent. The rate may be calculated by dividing the amount of the taxes by the assessed value of a property. See Effective Tax Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Nominal Value
Either a price or value deemed insignificant, or de minimis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Nominal Variable
Also referred to as a categorical variable, a variable with two or more cate- gories with no intrinsic order. For nominal variables there is no defined method to order the values from highest to lowest. For example, house style has a number of possible values: colonial, ranch, contemporary, etc. Another example of a nominal variable is a binary variable with two categories such as yes or no. Non-Aqueous Phase Liquids (NAPL) — Liquid contaminants often trapped in soil or bedrock.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Non-Cadastral
Spatial data that are typically dependent on and reside upon cadastral parcel data. Examples of non-cadastral data layers are zoning, future land use, and municipal boundary layers.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Non-Investment Property
See Property, Non-Investment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Non-Liquidity Rate
In building a rate of return by the summation approach, an appraiser must add in a factor or rate for non-liquidity. This rate compensates the investor for his or her inability to make immediate use of the investment amount. Generally, the longer the holding period for the investment, the higher the non-liquidity rate will be.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Non-Physical Contaminant
Recognized contaminant that does not consist of any tangible, physical substance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Non-Sampling Error
The error reflected in ratio study statistics from all sources other than sampling error. While non-sampling error is unavoidable due to the inefficiencies inherent in real property markets, the imperfections of the appraisal process, and the imperfections of conducting ratio studies, all practicable steps must be taken to minimize non-sampling error in ratio studies.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Nonlinear Model
The relationship between a set of independent variables and one dependent variable displaying complex effects not explainable using a linear (straight-line) model. Generally, nonlinear regression is used to estimate the parameters in a nonlinear model with the main assumption that the underlying data are well represented by the model. The value of the coefficients can be correctly interpreted only if the correct nonlinear model has been fitted. A good choice of starting points can lead to a desirable output; a poor choice will make the output misleading.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Nonparametric Statistic
Statistics that make no assumptions regarding the distribution of the sample data. Specifically, nonparametric statistics do not assume data are drawn from a popu- lation with a normal distribution. See Parametric Statistic.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 90
Normal
A line that is 90° (perpendicular) to the line or to a curve is a radial line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Normal Distribution
A symmetric distribution of data with relatively more values at the center of the distribution and relatively few in the tails. The density or height of a normal distribution (the height for a given value on the x-axis) is based on the distribution’s mean and standard devi- ation. In a normal distribution, 68 percent of the observations are within one standard deviation of the mean, 95 percent are within two standard deviations of the mean, and 99 percent are three standard deviations of the mean.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Normative Statement
A statement that involves the use of value judgments and whose merits cannot be evaluated on facts alone.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
North
The word “north,” as used in the descriptive call of a deed, may be controlled, or qualified, in its meaning by other words of description used with it, but when it is not qualified by other words, it must be construed as meaning due “north.” Due north means geographical or astro- nomical north relative to the earth.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Northerly
Where nothing is given to limit the exact direction, northerly means due north. Directed more toward the north than any of the other cardinal directions, but not exactly north, as in a northerly direction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Note
An agreement acknowledging and promising to repay a debt.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
NPL
See National Priorities List.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Null Hypothesis
A hypothesis that there is no statistical significance between certain character- istics of the population. Any difference is based either on chance or sampling error. See Alternative Hypothesis and Hypothesis Test.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Numerator
In a fractional expression, the number that is divided by some other number (the denominator). For example, 3 is the numerator of the fraction 3/4 and 4 is the denominator. O
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
O
OAR
See Overall Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Object of Tax
1) The objective element on which a tax is imposed; 2) The aims or purposes for which the tax is designed. Note: This term, as defined in 1) does not seem to be distinguished adequately from “measure of tax,” “subject of tax,” and “tax base.” Such distinction as can be drawn is pedantic, and the use of the term in this sense is not recommended. It is also recommended that the term “purpose of tax” be substituted for the second usage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Objective
The quality of being definable by specific criteria without the need for judgment. Quantitative variables are objective.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Objective Data
Data that are collected or obtained by established and verifiable facts and sources. For example, zoning requirements, corner lot, size of lot, and amount of front feet can all be objectively verified.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 91
Oblique Imagery
A type of imagery that provides high-resolution, three-dimensional images from various positions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Oblique Photograph
A photograph taken with the camera axis directed intentionally between the horizontal and the vertical. Typically taken from a plane.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Observation
One recording or occurrence of the value of a variable; for example, one sale ratio among a sample of sales ratios.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Observed Condition Breakdown Method
Generally divides depreciation (loss in market value) into all its components: 1)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Obsolescence
One factor of depreciation characterized by an impairment or limitation in function or design or by a shift in market preferences. See External Obsolescence, Functional Obsolescence, and Superadequacy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Occupancy
The act of taking possession of or residing in or on a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Occupancy Ratio
The ratio of the occupied units (for example, square feet of floor space, living units, or rooms) of a property to the total available units.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
OER
See Operating Expense Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Official Plan
A comprehensive, long-term plan developed by a municipality to determine public policy such as transportation, utilities, social housing, and land use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Offsets
Environmental permits allow certain amounts of air pollutants to be released into the environment. If an industry wishes to expand and increase air pollution emissions, it may first be required to reduce its current level of emissions, so that the expanded plant will not emit more air pollution than did the original plant. A company may also trade air pollution allowances with another company to facilitate expansion of the first company. Both these exchanges (intercompany and intracompany) are called “offsets.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Omitted Assessment
An assessment made after the close of a tax year on property that was legally assessable but was not listed, or was omitted, for taxation. Referred to as Omitted Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
On Record
A document that has been filed in the public records and made a matter of public record.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
One-Meter Ground Pixel Resolution
The smallest feature that can be discerned (in one pixel) is one meter in length or width.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Open Market
A freely competitive market in which any buyer or seller may trade and in which prices are determined by competition. Operating Expense Ratio (OER) — The ratio of expenses to effective gross income (EGI). Normally the percentage that operating expenses make up as a percentage of effective gross income. It can also be expressed as a percentage of potential gross income. It is the complement to the net income ratio (NIR) and can be found by the formula 1 – NIR. See Operating Expenses and Net Income Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Open-End Mortgage
A mortgage that permits the mortgagor to borrow additional money, with certain conditions, under the same mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Operating Expenses
Ordinary and typical expenses that are necessary to keep the property functional. Operating expenses are evaluated to determine which are proper for development of the income approach to value. Typical operating expenses can be classified as: 1) Fixed expenses — An expense that does not vary by the rate of occupancy; 2) Variable expenses — An expense that varies based on the rate of occupancy; and 3) Reserves for replacement — Annual charges for items that have relatively short lives.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Operating Leased Property
Property under an operating lease not included as an asset on the books of the lessee company. Operating leased property is similar to a rental agreement, where the property is rented/leased for a specified period of time and is intended to be returned to the owner/lessor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Operating Statement
Summarizes in writing the gross income, annual expenses, and resulting net operating income of a business during a specified period of time. Also known as an Income Statement or Profit and Loss Statement. It is a vital financial reporting document prepared period- ically, generally at the end of the year. It provides the operating results (income and expenses) for a specific period of time of the earnings or losses of an entity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Operating Unit
1) The property, taken as a whole, that is used in a public utility operation; and 2) A term used to define an integrated set of assets whose value is based on the interaction and contribution of the assets as a whole.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Operational Plan
A broad-scale plan for accomplishing several objectives in the immediate future (one year or less). It contains detailed information about objectives, workloads, measures of performance, and resource requirements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Opportunity Cost
The cost associated with not taking an alternative course of action in financial opportunities. Evaluation of the opportunity costs requires evaluation of every other viable option’s strengths and weaknesses.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Orderly Liquidation Value
The amount of gross proceeds that could be expected from the sale of the appraised assets under orderly conditions, given a period of time in which to find a purchaser(s). It considers a complete sale of all assets, as is, where is, and all sales made free and clear of all liens and encumbrances. Represents Value-in-Exchange.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Ordinal Data
Qualitative variables with a natural order, such as condition, building grade, etc. See Nominal Data.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Ordinance
A statute or law that designates an enactment by a county’s or municipal corpora- tion’s legislative body.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Organization Chart
A graphic representation of supervisory positions and lines of authority for all employees in an organization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 93
Original Cost
The cost of an asset to the current owner. Differs from historical cost, as the cost to the current owner may reflect a used purchase price. See Historical Cost.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Original Plat
Used to distinguish the first plat from the subsequent addition. Also known as Original Town or Original Town Site Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Origination Fee
A fee charged by a lender (called the loan originator) for making a real estate loan.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Orthoimage
See Orthophotograph.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Orthophotograph
A photograph having the properties of an orthographic projection, a corrected or “straightened” image. It is derived from a conventional perspective photograph by simple or differential rectification so that the image displacements caused by camera tilt and relief of terrain are removed. Sometimes referred to as an Orthoimage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Orthophotography
A photograph derived from perspective photographs and equivalent to a photograph made by orthographic projection. In a perfect orthophotography there are not displacements of images because of tilt or relief.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Orthorectification
The process of manipulating an image to remove spatial distortion by considering location, elevation, and sensor information.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Other and Unallocable Property
Includes any property not classified within any of the preceding groups. Examples are mineral rights, timber rights, and oil rights, if they are separately assessed as real estate. The actual manner in which the property is utilized. May differ from the legal zoning permitted by the governing authority. May differ from the highest and best use of the property. See Highest and Best Use and Zoning.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Outlier Ratios
Very low or high ratios as compared with other ratios in a sample.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Outliers
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 errors.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Outlot
A relatively large lot that is included within the boundaries of an original or subdivision plat but that is excepted from the general platting pattern for building lots and is usually intended for occupancy (as, for example, a truck farm or country estate).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Outputs
1) Goods produced by a firm; and 2) The information returned by a computer to its user.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Over-Improvement
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. When compared with highest and best use in the market, subject property’s excess cost of a property feature is not justified by any possible increase in its present value. Factors may include excess size, superadequacy, or lack of demand. Contrast Under-Improvement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
Overall Age/Life Method
A straight-line method of estimating accrued depreciation of an improvement’s replacement cost new, by applying a ratio equaling an improvement’s effective age divided by its total economic life. It is the ratio between the effective age of real or personal property and its total economic life. It is applied to the replacement cost new of the property to obtain an estimate of accrued depreciation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Overall Capitalization Rate
See Overall Rate (RO) or (OAR).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Overall Property Tax Rate Limits
A form of tax and expenditure limitation, applicable to all governments in the state, in which an upper limit is placed on either the property tax rate or the rate of increase in the property tax rate. Overall Rate (OR) (OAR) — The relationship between a single year’s annual net operating income and the property’s sale price or value. See Capitalization Rate, Discount Rate, Effective Gross Income, Effective Tax Rate, Net Operating Income, and Recapture Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 94
Overhead Cost
A cost that is not directly traceable to the construction of an improvement. For example, administrative costs, interest on funded debt, and property taxes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
Overlap
The amount by which one photograph duplicates the area covered by another photo- graph, usually expressed as a percentage. Overlap may be end or forward (along the flight path) or side taken during two or more parallel flights); both end and side overlap are customary when more than one line is flown.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
Overlay
In mapping, a record on a transparent medium to be superimposed on another record; for example, maps showing original land grants (or patents) prepared as tracing cloth overlays so that they can be correlated with maps showing the present ownership. Also, any of the several overlays that may be prepared in compiling a manuscript map; usually described by name; for example, lettering overlay.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
Oversight Agency
The supervisory agency responsible for the management and oversight of assessment programs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
Own-Source Revenue
See Revenue.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
Owner, Equitable
One who does not have legal title to a property but holds sufficient rights, benefits, and burdens in the property to be considered its owner. See Beneficiary.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
Owner, Legal
One whose claim to ownership is based on a document (i.e., deed) or rule of law that specifically transfers ownership of the property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
Ownership
The rights to the use of property, to the exclusion of others. See Bundle of Rights. P
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 95
P
P/E
See Price-Earnings Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Package Mortgage
A mortgage that covers both personal and real property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Paired Sales Analysis
An appraisal technique using two sold parcels that are the same or comparable in every aspect except one feature or amenity. The price difference between the two sales reflects the value of the difference in the feature or amenity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Panchromatic
Photographic emulsion sensitive to all colors of light.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Panel
1) A target used for ground control or point identification during aerial photography; and 2) A group of individuals who are engaged for some service because of their expertise.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Paneling
Marking points on the ground with material of suitable contrast, size, and shape to provide images that can be positively identified on aerial photographs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Par Value
The face value of an item of intangible property that has both a stated face value and a fluctuating market value; applied especially to corporate stocks.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Parallel Lines
Two straight lines that are an equal distance apart. Parallel curves are always concentric curves. East-west latitude lines are parallel. Technically, north-south meridian lines converge at the poles and cannot be parallel; however, in a legal description or on a map, where two lines are shown with the same bearing, it is implied that the lines are parallel. The same bearing on different maps does not imply parallelism. A line is parallel with, not to, another line. By mathe- matical definition, “parallel lines” are straight lines; but in common speech about boundaries, the words are often used to represent lines that are not straight lines, but photographs of each other, and courts, in ruling on questions of boundaries, often use them in the latter sense.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Parallel of Latitude
Any line that runs due east and west and is at every point at right angles to the meridian. A parallel of latitude is a curved line on the face of the earth; however, within the limits of a boundary as shown on a map, parallels of latitude are considered straight lines. Only where large tracts are surveyed is curvature consideration necessary.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Parameter
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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Parametric Statistic
A statistic that assumes the sample data come from a population with a normal distribution.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Parcel
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. In land ownership mapping for assessment purposes, a parcel is usually held to be a tract of land under one entity ownership. It may be a combination of two or more tracts acquired by separate deeds. Parcel Centroid (Point) — A point within the parcel to which related information can be attached.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 96
Parcel Identification Number
A numeric or alphanumeric description of a parcel that iden- tifies it uniquely. Assessors use various systems, many with common features. A growing number of these systems include geocoding. In the 30 states where it exists, the public land survey system, authorized by the United States government in 1785, is often a basis for parcel identification. In Ontario, Canada, it is a nine-digit number for numerical indexing of legal description-based property identification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Parcel Identification System
The scheme by which parcel identifiers are generated. Parcel iden- tifiers are constructed from elements relating them to surveying systems, map projection systems, map-page numbers, and geographic areas.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Parcel Identifier
A code, usually numerical, representing a specific land parcel’s legal description. The purpose of parcel identifiers is to permit reference to legal descriptions by using a code of uniform and manageable size, thereby facilitating record-keeping and handling. Also called Parcel Identification Number.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Parcel of Land
A contiguous urban or rural land area that is considered as a unit, is subject to single ownership, and is legally recorded as a single piece. Compare Lot and Plot.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Parcel Outline
The geographic extent of the parcel; the parcel boundaries forming a closed polygon.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Parcel Polygon
A sequence of vectors forming a closed shape that defines parcel boundaries. Parcel polygon objects include information about the parcel such as the parcel identification number and the parcel area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Part Sales
Transfers of real property in which a portion of an existing tract is separated and transferred to another owner, thereby creating one or more new parcels. See Land Division.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Partial Equilibrium
Equilibrium of individual economic units or subsections of the economy in light of constraints imposed from outside the unit. See Equilibrium and Principle of Balance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Partial Equilibrium Analysis
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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Partial Exemption
The amount of otherwise-taxable assessed value removed from tax liability by constitutional and/or statutory action. Examples of partial exemptions are those for qualifying homesteads, veterans, and senior citizens.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Partial Payment Factor
Also known as the Amortization or Periodic Repayment factor. The equal periodic payment that has a present worth of $1, for a specified number of periods and at a specified discount rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Partial Taking
Taking part rather than all of real property by means of eminent domain. Compensation will be both for the part taken and for any loss of value affecting the remainder.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Partially Amortized Mortgage
A mortgage that has monthly or quarterly payments of interest and partial amortization of the loan balance, with a large balloon payment at the end of the mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 97
Partnership
An association of two or more persons to carry on as co-owners of a business under a partnership agreement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Passing Call
References to cultural or topographic features along a survey line, sometimes used to locate lines or recover corners.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Passive System
A sensing system that detects or measures radiation emitted by the target.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Patent
1) The exclusive right granted by a government for a limited period to an inventor, his or her heirs, legatees, or assigns, to make, use, and vend an article or process invented by him or her; and 2) The instrument by which government lands are granted to private persons under the proceedings set forth in the general statutes. See Intangible Personal Property and Land, Patented.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Per Capita
Divided by the number of people in the population.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Percent Condition
The difference between observed physical depreciation, expressed as a percentage of original or reproduction cost, and 100 percent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Percent Good
An estimate of the value of a property, expressed as a percentage of its replacement cost, after depreciation of all kinds has been deducted.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Percent of Cost
A technique of valuation by establishing the ratio of the sale price to the cost new of an asset at the time of sale. With sufficient data, similar property can be analyzed statisti- cally, and relationships developed between age, selling price, and cost; it is logical then to estimate value by determining the current cost of the subject and applying the appropriate percentage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Percentile
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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 98
Perimeter Sketch
A graphic presentation of the boundaries of a property, either the land or the buildings on the land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Personal Effects
Items of tangible personal property that an individual normally wears, carries, or uses in activities that do not involve the production of income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Personal Property
All property not defined as real property. Generally, includes four categories (inventories, fixed assets, leasehold improvements, and intangibles). Tangible property includes most movable items, but can include sales tax, freight, installation costs, and all other costs required to place the item into service. Intangible property is evidence of ownership. Personal property is assessable unless specifically exempted by statute for each state. Personal Property Specialist (PPS) — A professional designation conferred by the International Association of Assessing Officers (IAAO) recognizing professionalism and competency in the valu- ation of personal property for tax purposes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Personalty
A synonym for personal property. See Personal Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
PGI
See Potential Gross Income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Phase I and II Reports
Used for properties that may be affected by contamination. Phase I reports include historical information about the subject property and the neighborhood, and a review of pertinent government records to determine any prior violation pertaining to hazardous wastes or substances. This report requires physical inspection of the property. Phase II reports are required when potential problems are identified in the Phase I study. Phase II is an in-depth study of groundwater, air, soils, and improvements to determine the existence of any hazardous waste or substance or other contaminant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Photo Delineation
The selection and identification of map-worthy features on a photograph or digital image.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Photogrammetry
1) The art and science of obtaining reliable measurements by means of photography; and 2) The making of maps based on aerial photographs taken under rigidly controlled conditions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Physical Contaminant
Any substance recognized as hazardous by the Environmental Protection Agency (EPA) or local or regional authorities.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Physical Deterioration
A cause of depreciation that is a loss in value due to ordinary wear and tear and the forces of nature. The loss in value begins immediately following the completion or installation of a building component. Man-made objects begin to suffer from deterioration as soon as they are created, simply because of the passage of time. Decay may be due to normal chemical changes in materials’ composition or may result from mechanical cause. The loss in value may be curable or incurable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Physical Life
The total period a building lasts or is expected to last. The length of time it could physically exist if allowed to remain standing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 99
Pixel
An element of surface resulting from subdividing an image into the smallest identically shaped figures that give information about the location, intensity, and perhaps color of the source, but of which no smaller subdivision will provide more information. The concept “pixel” (dimin- utive of “picture element”) is valid only for images made up of discrete patches. It is not valid for continuous images. The term is sometimes assumed to be the equivalent of resolution expressed in terms of area. However, it is not exactly equivalent, because resolution can be defined for pictures that do not contain pixels. The size of a pixel is set principally by the size of the smallest individual radiation-sensitive element in the instrument creating the image. For example, in the human eye, the pixel region is the region occupied on the retina by a cone. Place of Business, Principal — See Principal Place of Business.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plaintiff
The party who initiates a lawsuit in a civil matter.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plane Rectangular Coordinates
A system of coordinates in a horizontal plane used to describe the positions of points with respect to an arbitrary origin by means of two distances perpendicular to each other. See Coordinates.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Planimeter
A mechanical device used for measuring the area of a parcel on a map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Planimetric Map
A map that represents only the horizontal position for the features repre- sented; distinguished from a topographic map by the omission of relief in measurable form. Plant, Machinery and Equipment (PME) — Same as Personal Property. PME is often used outside the United States to reference non-real property items.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plat
A map intended to show the division of land into lots or parcels. Upon recordation with the appropriate authorities, land included in the plat can thenceforth be legally described by reference to the plat, omitting a metes and bounds description. Also, a diagram drawn to scale showing all essential data pertaining to the boundaries and subdivisions of a tract of land, as determined by survey or protraction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plat Book
A book in the registrar’s office or courthouse that contains subdivision plats and other plats or maps that have been filed for record.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plat, Original
A plat constituting the original plan or layout of a municipality and showing its location and division into blocks and lots.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plat, Recorded
A plat that has been accepted by the constituted authority and that may hence- forth be used as the basis for a legal description of land within its boundaries.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plat, Subdivision
A plat showing the location of a subdivision and its layout into lots, streets, alleys, and the like.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plat, Township
A plat of a survey township prepared by, or under the direction of, the United States General Land Office.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plot
1) A relatively small area of land, generally used for a specific purpose; and 2) A measured area of land; lot.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 100
Plottage
The assembling of adjacent parcels of land into a single unit under single ownership that results in an increase in value. Compare Assemblage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Plottage Value
The incremental value increase that results when two or more sites are combined to form one larger site with greater utility. Compare Assemblage and Assembly Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
PLSS
See Public Land Survey System.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
PME
See Plant, Machinery and Equipment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
POB
See Point of Beginning.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Point
“Point” in a boundary is the extremity of a line. “To the point” in a description is often meaningless, since the end of a line is a point. If the point is to be referred to later, “to point A” or “to point = 1” gives an easy reference.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Point Estimate
A single numerical value used to estimate a population parameter from a sample. Point estimates provide the best unbiased estimate of the population parameter consistent with the sample data. See Confidence Interval and Reliability. Point of Beginning (POB) — In a deed description, it is a reference point from which the description begins.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Point of Commencement
The first point described in a legal description that begins a series of calls that eventually takes the reader to the point of beginning.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Points
Prepaid interest on a loan; one point is equal to 1 percent of the amount of the loan. It is common to deduct points in advance of the loan, so that an individual pays interest on 100 percent of the loan but gets cash on, say, only 99 percent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Pole
See Rod.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Police Power
The power of the state that curtails individual rights for the health, safety, and general welfare of all society. See Bundle of Rights.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Policy Statement
A formal expression of the principles and goals of particular aspects of property tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Polygon
A line chart that includes a number of straight-line segments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Pooled Regression
Combining two or more strata to form one regression model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Population
All the items of interest, for example, all the properties in a jurisdiction or neigh- borhood; all the observations in a data set from which a sample may be drawn.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Position
A numerical or other description of the location and orientation (attitude) of a point or object. In particular, in geodesy and navigation; 1) Data that give the location of a point in a specific coordinate system; 2) The place occupied by a point on the earth; and 3) The coordinates giving the location of a point on the geoid or ellipsoid.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 101
Position, Geographic
The location of a point on the surface of the earth, expressed in terms of either geodetic or astronomic latitude and longitude. Geo-position is a contraction of this term.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Positional Accuracy
The degree to which the coordinates define a point’s true position on the earth’s surface.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Positioning System
Generally, a system (equipment, procedures, and personnel) used for locating a vehicle or, less frequently, an instrument. A navigation system can also be used for posi- tioning, but a system designed specifically for positioning generally gives more accurate locations.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Positioning System, Doppler
A positioning system consisting of a radio receiver at the point whose coordinates are to be determined.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Positioning System, Inertial
A positioning system consisting of a computer and an assemblage of three accelerometers and two or three gyroscopes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Positioning System, Radio
A positioning system in which the travel time or phase shift of radio waves is measured.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Positioning System, Satellite
A positioning system consisting of a radio receiver, or a receiver and transmitter, at the point whose location is to be determined, one or more beacons or tran- sponders in orbit about Earth, and a computing system for determining and predicting the orbits.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Positive Statement
A statement that involves the use of no value judgments and whose merits can be evaluated on facts alone.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Possession
Physical control of personal or real property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Possessory Interest
1) An interest of a person in an article of property arising from a physical relationship to the article of such nature as to confer on him or her a degree of physical control over it, coupled with the intent to so exercise such control as to exclude the general public from use of it; and 2) The right to occupy and use any benefit in a transferred property, granted under lease, licenses, permit, concession, or other contract.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Posting
The act of transferring to an account in a ledger the data, either detailed or summa- rized, contained in a book or document of original entry. Occurs when the balances in the general journal are recorded into the general ledger. Potential Gross Income (PGI) — The total scheduled annual income for income-producing prop- erties at 100 percent occupancy, including other income the property generates (e.g., parking, laundry, pet fees, etc.).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Potential Gross Rent
The total rent a property would produce if 100 percent occupied at market rent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
Power of Attorney
A written authorization in which one person gives authority to another person to act on his or her behalf.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
PPS
See Personal Property Specialist.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
PRB
See Coefficient of Price-Related Bias.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 102
PRD
See Price-Related Differential.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Pre-Audit
A review of the primary purpose for conducting an audit, a review of the property tax filings (statements, renditions, personal property filings) if rendered, a review of the development of the assessment, in order to complete an audit timely and efficiently, and in compliance with all property tax laws.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Pre-Tax Cash Flow
See Before-Tax Cash Flow (PTCF).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Precedence of Calls
The concept that provides the necessary guidance to map a parcel when a discrepancy exists between two tracts or when conflicting information is found in a single description.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Preferred Capitalization Rate
1) The capitalization rate applicable to the band of investment financed by preferred stock; and 2) A component of the overall direct capitalization rate calculated by dividing dividends by the market value of preferred stock.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Preferred Stock
See Stock, Preferred. Preliminary Data AVM [AVM Assisting Appraisers] — This AVM sorts substantial amounts of electronic data and provides selected raw or basic data for interpretation by the appraiser. The appraisers use the AVM applications to provide their opinions of value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Present Value
The current value of a future sum of money given a specified rate of return.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Present Worth
See Present Value. Present Worth of $1 — The lump sum amount that would have to be set aside to accumulate with compound interest to $1 at the end of a specified number of years and at a specified rate of interest. Alternatively, it can be viewed as the present value of $1 receivable at the end of a specified number of years and discounted at a specified rate. Also called Reversion Factor. Present Worth of $1 Per Period — The present worth of a series of payments of $1, receivable at the end of each year, for a specified number of years and at a specified interest rate. Also called the Annuity Factor or Inwood Coefficient.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Press Release
An official statement written by the assessment office and given to members of the media. A press release provides information on a particular subject.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Price
The amount asked, offered, or paid for a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Price, Adjusted Sale
See Adjusted Sale Price.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Price, Market
The value of a unit of goods or services, expressed in terms of money, as established in a free and open market. Note: This term is sometimes distinguished from “market value” on the grounds that the latter term assumes that buyers and sellers are informed, but this assumption is also implied by the phrase “free and open market.” Compare Price, Sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 103
Price, Sale
1) The actual amount of money exchanged for a unit of goods or services, whether or not established in a free and open market. An indicator of market value; and 2) Loosely used synonymously with “offering” or “asked” price. Note: The sale price is the “selling price” to the vendor and the “cost price” to the vendee. Price-Earnings Ratio (P/E) — The ratio of the market price per share of the common stock of a specific company to the earnings per share of common stock of that company during a 12-month period. Typically, the ratio is based on the current market price and the most recent 12-month period for which earnings are known. This ratio is the reciprocal of the earnings-price ratio (E/P).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Primary Assessing Jurisdiction
The unit of government having initial responsibility for deter- mining the assessed value against which general property taxes are levied by local government and, where applicable, by state government.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principal Meridian
A true meridian from which range lines are established by the government survey.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principal Place of Business
1) The main location in which a company conducts business; and 2) The place at which the person or persons responsible for the management of a business enter- prise exercise their managerial powers. Note: Generally, the president, treasurer, and chair of the board of directors have their headquarters at the principal place of business. The principal place of business in any given state may be a district or even a branch office.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Anticipation
The principle of value that states that value is the present worth of all the anticipated future benefits to be derived from a property. The benefits, in the form of an income stream or amenities, are those benefits anticipated by the market.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Balance
The principle of value that states that maximum market value is reached when the four agents of production attain a state of equilibrium. The four agents of production are 1) Land; 2) Labor; 3) Capital; and 4) Management. See Agents of Production.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Change
The principle of value that states that market value is never constant because physical, environmental, economic, governmental, and social forces are at work to change the property and its environment. When these forces are in balance, the market achieves a temporary state of rest called equilibrium.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Competition
Created by the potential for profits, which attracts new buyers and sellers to the marketplace. It is the principle of value that states that when the amount of property of a certain type offered for sale is large in relation to demand, prices will fall, and conversely, when a property of a certain type is reduced in relation to demand, prices will increase.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Consistent Use
The principle of value that states that the property must be valued with a single use for the entire property. It is improper to value a property on the basis of one use for land and another use for the improvements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Contribution
The principle of value that states that the value of a component of property depends on its contribution to the whole. In other words, the cost of the component does not necessarily equal the value the component adds to the property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Highest and Best Use
See Highest and Best Use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Increasing and Decreasing Returns
The principle of value that states that when successive increments of one agent of production are added to fixed amounts of the other agents, future net benefits (income or amenities) increase up to a certain point (the point of decreasing returns), after which successive increments decrease future net benefits.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Progression
The principle of value that states that the value of a lower-priced property is increased by association with superior properties of the same type in the same area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Regression
The principle of value that states the value of a better-quality property is decreased by association with lower-quality properties of the same type in the same area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Substitution
The principle of value that states that a property’s market value tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution. This principle underlies each of the three approaches to value: cost, sales comparison, and income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Supply and Demand
The principle of value that holds that the price of a property varies directly with demand and inversely with supply. Supply is a function of the four agents of production. Demand is a function of consumer desire to purchase the property. See Principle of Balance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principle of Surplus Productivity
The principle of value that is the net income remaining after the costs of labor, management, and capital (in that order) have been satisfied. The surplus productivity is the income earned by the land. The agents of production must be satisfied in the following order: labor, management, capital, and land. As a result, land value tends to be set by the cost of labor, management, and capital. See Principle of Balance, Principle of Contribution, and Principle of Increasing and Decreasing Returns.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Principles of Value
(See the Principles entries that follow)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 104
Private Encumbrances
Private hindrances that affect value and sale price, such as easements, condominium controls, and deed or subdivision restrictions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 105
Private Restrictions
Private parties, such as a group of homeowners, may establish private restrictions on ownership rights. Deed restrictions are a common form of private restriction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 105
Private Sale
A sale negotiated and concluded privately between buyer and seller and not offered on the open market.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Privilege Tax
A special tax on the right to start, expand, or continue a business. Synonymous with Franchise Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Procedural Audit
A systematic set of procedures used by an auditor to determine whether an organization is adhering to established procedures. Also, an examination of an organization to determine whether established or recommended procedures are being followed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Productivity Value
Measures the worth of land based on its income-producing ability in its current use. Owners of farm and ranch property apply for agricultural-use or open-space valu- ation (both are forms of productivity value) to avoid having their properties assessed at a different highest and best use that would bring higher assessed values and presumably higher taxes. Compare Value-in-Use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Profit and Loss Statement
See Income Statement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Program Budgeting
A style of budgeting that centralizes budgeting to examine net public benefits. It shows the allocation of funds and personnel across broad programmatic areas. Program Evaluation and Review Technique (PERT)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Progressive Tax
Assessment progressivity occurs when assessment levels or effective property tax rates on low-value properties are less than assessment levels or effective property tax rates on high-value properties.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Progressive Tax System
A method of taxation in which those with more resources pay a greater percentage of their resources than those with fewer resources. Income progressivity occurs in a tax system under which a taxpayer’s average tax rate increases with income. This is often the case with income taxation based on multiple rates. Assessment progressivity occurs when effective property tax rates on high-value properties are greater than effective property tax rates on low-value properties.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Progressivity
See Principle of Progression and Principle of Regression.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Projection
A systematic drawing of lines on a plane surface to represent the parallels of latitude and meridians of longitude of the earth or a section of the earth.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Prolong
To extend in length along a line; to continue along a curve.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Proper Expenses
See Operating Expenses.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 106
Property
The ownership of a thing is the right of one or more persons to possess and use it to the exclusion of others. An aggregate of things or rights to things. These rights are protected by law. There are two basic types of property: real and personal. Real property consists of the interests, benefits, and rights inherent in the ownership of land plus anything permanently attached to the land or legally defined as immovable; the bundle of rights with which ownership of real estate is endowed. To the extent that “real estate” commonly includes land and any permanent improve- ments, the two terms can be understood to have the same meaning. Also called Realty. Personal property is defined as those items that generally are movable or all items not specifically defined as real property. Many states include as personal property the costs associated with placing personal property in service, such as sales tax, freight, and installation. Installation items include, but are not limited to, wiring, foundations, hookups, and attachments. Two commonly used tests for distinguishing real and personal property are 1) the intent of the parties; and 2) Whether the item may be removed from the real estate without damage to either. See Intangible Personal Property, Personal Property, Real Property, and Tangible Personal Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property in Transit
Property moving interstate by common carrier or private conveyance. It is covered by federal Interstate Commerce Commission regulations and cannot be assessed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property Line
The boundary line that defines a parcel of land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property Record Card
See Appraisal Card.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property Residual Technique
A valuation method normally used when neither land nor building value can be estimated reliably. To use this technique, an estimate of the amount of recapture is required. This technique treats the net income directly, relating the income to the total property value without considering separation of land or building from the total property value. The remaining proceeds of sale attributed to the land after all expenses, financing costs and profit have been deducted. Source: UBC Sauder School of Business.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property Rights
See Bundle of Rights.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property Split
A result of the sale of property held by a single owner such that different pieces of the property are owned by different owners. Splits may or may not occur along plat lines. See Land Division.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Tax
Any tax that is imposed on persons on account of their ownership or possession of property; it is measured by the number of units, the value, or some presumptive evidence of number of units or value, of such property. Note: This tax is generally, but not necessarily, intended to be a direct, proportional ad valorem tax. Compare Classified Property Tax, General Property Tax, and Special Property Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Tax Base
See Assessment Base.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Tax Calendar
See Tax Calendar.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Tax Credit
An offset against the property tax payment or another tax payment for taxpayers who meet certain criteria (for example, senior citizens), or whose properties have certain characteristics or are used for specified purposes (for example, pollution abatement), a direct reduction in a tax payment rather than in a tax base.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Tax Levy
1) The total amount of money to be raised from the property tax as set forth in the budget of a taxing jurisdiction; and 2) Loosely, by extension, the millage rate or the property tax bill sent to an individual property owner.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Tax Levy Limits
A form of tax and expenditure limitation, applicable to all local governments in the state, in which an upper limit is placed on either the proceeds of the property tax or the rate of growth in the proceeds of the property tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Tax Policy
Any purposeful course of action by governmental bodies that affects or deter- mines the way property taxes are created, levied, collected, or spent. Property tax policy issues can include determining the division of responsibility between local and state/provincial governments, equalization, appeals, public relations, reappraisal systems, the market value standard, exemptions and abatements, fractional assessments (ratios), and limits on taxes and assessed values.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Taxes
See General Property Tax, Property Tax, and Special Property Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property Use Category
A United States Census Bureau classification scheme based on actual utilization of real property, including; 1) Residential (Non-Farm) Single-Family; 2) Residential (Non- Farm) Multifamily; 3) Acreage (Acreage and Farms); 4) Vacant Platted Lots; 5) Commercial Property; 6) Industrial Property; and 7) Other and Unallocable Property. The actual manner in which the property is utilized. May differ from the legal zoning permitted by the governing authority. May differ from the highest and best use of the property. See Acreage, Commercial Property, Highest and Best Use, Industrial Property, Other and Unallocable Property, Residential (Non-Farm) Multifamily, Residential (Non-Farm) Single-Family, Vacant Platted Lots, and Zoning.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Property, Distributable
1) Property subject to central assessment that is certified by the central assessing officer or body to local tax districts, according to the property’s actual or constructive tax within such districts, for inclusion in the local assessment and/or tax rolls; and 2) The personal property of an intestate available for distribution by the administrator to the heirs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property, Investment
A property that has been developed with the intention and expectation of renting it, in whole or in part, for profit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property, Non-Investment
A property that has not been developed with the intention and expectation of renting it, in whole or in part, for profit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property, Non-Operating
Property not included in the unit being appraised, usually where the non-operating property is not necessary to the operation of the unit and is readily assessed locally. Property, Ratable (or Rateable) — Taxable property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Property, Tangible
Physical items that includes both real and personal property. Specifically, does not include intangible property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 107
Proportional Tax
A tax in which the effective tax rate is the same for all taxpayers regardless of the sizes of the tax bases on which they are subject to taxation. A tax system under which a taxpayer’s average tax rate is the same at each level of income.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Proprietary Lease
See Lease, Proprietary.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
PTCF
See Before-Tax Cash Flow. THERE IS CROSS REFERENCE TO PROPERTY, RESIDENTIAL BUT NO ENTRY FOR IT
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 108
Public Access System
An electronic database, accessible to everyone, that provides the public with a searchable repository of information related to local property assessment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Public Good
A good/service that is made available to all members of a society.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Public Interest Value
Classes of properties, primarily government-owned or public-oriented, for which the economic considerations underlying highest and best use analysis are different, because these properties are built or acquired for reasons other than economic return. Public Land Survey System (PLSS) — A rectangular survey system established in the United States by the Land Ordinance of 1785. The basic survey unit is the six-square-mile township. Townships are located by baselines and meridians parallel to latitude and longitude lines; they are defined by range lines running parallel (north-south) to meridians and township lines running parallel (east-west) to baselines.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Public Policy
Any purposeful course of action by governmental bodies, whether successful or unsuccessful and whether implementable or not.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Public Restrictions
Governmental restrictions that place limitations on the bundle of rights, including taxation, eminent domain, police power, and escheat.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Purchase Money Mortgage
A mortgage given by the buyer to the seller or other lender to enable the purchase transaction. With this mortgage, a buyer can finance all or much of a property’s cost by arranging for the seller to accept a purchase money mortgage as part of the purchase price. Q
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Q
Qualified Sale
A property transfer that satisfies the conditions of a valid sale and meets all other technical criteria for inclusion in a ratio study sample. If a property has undergone significant changes in physical characteristics, use, or condition in the period between the assessment date and sale date, it would not technically qualify for use in ratio study.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Qualitative Data
Non-numerical information that is subjective in nature. For example, view, fire protection, quality, or site/location.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Qualitative Variable
Non-numeric variable that is subjective in nature. It describes an amenity such as view, fire protection, quality, or site/location.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Quality Class
A classification of a structure by an appraiser, intended to describe materials used, workmanship, architectural attractiveness, functional design, and the like. Quality class, or its synonym “grade,” is the key variable in most cost schedules. See Classification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Quality Control
The activities involved in ensuring that data accuracy standards are achieved and maintained.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Quantitative Data
Pertaining to the objective nature of some variable of interest, that is, some- thing that can be measured or counted with little ambiguity. For example, number of bathrooms is a quantitative variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 109
Quantitative Variable
See Quantitative Data.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Quantity Survey Method
A method of estimating reproduction cost in which a complete item- ization is made of all labor and material costs by component and subcomponent and all indirect costs; these are added to obtain an estimate of the cost of a structure or a reasonable bid for a contractor to submit on a proposed project.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Quarter Section
A subdivision of a section containing 160 acres more or less, described by referencing the center point in the section, that is, the NE + is north and east of the center point.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Quartiles
The values that divide a set of data into four equal parts when the data are arrayed in ascending order. The first quartile includes the lowest quarter of the data; the second quartile, the second lowest quarter, and so forth.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Quiet Title
An action at law to remove an adverse claim or cloud on the title of property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Quitclaim Deed
A deed in which the grantor conveys or relinquishes all interests that he or she may have in a property, without warrant as to the extent or validity of such interests. See Deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
R
Radar, Side-Looking
A form of radar mounted on aircraft in which the beam is pointed, either by scanning or by shaping, in a direction perpendicular to the longitudinal axis of the aircraft so that the returned signals come from a long, narrow strip of ground approximately parallel to the airplane’s line of flight. The ground is mapped as a set of adjacent, overlapping strips.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Radar, Synthetic-Aperture
A radar containing a moving or scanning antenna; the signals received are combined to produce a signal equivalent to that which would have been received by a larger, stationary antenna.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Radiation
Process by which electromagnetic energy is propagated through free space by virtue of joint undulatory variations in the electric and magnetic fields in space.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Radon
Radioactive gas that may enter structures from beneath the ground level and contam- inate the air within.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Random Sample
A sample for which each item of the population has an equal chance of being included and, by extension, each possible combination of n items (number of items) has an equal chance of occurrence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Range
1) The maximum value of a data set (sample), minus the minimum value; and 2) The difference between the maximum and minimum values (that) a variable may assume.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 110
Range Line
One of a series of survey lines running due north and south at six — mile intervals, used for locating parcels of land under government survey. See Meridian, Principal. Contrast Township Line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Rank
1) The position of an item relative to others in a set ordered according to the value of each member of the set in relation to the others; and 2) The act of ordering the members of a set according to the value of each member in relation to the others. For example, the numbers 0.95, 0.87, 1.09, and 0.83 have ranks of 3, 2, 4, 1.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Raster Image
An image represented by a series of lines and samples. A format for storing, processing, and displaying digital graphic data in which graphic images are stored as values for uniform grid cells or pixels. Ratable Property (Rateable) — See Property, Ratable (or Rateable).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Rate Base
Under perfect regulation, the dollar amount on which a return is allowed as estab- lished by a regulatory agency.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Rate of Return
See Discount Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Rate, Capitalization
See Capitalization Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Rate, Discount
See Discount Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Rate, Mill
See Millage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Rate, Tax
See Tax Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Rate-Driven Levy
The property tax rate to be applied is specified in the budget or tax levy ordi- nance of a taxing jurisdiction, rather than the situation in which the total revenue to be raised is specified and the rate is calculated.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Ratio Study
A statistical study of the relationship between appraised or assessed values and market values; based on an analysis of the ratio derived by dividing the appraised or assessed values of property by the market values of such property. Sale prices or independent appraisals are used as proxies for market values.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Ratio, Assessment
See Appraisal Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Ratio, Occupancy
See Occupancy Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Raw Materials
A type of inventory used in a manufacturing process but may include some synthetics. This type of inventory, which can be converted into a new and more useful product, also as personal property, is usually located at the manufacturing level of trade.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
RCN
See Replacement Cost New and Reproduction Cost New.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
RCNLD
Replacement/reproduction cost new less depreciation or reproduction cost new less depreciation. See Depreciation, Replacement Cost New, and Reproduction Cost New.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 111
Real Estate
The physical parcel of land and all improvements permanently attached. Compare Real Property. Real Estate Investment Trust (REIT) — Combines capital from many investors to acquire or finance real estate through formation of a corporation whose shares are traded in a market.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Real Estate Taxes
A levy imposed on land and buildings. It is collected by a governing body. It can extend to personal property in some jurisdictions. North America is primarily an ad valorem tax system, and the levy is imposed on the estimated value of the property. The collected funds help the government maintain services within the jurisdiction. See Effective Tax Rate and Nominal Tax Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Real Estate Transfer Affidavits
In written or electronic format, these documents are an affirmed or sworn statement regarding particulars of a sale of real property, such as personal property, financing, and so on. Typically, these forms are required in states and provinces in which sales disclosure statutes have been enacted and are filed prior to recording the deed. Comprehensive affidavits may limit the number of follow-up verifications required during the sales verification process. These questionnaires are also known as Sales Verification Questionnaires.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Real Estate Transfer Documents
The various kinds of deeds whereby real property is conveyed. Compare Conveyances.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Real Property
Consists of the interests, benefits, and rights inherent in the ownership of land plus anything permanently attached to the land or legally defined as immovable; the bundle of rights with which ownership of real estate is endowed. To the extent that “real estate” commonly includes land and any permanent improvements, the two terms can be understood to have the same meaning. Also called Realty. See Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Real Time
To make images or data available for inspection simultaneously with their acquisition.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Realty
See Real Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Reappraisal
The mass appraisal of all property within an assessment jurisdiction accom- plished within or at the beginning of a reappraisal cycle. A subsequent (and possibly periodic) mass appraisal of all property of a specified class or classes within an assessment jurisdiction. Factors considered may include changes in physical condition, use, or the market. Also called Reassessment or Revaluation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Reappraisal Cycle
Time needed, taken, or permitted for a jurisdiction to reappraise all prop- erties of a specified class or classes, as may be mandated by law or rule. See Reappraisal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Rear
A deed reading “thence running to the rear of said land” does not always mean that the land extends to the rear line but may mean “toward the rear.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Reassessment
1) A revaluation of all property of a specified class or classes within an assessment district directed upon a lawful finding that a prior assessment was too faulty to be corrected through usual procedures of review and equalization; and 2) Revaluation of all real property by assessing authorities, as distinguished from assessment on the basis of valuations most or all of which were established in a prior year. See Reappraisal Cycle and Revaluation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Recapture Rate
A portion of the overall rate (Ro) or (OAR) in an income approach representing the return of the owner’s investment in property. Expressed as the current year’s percentage of the remaining economic life (REL). See Remaining Economic Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Recapture, Straight-Line
The recovery of capital invested in a wasting asset in equal periodic amounts over the remaining economic life of the asset. See Recapture Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 112
Receiver
One who is appointed by a court of equity as its representative to manage property owned by an insolvent debtor until the claims of creditors have been met or to manage property that is the subject of a lawsuit pending its outcome.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Reciprocal
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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Reclamation
The process of physically changing land to increase value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Reconciliation
The final step in the valuation process wherein consideration is given to the relative strengths and weaknesses of the three approaches to value: cost, income, and sales comparison. Consideration is given to the nature of the property appraised and the quantity and quality of available data in formation of an overall opinion of value, as either a specific value or a range of value. Referred to as Correlation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Recordation/Recording
The filing of documents affecting real property for public record, which usually requires the witnessing and notarizing of the document.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Recorded
A deed that has been filed for record in the courthouse and made a matter of public record.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Rectangular Coordinates
A land description system where boundaries are described as lines running from points on an x and y grid.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Rectangular Land Surveys
Land description systems based on permanent, uniformly sized rect- angular grids that can be subdivided into smaller units of land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Rectangular Survey System
A surveying method that uses a rectangular grid system, the basic elements of which are townships approximately six miles on each side. Each township is divided into 36 sections, nominally one mile square and containing 640 acres. Sections are further subdi- vided into quarter sections, and so on.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Rectification
1) The process by which the geometry of an image area is made planimetric; and 2) The process of converting a tilted or oblique photograph to the plane of the vertical by projecting it onto a horizontal reference plane, with the angular relationship determined by the use of control points recognizable on the photograph and an accurate map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Rectified
An aerial photograph printed by a process to remove distortion or displacement due to the tilt of the aircraft when originally exposed. See Orthophotograph and Orthorectification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Redemption
The process by which the owner of real property sold at a tax sale buys back the property from the purchaser at an enhanced price within a specified redemption period.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Regression Analysis
A statistical learning technique useful to infer the relationship between a dependent variable and independent variables. There are numerous types of regression analysis, from simple linear regression to more complex multiple linear and nonlinear regression. See Multiple Regression Analysis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 113
Regression Coefficient
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. A regression coefficient is the number by which a variable in an equation is multiplied. For example, in the equation MV = 10,000 + 50(X1) the variable X1 is multiplied by 50, so the regression coefficient is 50.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Regression Line
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 coef- ficient 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 to represent the relationship by a line rather than the more nearly correct series of vertical bars on a bar chart. Linear regression finds the straight line, specifically the least squares regression line that best represents the relationship between the independent variable and the dependent variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Regressive Tax System
Assessment regressivity occurs when assessment levels or effective property tax rates on low-value properties are greater than assessment levels or effective property tax rates on high-value properties.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Regressivity
See Principle of Regression.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Regressivity Index
See Price-Related Differential (PRD).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Regular Section
A one-square -mile subdivision of a township containing 640 acres.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
REIT
See Real Estate Investment Trust.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Reject Code
A flag applied to a record indicating that it should not be used for certain purposes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
REL
See Remaining Economic Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Relationship
The phenomenon whereby knowledge of the value of one variable tells you some- thing about the probable value of another. 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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Relative Location
Location as described by the relationship between objects.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Reliability
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.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 114
Remainder
An interest in real property that does not give the right of possession until the rights of the person in possession have been terminated either by death or by lapse of time. An example is when A conveys property to B, reserving in the deed a life estate to A. A (life tenant) has the right of possession and enjoyment of the property for their lifetime, and at their death, B (remainderman) acquires this right of possession, thereby giving them the entire interest in the property. During A’s lifetime, B’s interest is a remainder. In cases of eminent domain, the portion of a property remaining for the property owner.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Remainderman
The person who receives property after the death of a person or persons in a life estate. Remaining Economic Life (REL) — The estimated number of years remaining during which the improvements and personal property continue to contribute to the total property value. Often expressed as a percentage of the total economic life (REL %). See Age, Economic Life, Effective Age, and Useful Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Remodel
To improve a structure by changing its floor plan, functions, or characteristics.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Remote Sensing
The process of obtaining information about an object while physically sepa- rated from it. Practically, this term is used to describe the process of using sensors mounted on satellites to capture images and to observe the earth’s geology, surface, and atmosphere.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Rendition
A term occasionally used synonymously with Declaration.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Rent, Economic
1) In appraisal, the annual rent that is justified for the property on the basis of a careful study of comparable properties in the area; market rent; and 2) In economics, the payment received by an owner of something being bought or rented in excess of the minimum amount for which he or she would have sold or rented it.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Rent, Escalation Clause
A clause in an agreement that allows for an increase in rent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Rent, Gross
The total amount received by a lessor from a lessee, without deduction for taxes, maintenance, or any other payments made by the lessor on account of the leased property. Contrast Rent, Net.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Rent, Ground
See Ground Rent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Rent, Net
The amount remaining to the lessor out of gross rents after deducting taxes on the property, insurance, repairs, expenses of management, and any other operating and maintenance expenses payable by him or her on account of the leased property. Note: Net rent is arrived at before deduction of depreciation expenses, interest on the lessor’s investment in the property, and income taxes payable by the lessor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Rentable Area
A specified unit area of leasable space. 1) The pro rata portion of a building’s space usable by tenants. It may include common areas, such as hallways, lobbies, public restrooms, and fitness facilities; and 2) Amount of space on which rent is based, calculated according to local practice.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Rental Value
The value of a property that is devoted to or available for supplying space for rent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 115
Repeat Sales Analysis Model
Aggregates changes in value and statistical means for properties sold more than once during a specified period in a given geographic area. For example, in a ZIP or postal code area, estimates 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 that local housing market during that time period. The larger the number of available sales pairs, the more statistically reliable the estimate of overall housing price trends will be. Because this analysis is based on identifying properties where more than one sale has occurred, the challenge is to identify enough observations to provide a meaningful index of housing values, while keeping to as small a geographic area as possible. A repeat sales index may also overestimate market appreci- ation if the data contain pairs of sales in which the second sales price reflects substantial improve- ments (or other alterations) made to the property after the first sale. Repeat sales indices can provide very useful valuation estimates in jurisdictions where the data are insufficient to support hedonic models. In addition, they may prove to be more accurate in tracking housing values for the houses that a hedonic model may struggle with (especially those subject to extreme positive or negative influences) when a prior sale is known on the property. See Paired Sales Analysis. Repetitive Automated Valuation Model (Continuous Application AVM) — This AVM appli- cation is intended to be used repeatedly to project values for future dates without recalibration but through the addition of new sale prices and economic information. Replacement Cost New (RCN) — The current cost of producing a building or improvement, or item of personal property with the same utility with modern materials, design, and workmanship. This cost is less than the amount indicated by the reproduction cost new method. It implies that the cost is based on a modern improvement that affords utility equivalent to that provided by the subject property. Replacement/Reproduction Cost New Less Depreciation (RCNLD) — See Depreciation, Replacement Cost New (RCN), and Reproduction Cost New (RCN).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 116
Replacement Reserve
An allowance in an annual operating statement for replacement of short- lived items that will not last for the remaining economic life of a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 116
Report
Any communication, written or oral, of an appraisal, review, or consulting service that is transmitted to the client upon completion of an assignment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 116
Representative Sample
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. Reproduction Cost New (RCN) — The cost of producing an exact replica of a building, improvement, or item of personal property using the same or similar materials, design, and workmanship. This cost involves rebuilding the subject property with an inherent faculty design, superadequacies, and inefficiencies. It is an unrealistic method for older, obsolete property due to the cost of repro- duction. See Cost Approach.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 116
Repurchase Agreement
A short-term financing arrangement whereby those needing funds sell securities but agree to repurchase them at a fixed price at a specified time. Request for Proposal (RFP) — A document outlining the specifications of a project that is sent to potential vendors.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 116
Required Rate of Return on Equity
A component of the discount rate, as it is understood from the point of view of band-of-investment analysis, and a component of the overall rate developed according to mortgage-equity analysis. See Discount Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 116
Requirements
Legal obligations for local government offi- cials to make taxpayers aware of assessment increases, levy increase proposals, and the like and to give taxpayers an opportunity to participate in public hearings on the changes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 142
RES
See Residential Evaluation Specialist.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Resale Factor
A property’s cost components pertaining to carrying charges expected to be incurred during construction and preparation for occupancy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Resales
A parcel or item of personal property that sold in the past and has been sold again. The difference in selling price can be used to calculate a market condition adjustment. See Market Condition Adjustment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Research Automated Valuation Model
General valuation tools that resemble production AVMs in design but have limited functionality. Research AVMs are used for initial testing of concepts.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Reserve
Creates some right or privilege for the grantor in the land described as granted.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Reserve Requirement
The amount, expressed as a percentage of deposits, a commercial bank that is a member of the Federal Reserve System must keep on deposit in the Federal Reserve Bank of its region.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Reserve, Valuation
An account to which is credited the amount of depreciation expenses, antic- ipated losses on bad debts, and other charges representing a downward revaluation of assets that are carried on the books at a figure making no allowance for such revaluation. Note: Valuation reserves are sometimes carried on the liabilities side of the balance sheet. Good accounting procedure, however, requires that they be carried on the assets side of the balance sheet directly after the assets to which they pertain, and that their amounts be deducted from gross book values in arriving at total sales.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Reserves for Replacement
Expenses that include annual charges for items that have relatively short lives (short — lived items), such as roof covering, carpets, paint, water heaters, and HVAC systems. See Sinking Fund.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Reserving
See Reserve, Valuation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Residence
1) A domicile; 2) A domicile at which a person is actually dwelling; and 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. See Residential Property. Residential Evaluation Specialist (RES) — A professional designation conferred by the International Association of Assessing Officers (IAAO) recognizing professionalism and compe- tency in the valuation of residential property for tax purposes. Residential (Non-Farm)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Residential Property
Generally includes any property that is used or designed for use by a one - to four- family dwelling in which one or more persons reside. Includes Single-Family residences, up to four multifamily units. This category includes each condominium unit in a multi-unit dwelling structure, plus each condominium owner’s share of the common area. See Property, Residential.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Residual
The difference between an observed value and a predicted value for a dependent variable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Residual Technique
See Abstraction Method.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Residual Value
The value of the property after cleanup of environmental contamination. This may be more or less than the original value, depending on counterbalancing effects of stigma and improvements to property efficiency.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Residual Value of Improvements
See Building Residual Technique.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Residual Value of Land
See Land Residual Technique.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Resolution
Fineness of detail that can be distinguished in an image, as on a video display terminal. Display resolution is the density of the pixels that compose an image. Spatial resolution is the smallest possible map feature that can be accurately displayed at a specified map scale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Response Surface Analysis
A mass appraisal technique that involves creating value influence centers, computing variables to represent distances (or transformations thereof) from such points, and using the variables in a multiple regression or other model to capture location influences. Implementation of the technique is enhanced using a geographic information system. Some geographic information systems permit the value influence centers to be displayed and measured as a three-dimensional grid surface, the results of which can be likewise used in calibration tech- niques to arrive at the contribution of location based on the model specification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Restricted-Use Value
See Value-in-Use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Restriction
Any limitations on the uses or right of real property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Revaluation
Sometimes used interchangeably with a reappraisal of property, a complete reap- praisal of real property as of a specified date. See Reappraisal and Reappraisal Cycle.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 118
Revenue
All government revenue except from government-operated public utilities, govern- ment-operated liquor stores, and for unemployment compensation, employee retirement, workers’ compensation, or other government trust funds. Miscellaneous revenue is a non-tax, non-charge revenue derived from interest earnings, special assessments, sale of property, or other sources. Own-source revenue is government funding that comes only from within the jurisdiction under consideration. For local governments, this means that it excludes revenue received from federal and state intergovernmental grants; it may include taxes, current charges, and miscellaneous revenue collected by the jurisdiction. Alternatively, general revenue minus intergovernmental revenue.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Reverse Mortgage
A low-interest loan, usually for senior homeowners, that uses a home’s equity as collateral. The loan amount is a percentage of the home’s value determined by the age of the youngest homeowner. The loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 12 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not liable if the home sells for less than the balance of the reverse mortgage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Reversion
The right of possession commencing on the termination of a particular estate. The estate or interest that will revert to, or be returned to, the grantor in a deed should restrictions be violated or the term of the conveyance end.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Reversion Factor
See Present Worth of $1.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Review
1) Consideration by a board of appeals, a board of equalization, a board of review, or a court of individual, property class, or district assessments, whether for the purpose of adding omitted taxable property, removing exempt property, or equalizing the valuations placed on listed property; and 2) The act or process of critically studying a report, such as an appraisal, prepared by another.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Review, Administrative
See Administrative Review.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Review, Judicial
See Judicial Review.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Revocable Trust
A trust in which the grantor of the property held in trust retains the right to repossess the legal and equitable titles. See Trust Deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
RFP
See Request for Proposal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
RI
See Land Capitalization Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Right-of-Way
1) An easement consisting of a rite of passage through the servient estate (preferred); and 2) By extension, the strip of land traversed by a railroad or public utility, whether owned by the railroad or utility company or used under easement agreement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Rights of Survivorship
The process of descent of ownership or title to property when so stipu- lated in an instrument of conveyance, such as a deed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Rights, Property
See Bundle of Rights.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Riparian Rights
Rights held by owners and users of land adjacent to or abutting streams, rivers, and creeks. See Littoral Rights.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 119
Risk Rate
The return commensurate with the risk assumed by the investor. Risk rate is a component of the discount rate because the return on real estate is a desired return and might or might not be realized by the investor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
RMS
See Root Mean Square.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Rod
A land measure of 16+ feet or 25 links. Also called a “pole.” A land measure, a surveyor’s linear measure of 16.5 feet for 1/4 of a chain.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Roll, Assessment
See Assessment Roll.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Roll, Tax
See Tax Roll. Root Mean Square (RMS) — The square root of the average value of the sum of the squares of the differences between values in a set and the corresponding values that have been accepted as correct or standard. Used to measure map accuracy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Royalty
1) A payment made periodically or at irregular intervals to the owner of a patent or copyright for the privilege of reproducing or using a patented or copyrighted article; and 2) A payment made periodically or at irregular intervals to the owner of an interest in mineral land for the privilege of exploring for, and/or mining and disposing of, mineral deposits. S
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
S
Safe Rate
The rate obtainable with the most safety and the least risk.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Said
Refers to one previously mentioned with the same name. Sale, Arm’s-Length — See Arm’s-Length Transaction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sale Price
See Adjusted Sale Price.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sale Price-Assessment Ratio
The reciprocal of the assessment-sale price ratio. See Assessment and Sale Price Ratio.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sale Terms
The amount of down payment, the interest on the mortgage, and information on points and other fees involved in a real estate sale. Also called Terms of Financing or F inancing Terms.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sale, Conditional
See Conditional Sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sale, Distressed
See Distressed Sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sale, Forced
See Forced Sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sale, Judicial
See Judicial Sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sale, Leaseback
See Leaseback Sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sale, Private
See Private Sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 120
Sales Chasing
1) The practice of using the sale of a property to trigger a reappraisal of that property at or near the selling price. Use of the Mann-Whitney test can determine whether sales chasing occurs. If sales with such appraisal adjustments are used in a ratio study, the practice causes invalid uniformity results and causes invalid appraisal level results, unless similar unsold parcels are reappraised by a method that produces an appraisal level for unsold properties equal to the appraisal level of sold properties; and 2) By extension, any practice that causes the analyzed sample to misrepresent the assessment performance for the entire population as a result of acts by the assessor’s office. A subtle, possibly inadvertent, variety of sales chasing occurs when the recorded property characteristics of sold properties are differentially changed relative to unsold properties. Then the application of a uniform valuation model to all properties results in the recently sold properties being more accurately appraised than the unsold ones. See Mann-Whitney Test.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sales Comparison Approach
One of three approaches to value, the sales comparison approach estimates a property’s value (or some other characteristic, such as depreciation) by reference to comparable sales. The sales comparison approach compares recently sold properties to the subject property. Adjustments are made to comparable properties to reflect the characteristics of the subject property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sales Data
1) Information about the nature of the transaction, the sale price, and the charac- teristics of a property as of the date of sale; and 2) The elements of information needed from each property for some purpose, such as appraising properties by the direct sales comparison approach.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sales File
A file of sales data. See Sales Data.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sales Ratio Study
A ratio study that uses sale prices as benchmarks for market values. A rela- tionship between sales prices and value (market value, assessed value, equalized value), that is used to measure the level of appraisal. Used to evaluate the effectiveness of assessment practices, reap- praisals, or revaluations.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sales Ratio/Assessment Ratio
The ratio of an appraised (or assessed) value to the sale price or adjusted sale price of a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sales Tax
A tax levied as a fixed percentage on the dollar value of a broad category of retail purchases.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sales Verification Questionnaire
In written or electronic format, these documents are an affirmed or sworn statement regarding particulars of a sale of real property, such as the inclusion of personal property, favorable financing, etc. These forms assist the assessing officer in sales vali- dation for property valuation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Salience
In the economics of taxation, salience refers to the visibility of the tax in question and how this visibility affects behavior.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Salvage Value
The value that badly depreciated improvements, machines, or equipment would have if dismantled and sold in separate parts or pieces; the value of an asset at the end of its economic life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 121
Sample
A subset containing the characteristics of a larger population. A sample should represent the population as a whole and not reflect any bias toward a specific attribute. In order to achieve an unbiased sample, the selection must be random so each item from the population has an equal chance of inclusion in the sample group.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Sampling Error
A statistical error from a sample that does not represent the population.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Sandwich Lease
See Lease, Sandwich.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Saturation
Vividness or intensity of hue in color theory.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Scale
The reduction ratio that characterizes a particular map. A ratio of 1:100, for example, is said to be a larger scale than 1:1,000.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Scanner
1) An optical-mechanical imaging system in which a rotating or oscillating mirror sweeps the instantaneous field of view of the detector across the terrain; and 2) A device for capturing and digitally encoding images in computer files.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Scanning
Capturing an image using an optical or video input device that uses light-sensing technology. The process of converting paper documents (maps) to digital or computer readable raster images by placing a map original on a drum, which is rotated beneath an optical input device.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Scatter Diagram or Scatterplot
A graphic means of depicting the relationship or correlation between two variables by plotting one variable on the horizontal axis and one variable on the vertical axis. Often in ratio studies it is informative to determine how ratios are related to other variables. A variable of interest is plotted on the horizontal axis, and ratios are plotted on the vertical axis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Scene
The area on the ground that is covered by an image or photograph.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Schedules
Tables, equations, or some other means of presenting the relationship between the values of two or more variables that are functionally related. For example, cost schedules present the relationship between cost per square foot and living area for a number of quality classes, building heights, and other characteristics.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
School Aid Equalization
A system of state revenue sharing to local schools based on guaran- teeing that each school district has the same property tax base per student on which to levy local property taxes to fund per — student expenditure on public education.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Scrap Value
See Salvage Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Screening Codes
Used to identify the source of the sales information or how the sale was verified; they are separate from the validity code.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Sealed Bid
Method of marketing property in which each bidder (buyer) is given just one chance to submit a bid in a sealed envelope, without knowing other bid amounts. All such bids are opened at one time. The seller may set a minimum bid.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Searcher
Known as an Abstractor. See Abstractor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Second
One sixtieth of a minute of the circumference of a circle.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 122
Secondary Mortgage Market
A market in which the originator of a mortgage, such as a local savings bank, may sell it to another investor, such as a pension fund.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Section
A unit of land approximately one mile square and normally containing 640 acres, as laid out by the government survey.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
SEE
See Standard Error of the Estimate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Seisin
The acquiring of the right of possession of real property via a transfer of title to a freehold estate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Selection Bias
Occurs when the procedures used to select observations included in a sample produce a result that is different from what would have been obtained if all members of the popu- lation were included in the study. For example, using all available sales as a sample in a valuation study may not represent accurately the larger population from which the sample is selected.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Self-Assessment
The assessment process or portion of the assessment process that requires the property owner to file a return, statement, rendition, or some authorized disclosure on which to compute the tax liability, which is accepted as filed to the assessing officer, as a matter of law or practice.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Seller
A vendor, or person who sells or contracts to sell goods. In real property sales the seller is the grantor who transfers property by deed or grants property rights through a trust instrument or other document.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Seller Financing
A sale in which the seller provides financing to the buyer, typically with a higher rate of interest than market and a lower sale price or a lower rate of interest than market with a higher sale price. Sales should be adjusted to determine market value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Sensor
Any device that gathers energy (electromagnetic radiation or other), converts it into a signal, and presents it in a form suitable for obtaining information about the environment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Service Life
The period (or service) for an asset from the date of its installation to the date of its retirement from service.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Service-Hours Method
A valuation method to estimate depreciation of fixed assets that assumes that the useful life of a machine or piece of equipment can be estimated in terms of the number of service hours it can work for.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Settlement
The official resolution of a conflict through agreed-upon terms.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Settlor
One who transfers to a trustee title to property that constitutes the trust estate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Severance
The division of one parcel into two separately conveyable parcels of land.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Severance Tax
A tax imposed on the privilege or act of removing or severing specified natural resources, such as minerals or timber, from a state of nature. Note: Such a tax may be measured by gross or net proceeds or by units of production, and may be in lieu of, or in addition to, a property tax on the severed or remaining natural resources.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 123
Shore
The land lying between the high-water and low-water marks.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Short
Lived Items; 3)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 92
Short Sale
A sale in which the lien holder agrees to accept a payoff for less than the outstanding balance of the mortgage or loan.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Short-Lived Items
Items of a structure that have a shorter life than the basic structure. For example, roofing, water heaters, floor covering, and interior finish.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Significance Level
A measure of the probability that an event is attributable to a relationship rather than merely the result of chance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Single Property Appraisal
Systematic appraisal of properties one at a time. Commonly referred to as a fee appraisal or bank appraisal, which normally determines a value of a particular property as of a given date. Differs from mass appraisal, which systematically appraises groups of properties as of a given date using standardized procedures and statistical testing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Single-Family
Includes each detached, semi-detached, or attached house, if separately assessed and not on a farm, that is a residence for one family only. For detached houses, this would include one-family rural properties or suburban estates not used primarily for farming, and mobile homes assessed as real property. This category includes each condominium unit in a multi-unit dwelling structure, plus each condominium’s share of the common area, unless the common area is separately assessed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 117
Sinking Fund
A real or accounting fund or pool of money into which deposits are periodically made; these deposits, together with the compound interest they earn, are projected to accumulate to a given amount on a given date. Some sinking funds are dedicated to a particular purpose, such as replacing a heating system; others are simply convenient ways of thinking about flows of money.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Sinking-Fund Capitalization
A way of calculating the recapture rate in the income approach. It assumes that an investor will deposit recapture income in an interest-bearing account and will thus, in effect, accelerate recapture. To use it, an appraiser goes to a compound interest table to locate the interest rate the investor would probably get and looks down the column of sinking-fund factors to the number of years equal to remaining economic life of the improvements. Adding the sinking-fund factor to the discount rate gives the recapture rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Sinking-Fund Factor
The amount that must be periodically set aside to accumulate with compound interest to $1 at the end of a specified number of years and at a specified interest rate. The Sinking-Fund factor is sometimes known (in connection with annuity capitalization) as the Capital Recovery Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Sinking-Fund Method
See Sinking Fund.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Sinking-Fund Method Annuity Premise
Assumes that the interest rate on a sinking fund is equal to the investor’s discount rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Site
The location of a person, thing, or event.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Site Amenities
The specific location-related positive attributes of a property: topography, utilities, street traffic, view, and so on.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Site Analysis
A study that determines the suitability of a specific parcel of land for a specific purpose.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Site Characteristics
1) Characteristics of data that describe a particular property, especially land size, shape, topography, and drainage, as opposed to location and external economic forces; and 2) By extension, any characteristics of the site or the improvement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 124
Site Development
Improvements made to a land site (for example, grading, utility installation, roadways, and curbs) before a building is constructed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Situs
The actual or assumed location of a property for purposes of taxation. In personal property, situs may be the physical location of the property or, in the instance of highly mobile property, the more or less permanent location of the property owner.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Situs, Constructive
The tax situs established by reasonable rules of law or practice for intangible property or for tangibles when they are not continuously within a given tax district for the full assessment year. For example, a constructive situs is established for freight cars by allocating to a tax district a fraction of the total number of cars owned equal to the ratio of car miles operated within the district to the total number of car miles operated within and without the district.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Situs, Tax
The place at which property is legally taxable; that is, the jurisdiction within which property actually lies or is said to lie for tax purposes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Skewed
The quality of a frequency distribution that makes it asymmetrical. Distributions with longer tails on the right than on the left are said to be skewed to the right or to be positively skewed; distributions with longer tails to the left are said to be skewed to the left or to be negatively skewed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Slope
A measure of the steepness of a line. A positive slope is indicated by a line going up moving from left to right along the x-axis. A negative slope is indicated by a line going down moving from left to right. When the line is horizontal, the slope is zero. A line with zero slope is parallel to the x-axis.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Slope Rights
Adjacent to highways, the right to extend fills or cuts beyond the sidelines of the road easement as dedicated.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Soft Cost
See Indirect Costs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Software
1) Computer programs; and 2) Those parts of a computer system that are not machinery or circuits; thus, procedures and possibly documentation are included along with programs. Often considered an intangible for personal property valuation. See Intangible Personal Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 125
Solar Panels
Devices containing solar cells that are used to absorb the sun’s rays and convert them into electricity or heat.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Sole Proprietorship
A business enterprise net worth that belongs entirely to one individual.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Sonar
An apparatus that detects the presence of, or determines the distance or direction of, an object underwater by receiving and interpreting sound from the object.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Span of Control
The number of employees supervised by each manager.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Spatial
The location of, proximity to, or orientation of objects with respect to one another in N-dimensional space. Generally, refers to phenomena that can be mapped in two or three dimen- sions on or near the earth’s surface.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Spatial Data Analysis
The study of the relationship between location-related data and property data, including property characteristics, market data, estimated values, and sales ratios.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Spatial Resolution
1) The ability of an entire remote sensor system, including lens, antennas, display, exposure, processing, and other factors, to render a sharply defined image; and 2) A measure of the smallest angular or linear separation between two objects that can be resolved by the sensor.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Spearman Rank Test
Tests the association between two ranked variables. Specifically, as the value of one variable increases, does the other variable tend to increase or decrease? This is a standard nonparametric test useful in examining assessment bias.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Special Assessment Area
A geographic area where additional funds are collected to provide services in a municipality. Also known as Special Rate Area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Special Property Tax
A tax that applies to a single class of property (for example, oil and gas properties, motor vehicles) and differs substantially in one or more respects from the general property tax. Note: Such difference may be in the base of the tax (for example, it may consist of gross earnings instead of property values), in the rate, or in important administrative aspects. Compare General Property Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Special Tax
1) In general, an unusual, extraordinary, or unique tax; and 2) Specifically, as applied to property taxes, a) a property tax that is levied in addition to the levying of the regular annual property tax; and b) a property tax levied for a single purpose rather than for the general purposes of government.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Special Warranty Deed
A deed in which the grantor only covenants to warrant and defend the title against claims and demands of the grantor and all persons claiming by, through, and under him or her.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Special-Use Properties
Properties that have a very specific use and might be appropriate for only one or a very limited number of uses.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Specific Data
A category of data that consists principally of site and improvement data.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Specific Tax
A tax in which the base is a physical, rather than a value unit; for example, a head tax, gallon tax, or age tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 126
Specifications
A written, detailed, drawing that shows a contractor how to proceed with construction.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Spectral Band
An interval in the electromagnetic spectrum defined by two wavelengths or frequencies.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Spectral Reflectance
The reflectance of electromagnetic energy at specified wavelength intervals.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Spectral Resolution
The dimension and number of specific wavelength intervals in the electro- magnetic spectrum to which a sensor is sensitive.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Spheroid
1) Any surface differing only slightly from a sphere; and 2) By extension, a surface close to the geoid or approximating the geoid.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Spiral
A variable radius curve that gradually changes into a straight line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Split
See Land Division.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Standard Depth
The depth of a standard lot either arbitrarily or because it is representative of the majority of lots within a given area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Standard Deviation
The statistic calculated from a set of numbers by subtracting the mean from each value and squaring the remainders, adding together all the squares, dividing by the size of the sample less one, and taking the square root of the result. When the data are normally distributed, one can calculate the percentage of observations within any number of standard deviations of the mean from normal probability tables. When the data are not normally distributed, the standard deviation is less meaningful, and one should proceed cautiously.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Standard Error
A common measure of sampling error. The difference between a population parameter and a sample statistic. The standard error of the mean is an estimate of the precision of the sample mean. While the standard error of the mean is the most common type of standard error, standard errors are calculated for other statistics as well. The standard deviation is a descriptive statistic that can be calculated from sample data. In contrast, the standard error is an inferential statistic that can only be estimated, unless the real population parameter is known. Standard Error of the Estimate (SEE) — A measure of the accuracy of predictions made in a regression model. For a regression model with a small standard error of the estimate, the data points (predictions) are close to, if not on, the estimated regression line.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 127
Standard Lot
See Lot, Standard.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
Standard Parallels
The east-west axes on a map that are counted north and south of the baseline.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
Standardize
1) To transform a variable to standard form; that is, to make the mean of the frequency distribution equal to zero and the standard deviation equal to one; and 2) To adjust, for appraisal purposes, reported data such as income and expenses to remove the effects of non-real estate factors, such as abnormally good or bad management, weather, and the like. The more common term for this adjustment process is Normalization.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
State Assessed Property
That property for which the assessed value is set by a state agency, either for taxation by the local jurisdiction affected or for state taxation. Most often, this term applies to utility property or property with special characteristics where the state preempts local authority to achieve uniformity in assessments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
State Plane Coordinate System
1) One of the plane rectangular coordinate systems for each state in the United States, established by the United States Coast and Geodetic Survey in 1933 for use in defining locations of geodetic stations in terms of plane — rectangular Cartesian coordi- nates. State plane coordinate systems have been established for all 50 states, and within each state there are one or more separate projections of areas known as zones. The boundaries of state plane coordinate zones are coterminous with county and state boundaries, an administrative advantage in that counties are never required to use more than one state plane coordinate zone; and 2) A mathematical projection of the curved surface of the earth on a flat surface over which a coor- dinate grid expressed in feet is laid.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
State Plane Coordinates
1) Geographic coordinates based on the state plane coordinate system; and 2) A series of grid coordinate systems prepared by the U.S. Coast and Geodetic Survey for the entire United States, with a separate system for each state. Each state system consists of one or more zones. See State Plane Coordinate System.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
State Property Tax Tribunal
A quasi-judicial administrative review agency organized to separate the state’s review and appeal responsibilities from its administrative and equalization functions.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
Stationary Property
Property that is more or less permanently located at a business premise.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
Statistical Accuracy
The closeness between the statistical estimate and the true (but unknown) population parameter value it was designed to measure. It is usually characterized in terms of error or the potential significance of error and can be decomposed into sampling error and non-sam- pling error components. Accuracy can be specified by the level of confidence selected for a statis- tical test.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
Statistical Precision
How close estimates from different samples are to each other. For example, the standard error is a measure of precision. When the standard error is small, estimates from different samples will be close in value. Precision is inversely related to standard error. When the standard error is small, sample estimates are more precise; when the standard error is large, sample estimates are less precise.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 128
Statistics
Numerical descriptions calculated from a sample; for example, the median, mean, or coefficient of dispersion. Statistics are used to estimate corresponding measures, termed param- eters, for the population.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Statute
A law enacted by a legislative body (Congress or a statehouse in the US); can also be referred to as an act.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Step-Up/Step-Down Lease
A lease that calls for set increases or decreases in rent at specified intervals.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stepwise Regression Analysis
A technique for selecting the most appropriate independent vari- ables for building a regression model. Stepwise regression is a combination of two other variable selection techniques: forward and backward selection. Stepwise regression is a modification of the forward selection so that after each step in which a variable is added, all candidate variables in the model are checked to see if their significance has been reduced below the specified tolerance level. If a nonsignificant variable is found, it is removed from the model. Stepwise regression requires two significance levels: one for adding variables, and one for removing variables.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stereoscope
An instrument that uses a stereoscopic pair of images to produce a visual effect of depth or solidity, numerical data, or topographic maps showing depth (height).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stereoscopic Coverage
Aerial photography taken with sufficient overlap to permit complete stereoscopic observation. Sixty percent forward overlap between frames is usually recommended for adequate stereoscopic coverage.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stereoscopic Pair
Two photographs of the same area taken from different camera stations in order to afford stereoscopic study of the overlap area. Also called Stereo Pair.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stigma
A perception that a property continues to be contaminated even though it has been cleaned up. Stigma may affect property value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stock
Share of a company.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stock and Debt Technique
A method of appraisal in which the liabilities and equity on a company’s balance sheet are valued to yield a value for the operating assets (after non-operating properties are deducted). A substitute for the sales comparison approach when sales are insuffi- cient, as the total value of the various interest positions (taken from stock and bond sale prices in the daily newspaper or elsewhere) when summed provides a relatively objective indication of market value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Stock in Trade
Refers to merchandise items; 1) On display; 2) In easy-access storage; 3) Being received; or 4) Being prepared for shipment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Stock, Capital
The book value of the outstanding shares of a corporation; the capital stock represents the permanently invested capital of the corporation that cannot legally be impaired by payment of ordinary dividends.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stock, Common
Corporation stock that has a residual claim on net profits and assets, on disso- lution of the corporation, after satisfaction of the claims of all creditors and of the preferred stock- holders, if any, or stock that is subordinate in any other respect to a second issue of stock by the same corporation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 129
Stock, Preferred
1) In general, corporation stock that has preference in any request over the common stock; and 2) Specifically, corporation stock on which a dividend must be declared at a specified rate per share before any is declared on common stock, and on which liquidation dividends must be paid to the full-face value of the stock before any such dividends are paid on common stock. Note: If the preferred stock is cumulative, dividends that are passed or paid in an amount less than the specified rate per share must be paid in full before a dividend may be declared on common stock in any subsequent year; if it is noncumulative, dividends passed in whole or in part in one year need not be paid in a subsequent year before declaration of dividend on common stock. Participating preferred stock shares in any additional dividends after payment at specified rates on both preferred and common stocks.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Straight Mortgage
A mortgage that has a short term, usually about three years. It has no requirement for amortization (the process of extinguishing debt or recovering a capital investment through periodic repayments of principal); requires level interest payments, usually monthly or quarterly; and requires that the entire unpaid principal and interest balance be paid at maturity. This last requirement is known as a balloon payment, which is the balance due on a note at the end of the loan term in excess of the regular payment amounts.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Straight-Line Annuity
An income stream that increases or decreases by a fixed amount per period.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Straight-Line Capitalization
A means of estimating value whereby net operating income is divided by a capitalization rate composed of the discount rate, the reciprocal of remaining economic life as the recapture rate, and sometimes the effective tax rate. The method implicitly assumes that net operating income will decline by an equal dollar amount each year.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Straight-Line Depreciation
Fixed rate of depreciation that occurs through the economic life range of a property. A method of writing off the cost of a property over the period of its expected economic life by means of equal annual charges, the sum of which is equal to the original cost of the property less any anticipated scrap value at the end of its expected economic life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Straight-Line Method
A method of amortizing investments and other sources of cash flow so that equal amounts are attributed to each of several equal intervals of time.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Strata Plan
Strata housing includes properties that are vertical housing similar to apartments, but can be duplexes, townhouses, and fractional vacation properties. The strata corporation is self-governing and has its own by-laws and rules.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Strategic Plan
A broad-scale plan for accomplishing multiple objectives affecting events several years in the future. These plans typically cover a period of five years or more.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 130
Stratification
The division of a sample of observations into two or more subsets according to some criterion or set of criteria. Such a division may be made to analyze disparate property types, locations, or characteristics, for example.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Stratify
To divide, for purposes of analysis, a sample of observations into two or more subsets according to some criterion or set of criteria
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Stratum, Strata
Class or subset that results from stratification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Stream Mode
A method of converting manual data to digital data that consists of an automatic vertex input at set intervals.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Structure
A man-made improvement, inherently permanent and affixed in place on a specific geographical area. Structures can take various forms, such as buildings, bridges, dams, transmission towers, in — ground pools, drilling platforms, and stationary wharves and docks.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Stumpage
The amount of timber “on the stump.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Stumpage Value
The value of uncut timber.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subclass
See Subset.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subdivision
A tract of land divided, by means of a map, into lots or lots and blocks for the purpose of resale, generally for residential or agricultural purpose. To be valid, in most jurisdic- tions a subdivision plat usually must be approved by the local municipality and then recorded (registered) in a county recorder (registrars) office.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subject Property
The property being appraised.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subject To
A phrase that identifies rights and/or obligations affecting property, i.e. “subject to an easement.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subjective
Having the quality of requiring judgment in arriving at an appropriate answer or value for a variable (such as the quality class of a structure). Collected or obtained through personal interactions or observation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subjective Data
Items for which the proper value is a matter of informed judgment and more difficult to verify. Examples include construction class, condition, effective year built, neighborhood desirability, and view. The information collected that is dependent on judgment in arriving at an appropriate value for a variable. See Subjective.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Sublease
A scenario in which a tenant transfers its rights under a lease to another party known as the subtenant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subpoena Duces Tecum
A subpoena requiring the person served therewith to appear at the appointed place or before the designated tribunal with those documents or other things called for in the subpoena.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subset
A group of properties within a sample, smaller than the sample, usually although not necessarily defined by stratification rather than by sampling.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 131
Subsidiarity
A principle of government organization that holds that decisions should be made at the level of government closest to where they will have their effect, such as by a local government instead of a state or central government. The aim is to make government more responsive to citizens’ needs and to make it easier for citizens to hold government accountable.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Substitute Goods
A product or good that can be used in place of another with equally suitable use and quality. Increase in consumption of one product or good decreases the consumption of the other product or good.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Substitution
See Principle of Substitution.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Succession
The conveyance of real property by inheritance or will.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Sum of Squared Errors
The sum of the squared deviations from the predicted values (rather than the mean value).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Sum of Squares
The result obtained by adding all the squares of the individual deviations from some given value. Usually, it is the sum of the squares of the deviations of the individual values of a variable from the mean value. Sum of the Years’ Digits — The method of accounting for depreciation in which a percentage of depreciable cost is allocated to each year, which percentage is equal to the number of years of remaining economic life divided by the sum of the digits for each year in the total economic life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Summation Approach
See Cost Approach.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Sunset Provision
A provision within a statute creating a law or agency providing for the auto- matic termination of that law or agency at a fixed date in the future.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Superadequacy
A feature of a property exceeding in quality or amount the corresponding feature in a typical property of the same use. Superinsulation is one example. Superadequacies fall into the larger category of functional obsolescence. See Functional Obsolescence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Superpositioning
The capability of overlaying, normally an aerial image and a line map, for the purpose of data collection or data maintenance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Supplies
A type of inventory of goods intend to be consumed during business operations. May be part of a manufacturing process but is not part of the raw materials inventory. Includes items such as paper, chemicals, pallets, and other consumable items that are not held for resale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Supply
The amount of a good or service that would be offered for sale at various prices during a given period.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Supply and Demand
See Principle of Supply and Demand.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Surplus Productivity
See Principle of Surplus Productivity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Surplus Value
The value of a commodity over and above the quantity of labor required to produce it.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Surplus, Corporate
1) Broadly, the equity of the stockholders in the assets of a corporation in excess of that represented by the capital stock; 2) More narrowly, the equity of the stockholders in the assets of a corporation in excess of that represented by the capital stock, undivided profits, and reserves; and 3) Sometimes erroneously used to refer to the assets that are assumed to represent such equity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 132
Survey, Control
A survey that provides coordinates (horizontal or vertical) of points to which supplementary surveys are adjusted.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Survey, First-Order
A geodetic survey of the highest prescribed order of precision and accuracy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Survey, Geodetic
A survey that considers the size and shape of the earth (as distinguished from a plane survey, in which the surface of the earth is considered a plane).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Survey, Government
See Government Rectangular Survey System.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Surveying
The science and art of making measurements of distance and direction necessary to determine the relative position of points on, above, or beneath the surface of the earth or to establish such points. The act or operation of making measurements for determining the relative positions of points on, above, or beneath the earth’s surface; also, the results of such operations; also, an organization for making surveys. Examples include: 1) Photogrammetric survey — A method that uses either ground photographs or aerial photographs; 2) Aerial survey — A survey using aerial photographs; 3) Ground survey — A survey made by ground methods, as distinguished from an aerial survey. A ground survey may or may not include the use of photographs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Surveying, Plane
Surveying done under the assumption that the surface of the earth is flat.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Survivor Curve
In depreciation analysis, a method of estimating the probable service life of unit properties and the probable average service life of group properties based on experience; indicates the percentage of the property or asset (in physical units or dollars) that survives at ages (usually in years) from zero to maximum life. See Iowa Type Curve.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Sweat Equity
Anything done to a property that doesn’t necessarily have a cash value attached to it.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Synoptic View
The ability to see or measure large areas at the same time and under the same conditions (that is, the overall view of a large portion of the earth’s surface that can be obtained from satellite altitudes).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
System
1) Structured organization of people, theory, methods, and equipment to carry out an assigned set of tasks; 2) The property operated as an integral unit under one control, management, or operating supervision; and 3) An integrated group of assets that may be related entities or may be property elements such as machinery, buildings, land, and other property used in the perfor- mance of services or manufacture of products.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Systematic Maintenance
Maintenance activity that results from real estate transactions, deeds, wills, and subdivision plats.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
Systems Approach
An approach to management theory that views the principal function of the manager to be to create an open organizational system with appropriate informal and formal feedback mechanisms, such that the major subsystems work well together, and the organization can exhibit growth, stability, and equilibrium in the face of environmental changes. T
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 133
T
Table, Depth
A table used in appraisal showing percentages of the variation of land value based on the depth of the specific parcel.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tangent
A tangent to a curve is a line that touches the curve at one point and is also at right angles to the radial line at the point of contact with the curve.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tangible Personal Property
Includes most movable items, but can include sales tax, freight, installation costs, and all other costs required to place the item into service. See Personal Property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Task Force
A kind of organizational unit, usually temporary, composed of employees from different functional areas whose assignment is usually some kind of non-routine task, such as assisting in a system development effort.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax
A compulsory charge levied by a government unit against the income or property of a person, natural or corporate, for the common benefit of all citizens. The term does not include specific charges made against particular persons or property for current or permanent benefits and privileges accruing only to those paying such charges, such as licenses, permits, and specific assessments.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax Base
The aggregate of the values or units to which the tax rate or rates are applied to determine the tax liability of a person or a group of persons. Compare Object of Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax Burden
Economic costs or losses resulting from the imposition of a tax. Burden can be determined only by detailed analysis of all economic changes resulting from the tax. In popular usage, the term often refers to the initial incidence rather than to ultimate economic costs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax Calendar
Reflects the process and dates for the completion of an assessment roll and property tax levy for one year in chronological order.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax Capacity
The amount of tax that would be collected using an overall average tax rate. For example, for the tax capacity of a particular state, the overall amount raised nationally by the tax would be divided by total personal income (or population). The resulting national average tax rate would then be multiplied by the total personal income (or population) of the state to determine the tax capacity of that state.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax Deed
A deed by which title to real property sold to discharge delinquent taxes is transferred by a tax collector or other authorized officer of the law to the purchaser at a tax sale.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax District
1) In general, a state or any political subdivision thereof having or exercising the power to levy taxes; and 2) As applied to property taxes, any area, whether coterminous with or within a state or a political subdivision thereof, within which the tax rate levied by such state or political subdivision is required by law to be uniform on properties of the same class.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax Incidence
The distribution of a tax on natural persons who bear the tax after the completion of the process of tax shifting, to be distinguished from the distribution of the tax on the persons, natural or legal, who pay it in the first instance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax Incidence Analysis
Economic analysis that compares the way different taxes affect the distribution of income; requires analysis of the impact of taxes on the market for the taxed item and the market for all factors (land, labor, and capital) used in producing the taxed item.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax Increment Bonds
Debt instruments that governments may issue to allow them to pay for projects in a reinvestment zone. Tax revenues pay off the bonds. Tax Increment Financing (TIF) — The idea that property taxes or other revenue resulting from the increase in a tax base (for example, property values or retail sales) in a specific area can be used to repay the costs of investment in that area. Funds may be invested in various programs such as public infrastructure improvements or land write-down subsidies to private investors.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax Levy
1) The act by which a legislative body fixes either the amount of taxes to be placed in collection or the rate to be applied to a predefined tax base; or 2) The amount of taxes authorized to be placed in collection by a competent legislative body.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax Policy
Any purposeful course of action by governmental bodies that affects or determines the way taxes are created, levied, collected, or spent.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax Policy Analysis
The process of gathering and interpreting economic data to provide infor- mation that can be used by policymakers to formulate tax policy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax Rate
1) The amount of tax stated in terms of a unit of the tax base; for example, 30 mills per dollar, 2 percent, 2 cents per gallon; and 2) For property tax, the percentage of assessed value at which each property is taxed in a given district. Distinguish between Effective Tax Rate and Nominal Tax Rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax Roll
An official list showing the amount of taxes charged against each taxpayer and/or each property within the jurisdiction of a tax district. Note: In property taxation, the tax roll is some- times combined with the assessment roll into a single document.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax Rollback
A tax rollback results in assessment of back taxes on land that was previously taxed according to Special-Use value. When land no longer qualifies for use valuation, the taxing unit assesses taxes for a number of years as specified by statute. The additional tax is the difference between the amount of tax imposed and the amount that would have been imposed if the land had been appraised at (and taxed based on) full market value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax Sale
Sale of a taxpayer’s property by a public authority so that delinquent taxes may be collected from the proceeds; usually preceded by a period during which the taxpayer can pay delin- quent taxes and followed by a period during which the taxpayer can redeem the property from the purchaser. See Certificate of Redemption and Redemption.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax Shifting
The act of a taxpayer in transferring a tax to another person by means of price changes. Note: A tax is said to be fully shifted when it results in price changes that maintain the taxpayer’s net income at the level that would have been obtained in the absence of the tax. As long as price changes occur that forestall the reduction of net income by the full amount of the tax payment, some shifting has occurred. Shifting may be forward, as in the case of a tax on a retail concern that is shifted by increasing the retail price, or backward, as when such a tax is shifted by a reduction in the wages of employees or in wholesale prices.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax Warrant
A document directing a peace officer and tax collector to take as much of a person’s personal property as is necessary to pay all taxes, penalties, and interest the person owes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Tax, Ad Valorem
See Ad Valorem Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Classified Property System
See Classified Property Tax System.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Degressive
See Degressive Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, General Property
See General Property Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Graduated
See Graduated Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Indirect
See Indirect Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Land Value
See Land Value Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Net Worth
See Net Worth Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Progressive
See Progressive Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Property
See Property Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Proportional
See Proportional Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Recordation/Recording
See Recordation/Recording.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Regressive
See Regressive Tax System.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Severance
See Severance Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Special
See Special Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Special Property
See Special Property Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 134
Tax, Specific
See Specific Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax, Transfer
See Transfer Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax, Value Increment
See Value Increment Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax, Windfall
See Windfall Tax. Tax and Expenditure Limitations (TELs) — Statutory and constitutional limitations imposed by states on local fiscal autonomy. TELs are designed ostensibly to: 1) Control and reduce property taxes; 2) Control the growth of government and public spending; and 3) Improve fiscal account- ability. The six basic types of TELs are overall property tax rate limits, specific property tax rate limits, property tax levy limits, limits on general revenue or expenditure increases, limits on assessment increases, and truth-in-taxation (full disclosure) requirements.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 135
Tax-Exempt Property
Property entirely excluded from taxation because of its type or use. The most common examples are religious, charitable, educational, or governmental properties. This definition omits property for which the application of a partial exemption reduces net taxable value to zero.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Taxable Value
The appraised value of property less all applicable partial exemptions or limita- tions on valuation increases. Property taxes are levied on taxable value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Taxation, Double
See Double Taxation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 136
Taxing Unit
Any political unit of a state that imposes property taxes. Counties, school districts, incorporated municipalities (cities), and special districts may be taxing units. See Tax District.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Taxpayer
A person who makes payment of property taxes for real or personal property. Generally, includes all persons liable for the payment of property tax, by law or contract.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
TELs
Often used to reference Total Economic Life. See Tax and Expenditure Limitations.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Tenancy
The act of using or occupying property, especially real property whose fee title is vested in someone other than the occupant.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Tenancy in Common
Ownership of a parcel of property by two or more persons, that each person having the right to transfer the property by will or inheritance.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Tenancy in Severalty
A state of tenancy involving one person who owns a divided possessory interest.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Tenancy, Joint
A state of tenancy involving two or more persons owning undivided possessory interests that have arisen out of a single conveyance, no one of the tenants being free to create interests in the estate without the consent of the others, and the surviving tenants acquiring the interest of any tenant who may die. Compare Tenancy in Common and Tenancy by the Entirety. Tenancy by the Entirety — A state of tenancy, recognized by some states, in which the husband and wife are considered as a single person, neither one being free to create interests in the estate without the consent of the other and the survivor acquiring the whole interest upon the death of either.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Tenant
One who holds or possesses a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Tenement
1) Real property and the rights to ownership, especially those of a permanent nature that relate to and pass with the land; and 2) A building intended for rental residence.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Termination for Cause
A type of contract termination that occurs when a party has failed to deliver services on time or according to specifications.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Termination for Convenience
A type of contract termination that occurs when one or both parties decide that continuation of the contract is not in their best interests.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Test Sample
The sample of sales used to develop the model.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Testate
The state of having died after executing a valid last will and testament.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
The Appraisal Foundation
An organization authorized by Congress as the source of appraisal standards and appraiser qualifications.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Thematic Maps
Digital maps that allow various performance standards to be displayed spatially.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 137
Thence
“Thence” in a legal description means “from that place.”
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Theodolite
A precision surveying instrument for measuring horizontal and vertical angles. The graduated circles are usually read by means of optical microscopes and are more precisely grad- uated than are the circles on a transit.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Theory Z
A management theory that assumes workers can be trusted to do their jobs to their utmost ability as long as management can be trusted to support them and look out for their well-being.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Thermal Infrared
Electromagnetic radiation emitted by any substance as a consequence of the thermal excitation of its molecules. Thermal radiation ranges in wavelength from the longest infrared radiation to the shortest ultraviolet radiation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Thread
A line midway between the sides of a road or Right-of-Way. “Thread of a stream” is the line midway between the banks.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Three Approaches to Value
The cost approach, income approach, and sales comparison approach.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Tidelands
Lands covered and uncovered by the ordinary tides.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Tied
As used in surveying, monuments are tied together by measurements. A property corner is tied to offset monuments or to other property corners.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Tier
The area included between two township lines.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
TIF
See Tax Increment Financing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Time Series Analysis
A family of techniques that can be used to measure the cyclical move- ments, random variations, seasonal variations, and secular trends observed over a period of time.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Time Value of Money
The principle that an amount of money anticipated as income in the future is always worth less than an equal amount in hand at the present time.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Time-Adjusted Sale Price
A property’s sale price adjusted for changes in market conditions between the date of sale and the date of valuation. See Market Condition Adjustment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Timeshare Unit
A residence, usually a condominium at a vacation or resort site, whose ownership is divided among the owners by weeks or months, giving each owner the right to occupancy for a specified time each year.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Title
The union of all elements constituting proof of property ownership or the instrument that is evidence of ownership. Evidence of ownership and lawful possession of property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Title Examiner
A person who analyzes a chain of title to land and passes on validity of instru- ments and then renders his opinion.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
Title Registration System
A system under which a government agency examines evidence of ownership and determines who owns a property or possesses a property right and compensates injured parties should its determination prove incorrect.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Title Search
An examination of public records to ensure the quality of the seller’s title to a property. Preparation of an abstract of title requires a complete title search.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Title, Equitable
See Equitable Ownership.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 138
To
In legal descriptions, “to,” “on,” “by,” “at,” and “along” a road carry title to the center line unless otherwise qualified. “To” implies contrast. “To” does not always include an object, as “to certain property” does not include property. But “to a stone” usually means “to the center of the stone.” “To” is directional, as “90° to” (not with) or “at right angles.” “To” is a word of exclusion rather than inclusion. If you go to an object, you exclude other objects.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Tolerance
An acceptable margin of error or inaccuracy.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Top Managers
Managers responsible for controlling the organization by setting its goals, overall strategy, and operating policies.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Topographic Map
A map that presents the horizontal and vertical position of the features represented; distinguished from the planimetric map by the addition of relief in measurable form. See Contour Map.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Topography
The contour of land surface; for example, gently rolling, mountainous, or flat.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Topological Rules
An instruction to a spatial database defining the permissible relationships of features.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Topology
A set of defined relationships between links, nodes, and centroids. Topology describes how lines and polygons connect and relate to each other. Among the topological properties of concern in a geographic information system (GIS) are connectivity, order, and neighborhood.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Torrens System
A land registration system in which ownership interests in real property are established and transferred pursuant to a governmental registration and certification process rather than by, for example, deed or will.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Total Economic Life
See Economic Life. Total Quality Management (TQM) — Management theory that provides a strategy for continu- ously improving an organization’s performance at every level and in all areas of responsibility. Increasing user satisfaction is the overriding objective.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Total Station
A fully automated surveying device that measures distances and horizontal and vertical angles, recording them on a magnetic device.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Town
1) A small incorporated or unincorporated political subdivision of a state; 2) A civil township; and 3) A small urban area.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Townhouse
Single-Family dwelling sharing a common wall with another dwelling.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 139
Township
An approximately 36 square mile division of land used in the federal rectangular survey system. Townships are bounded by two successive range lines on the east and west and two successive township lines on the north and south.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Township Line
One of a series of survey lines running due east and west at six — mile intervals on either side of a baseline, used for locating parcels of land under government survey. See Baseline.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Township, Civil
An unincorporated political subdivision of the state, usually coterminous with a survey township or with that portion thereof that remains after the incorporation of cities and villages situated therein.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Township, Survey
The area included between two township lines and two range lines, normally containing 36 sections of approximately 640 acres each. Synonymous with Congressional Township and Geographical Township.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Toxics
Recognized hazardous substances in the environment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
TQM
See Total Quality Management. Trade, Level of — See Level of Trade.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Trade Fixture
Property attached to a commercial rented space or building by a tenant, used in conducting a business and owned by the tenant. Examples include decorative lighting, signs, shelving, built-ins. Trade fixtures can be either real property or personal property depending on the type of improvement, intent of the parties to make the improvement real property or personal property, legislative mandates, office policies and procedures, and whether the removal of the property would cause permanent damage to the real property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Trademark
A name, symbol, or other sign that identifies a product or service; officially regis- tered and legally restricted to use by the owner alone. Generally considered as intangible property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Transfer Tax
The tax payable to a state (and sometimes to a locality) upon the sale of real property and the recordation of the transfer. The payment is usually proportional to the sale price and is commonly used by appraisers in the absence of more accurate information to deduce the price for which the property sold.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Transit
A repeating surveying instrument for measuring horizontal and vertical angles. The graduated circles are usually not graduated as precisely as are those on a theodolite.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Transitional/Interim Use
A transitional or interim use refers to an improved property with an existing use that might not be the ultimate highest and best use. However, it is a use that is appro- priate until it is ready for its future highest and best use. An interim use is a current highest and best use that is likely to change in a short to moderate time period.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 140
Transverse Mercator Coordinates
Geographic coordinates based on a transverse Mercator projection and usually expressed in meters.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Treasury Bills
Short-term debt obligations of the United States Treasury. Treatment, Storage, and Disposal Facility (TSDF) — Business that treats, stores, and disposes of hazardous waste. Regulated by the Resource Conservation and Recovery Act (RCRA).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trended Cost
The historical cost adjusted to current price levels by price indexes or composite multipliers. The trended cost should closely approximate the reproduction cost if price indexes are appropriately selected and properly constructed.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trended Historical Cost
1) The cost of constructing an improvement at a particular time, adjusted to reflect inflation and deflation, as well as changes in construction costs, between that time and the appraisal date; and 2) Method of cost estimating that obtains an estimate of the reproduction cost of a structure by adjusting its original, or historical, cost with a factor from an appropriate construction cost index.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trending
Adjusting the values of a variable for the effects of time. Usually used to refer to adjust- ments of assessments intended to reflect the effects of inflation and deflation and sometimes also, but not necessarily, the effects of changes in the demand for micro-locational goods and services.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trending Factor
A figure representing the increase in cost or selling price over a period of time. Trending accounts for the relative difference in the value of a dollar between two periods.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Triangular-Lot Table
A schedule of adjustments used to appraise a lot having a triangular shape, in whole or in part, by comparison with a base lot or a given unit of comparison factor, such as a front-foot rate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trier of Fact
Any person(s) with the authority to determine the outcome of a legal contest, i.e. a judge, jury, or magistrate.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trimmed Mean
The mean of a data set calculated after removing a specific percentage of the smallest and largest values from the data set.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trust
An agreement whereby the owner of property (the settlor) transfers legal title to a second party (the trustee), such property to be held, managed, or disposed of for the benefit of a third party (the beneficiary) or the settlor, or both, as set forth in the trust agreement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trust Deed
1) Broadly, a deed by which title to property is transferred to a trustee to be held in trust; 2) Specifically, a deed by which title to property is transferred, conditionally or uncondi- tionally, to a trustee to be held for the benefit of creditors or obligors of the grantor; and 3) An agreement made between an issuer of bonds and the holders of such bonds that is deposited with the trustee, whether or not such agreement involves the transfer of property to the trustee. Also called Deed of Trust.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trust Estate
The aggregate interests of a trustee in property held under a trust agreement.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 142
Trust, Investment
See Investment Trust.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trust, Revocable
See Revocable Trust.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 141
Trustee
One who holds legal title to property under a trust agreement. Compare Settlor and Beneficiary. Truth-in-taxation (Full Disclosure)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 142
TSDF
See Treatment, Storage, and Disposal Facility. t-Statistic — A particular statistic important in inferential statistics for certain kinds of hypothesis testing of certain kinds of data. Also known as Test Statistic, it is used to test the null and alter- native hypotheses. It compares the means of two groups and quantifies the observed data in order to reject or accept the null hypothesis. t-est — A statistical test used to compare the means of two groups. It is often used in hypothesis testing to determine whether two groups are different from each other.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 142
Turnkey
A project in which the manufacturer, builder, or contractor delivers a completed product or facility; the tenant, user, or owner has only to “turn the key” to begin operations.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 142
Turnover Ratio
A figure signifying a relationship between sales over a stated period (usually a year) and average inventories during such period, arrived at by dividing either (a) total cost of sales by total cost of the average inventory or (b) total sales receipts by total sale price of the average inventory. A valuation guideline based on sales activity, the number of times per period (usually a year) a business sells the average sale value of its inventory during the same period.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 142
Two-Tailed Test
A test in which the alternative hypothesis does not specify the direction of the relationship, as opposed to a one-tailed test, in which the direction of the relationship is specified. For example, the alternative hypothesis that “A does not equal B” implies a two-tailed test, whereas “A is greater than B” implies a one-tailed test. See Null Hypothesis. U Underground Storage Tank (UST) — Any tank and associated piping that has more than 10 percent of its volume underground. If leaking, these tanks are known as LUSTs.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 142
U
Under-Improvement
An improvement that does not develop a site to its highest and best use, usually a violation of the principle of conformity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Undivided Interest
An interest in a property that is not distinct from the interest or interests of one or more other persons; for example, the interest of a joint tenant or a tenant in common.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unencumbered Fund Balances
Funds or appropriations left over at the end of the budget year that are not committed to any fiscal purpose. An encumbrance is a reservation of funds in the form of purchase orders, signed contracts, salary commitments, chargeable to an appropriation. Uniform Standards of Professional Appraisal Practice (USPAP) — The generally recognized ethical and performance standards for the appraisal profession in the United States. USPAP was adopted by Congress in 1989 and contains standards for all types of appraisal services, including real estate, personal property, business, and mass appraisal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unimproved Land
Raw land in its natural state, prior to grading, construction, and/or subdividing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unit
The property being appraised. Everything used or useful to the ongoing economic oper- ation of the business (property). Includes tangible and intangible property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unit Assessment
An assessment involving a composite appraisal of a property, as distinguished from an assessment involving a summation appraisal or a fractional appraisal.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unit Cost
A valuation guideline expressing the relationship between cost or value of property and some unit of measure; for example, cost per square foot or per employee.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unit Tax
A tax levied on the quantity purchased as opposed to the dollar amount purchased. Examples are cigarette taxes per pack and gasoline taxes per gallon.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unit Value
The value of one of a number of similar items or units contained in or making up a property. The cost of production of an item divided by the quantity of items = unit value. The sum of the units divided by the total number of units that make up the property provides the unit value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unit-in-Place Method
A method of cost estimating in which all the direct and some of the indirect costs of individual construction components (such as the foundation walls) are specified in appropriate units (such as cost per unit of area, volume, or length), multiplied by an estimate of the quantity required by the particular structure, and added to obtain an estimate of the cost of the structure.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Unitary Government
A hierarchical system of government in which state and local govern- ments are de facto departments of the national government.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
Unitary Method of Valuation
The unit rule is a method that values the property within a particular jurisdiction based on the fair share of the value of an operating enterprise, of which the property is an integral part. The unit value concept values all the property as a going concern without geographical or functional division of the whole and includes tangible and intangible assets. The unit rule concept is typically associated with the valuation of public utilities, telecom- munications networks, railroads, and other transportation properties. However, the concept of unit valuation is similarly applicable to the appraisal of a single-family residence when comparable sales are used to value the entire property without segregation of land values. Similarly, when rents are capitalized into a value estimate for commercial properties, the unit rule is used.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
United States Federal Reserve System
A United States banking system charged with responsi- bility for maintaining the health of the economy through its regulation of the money supply and the rate of interest.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
United States Public Land Survey
The land survey authorized by the United States Congress in 1785 upon which the federal rectangular survey system is based.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
United States Public Land Survey System
A rectangular land survey employed in most of the United States, based on township lines and baselines. Universal Transverse Mercator (UTM) — The transverse Mercator projection used in the United States. Universal transverse Mercator projection zones are six degrees of longitude wide and cross civil boundaries.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
Units of Comparison
Property characteristics expressed as value per unit of measure most often used by market participants to estimate a property’s total value. A relevant measure of simi- larity used to calculate the value of a property or establish similarity with another property. Units of comparisons can include land value per square foot, per acre of land area, per front foot, per buildable unit. For commercial property, the unit of comparison may be the square foot of gross building area, usable building area, or rentable building area. For personal property, the unit of comparison may be units of production. The optimal unit of comparison for analysis is typically the one with the lowest coefficient of variation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 143
Units-of-Output Method
A method used to estimate depreciation of fixed assets that assumes that the useful life of a machine or piece of equipment can be estimated in terms of number of units that can be produced.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
Unrecorded Deed
A deed, etc., is said to be unrecorded when it has not been filed for record in the courthouse and made a matter of public record.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
Uplift Factor
The factor used to bring manufacturing or wholesale cost to a retail level of trade. See Level of Trade.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
Usable Area
The area of land that serves an economic purpose or contributes to the value of the property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
Use Class
See Classification.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 144
Use Code
A code (used on a property record form) to indicate a property’s use class or, less often, potential use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
Use Tax
A companion to the general sales tax designed to cover out-of-state purchases. See Sales Tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
Use Value
See Value-in-Use. Use-Value (Farmland)
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
Useful Life
The estimated normal operating life in terms of utility to the owner of a fixed asset or group of assets. See Economic Life.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
USGS Quad Maps
A series of general-use maps at medium scales that present elevation (contour lines), hydrography, geographic place names, and a variety of cultural features; maps produced by the United States Geological Survey showing one quadrangle. A typical quadrangle in the US is a 7.5 Minute (1:24,000), while international quadrangles will be at smaller scales (1:100,000 or 1:250,000).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
USPAP
See Uniform Standards of Professional Appraisal Practice.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
UST
See Underground Storage Tank.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
Utility
The quality of a property or service that enables it to satisfy human wants; and 2) The satisfaction obtained from the goods and services that a consumer consumes.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
UTM
See Universal Transverse Mercator. V
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 145
V
Vacancy
Unoccupied space.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Vacancy and Collection Loss
Vacancy is the amount of money deducted from potential annual gross income to reflect the effect of probable vacancy and turnover. Collection loss is the nonpayment of rent by tenants. Vacancy and collection loss is commonly expressed as a percentage of potential annual gross income, and it should be based on market research, not actual rental history of a property.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Vacant Platted Lots
Unimproved parcels described in terms other than acreage, usually by a convention using lot, block, and subdivision name. Vacant platted lots are often located either within a municipality or in areas of higher population density than the surrounding territory.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Validity
The quality of a data element or procedure being what it should be in terms of some ultimate purpose or use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Valuation
1) The process of estimating the value (market, investment, insured, or other properly defined value) of a specific parcel or parcels of real estate or of an item or items of personal property as of a given date; and 2) The process or business of appraising, of making estimates of the value of something. The value usually required to be estimated is market value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Valuation Date
See Appraisal Date.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Valuation, Assessed
See Assessed Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value
The relationship between an object desired and a potential owner; the characteristics of scarcity, utility, desirability, and transferability must be present for value to exist; 2) Value may also be described as the present worth of future benefits arising from the ownership of real or personal property; 3) The estimate sought in a valuation; and 4) Any number between positive infinity and negative infinity. See Market Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value in Exchange
1) The amount an informed purchaser would offer for property under given market conditions; and 2) The concept that states value is based on the ability of property to command another asset, such as money, in trade.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Value Increment
The amount by which a property has increased in value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value Increment Tax
A tax on increases in value of property between two specific dates, accruing either periodically or at the time property is transferred. Note: This tax is currently found in the capital gains features of many income tax laws but is generally thought of as a land tax on the unearned increment.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Value, Assembly
See Assembly Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value, Full
Synonymous with the preferred term Market Value. See Market Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value, Going Concern
See Going Concern Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value, Intrinsic
See Intrinsic Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value, Junk
Synonymous with the preferred term Scrap Value. See Scrap Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value, Liquidation
See Liquidation Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value, Residual
See Residual Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value, Salvage
See Salvage Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value, Scrap
See Salvage Value.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 146
Value-in-Use
The value of a property as measured by its current use, regardless of whether that use is the highest and best use of the property. See Highest and Best Use.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Variable
An item of observation that can assume various values; for example, square feet, sale prices, or sales ratios. Variables are commonly described using measures of central tendency and dispersion.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Variable Costs
Costs that change as the quantity of the goods, services, or use of supplies and utilities changes, either increasing or decreasing.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Variable Expense
Expenditures that vary from month to month, such as utilities, maintenance, supplies, and management fees.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Variance
A measure of dispersion equal to the standard deviation squared. The expectation of the squared deviation of a random variable from the mean. It measures the distance for a set of random numbers from the mean.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Variation
1) A general term meaning dispersion; and 2) A reference to a particular statistic called the coefficient of variation. The expectation of the squared deviation of a random variable from the mean. It measures the distance from the average value. Variance is a descriptive statistic measuring dispersion. See Coefficient of Variation.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Vector
A format for processing and displaying graphic data. Vector data are represented by strings of coordinates representing the true positions of features represented by points, areas, and their boundaries.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Vendee
A purchaser. Synonymous with Buyer.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Vendor
One who transfers property by sale. Synonymous with Seller.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Verify
To check the accuracy of something. For example, sales data may be verified by inter- viewing the purchaser of the property, and data entries may be verified by check digits.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Vertical Coordination
Coordination between the various positions in an organization that lie along a single chain- of-command.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Vertical Equity
Distributing tax burdens fairly across differing property values. Equity is achieved when the price-related differential (PRD) falls between 0.98 and 1.03. See Horizontal Equity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 147
Vertical Inequity
Difference in the level of assessment of properties related to the value ranges of the properties. Evaluated by calculating the price-related differential (PRD). Equity is achieved when the price-related differential falls between 0.98 and 1.03. See Horizontal Equity, Horizontal Inequity, and Vertical Equity.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 148
Vertical Parcel
Parcels contained in the structure of two or more stories, such as a condominium tower. For purposes of cadastral mapping, these may be represented by stacking or pancaking the parcel polygons on top of one another.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 148
Vertical Photograph
An aerial photograph taken with the axis of the camera being maintained as closely as possible to a truly vertical position, with the resulting photograph lying approximately in a horizontal plane.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 148
Vest
To give title to or to pass ownership of property. W
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 148
W
Warranty Deed
A deed containing a covenant of warranty whereby the grantor of an estate of freehold guarantees that the title that he or she undertakes to transfer is free from defects and that the property is unencumbered except as stated, and whereby the grantor, and the grantors heirs, undertakes to defend and protect the grantee against any loss that may be suffered by reason of the existence of any other title or interest in the property existing at the time the deed was executed and not excepted therein.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 148
Wasting Asset
An asset that declines in value over its expected economic life. Generally, the asset depreciates, eventually having little or no residual value at the end of its life. Generally includes assets such as buildings, improvements, and tangible personal property. Does not include items such as land, or non-assets, such as investments or inventory.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 148
Wavelength
Equals velocity/frequency. In general, the mean distance between maxima (or minima) of a roughly periodic pattern. Specifically, the least distance between particles moving in the same phase of oscillation in a wave disturbance. Optical and infrared wavelengths are measured in nanometers, micrometers, and angstroms.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 148
Weighted Average Method
In personal property appraisal, a method of inventory cost accounting whereby inventory is valued according to the unit price of all units owned throughout the year, calculated by dividing total acquisition cost of all inventory by the number of units owned. Weighted Coefficient of Dispersion (CODw) — The coefficient of dispersion when the absolute differences between individual assessment ratios and the measure of central tendency (for example, median ratio) are weighted based on sale price. Weighted Coefficient of Variation (COVw) — The coefficient of variation when the squared differ- ences between individual assessment ratios and the arithmetic mean ratio are weighted based on sale price. Weighted Mean (Weighted Average) — The weighted mean is a measure of central tendency. The weighted mean of a set of values is computed according to the following formula: Where: are non-negative coefficients, called “weights,” that are ascribed to the corre- sponding values . Only the relative values of the weights matter in determining the value of the weighted mean. In other words, if you multiply each weight by a positive value and recalculate the weighted mean with new weights , then the value remains the same. The greater the weight in respect to other weights, the greater the contribution of the corre- sponding datum into the resultant value of the weighted mean.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 148
Weighted Mean Ratio
Sum of the appraised values divided by the sum of the sale prices (or independent estimates of market value), which weights each ratio in proportion to the sale price (or independent estimate of market value).
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 149
Welcome Stranger Assessment
The practice of systematically assessing recently sold properties based on their sale prices, while failing to reassess similar properties that have not recently sold.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 149
Will Book
A record book in the clerk of courts office that contains all last will and testaments that have been probated.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 149
Windfall Tax
An unexpected, unbudgeted increase in the proceeds of a tax.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 149
Words of Exclusion
“To,” “from,” “by,” “between,” and “on” are words of exclusion unless there is something in the phrase that makes it apparent that the words were used in a different sense. “To a stone mound,” “on Brown’s land,” and “by the river” exclude other terms. Y
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 149
Workfile
documentation necessary to support an appraiser's analyses, opinions, and conclusions.
USPAP (2024 Edition), The Appraisal Foundation, p. 18
Y
Yield Capitalization
The method of converting a series of future net benefits into present value where the future net benefits are discounted at a proper yield rate or discount rate (Yo). Yield capi- talization can also be accomplished by developing an overall rate (Ro) that specifically reflects the investment’s pattern of income, change in value, and yield rate. See Direct Capitalization, Income Approach, and Income Capitalization. Yield Rate (Discount) — The rate of return on a real estate investment. The yield rate reflects the compensation necessary to attract investors to give up liquidity, defer consumption, and assume the results of investing. It is the rate of return required on total property investment to meet investment requirements. Conceptually, the yield rate is the weighted average of the mortgage interest rate or mortgage yield rate and the equity yield rate, weighted by the proportions of total investment represented by rate and considers all the properties’ expected benefits, including the proceeds from resale at the end of the investment hold period. Referred to as the property’s internal rate of return. See Discount Rate, Equity Yield Rate, and Mortgage Interest Rate. Yield to Maturity (YTM) — The average rate of return on outstanding debt issues taking into consideration current price, interest payments, and capital gains or losses at maturity of the issue.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 150
YTM
See Yield to Maturity. Z
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 150
Z
Zero-Based Budgeting
A style of budgeting that addresses the fact that a government’s fiscal resources are limited and might even be declining in the face of inflation, population growth, and increasing service demands. This budgeting concept forces the manager to start from scratch each year.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 150
Zoning
The exercise of the police power to restrict landowners as to the use of their land and/ or the type, size, and location of structures to be erected thereon.
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 150
Zoning Bylaw
Implements the objectives and policies of a municipal official plan. Is a legal tool to control land use. z-Statistic — A statistic used in inferential statistics, specifically in a t-test to either support or reject the null hypothesis, i.e., is the sample mean significantly different from the population mean. It is used in hypothesis testing together with a p-value. The p-value indicates the odds the results could have happened by chance. See z-Test. z-Table — Table of critical values associated with the z-Test. See z-Test. z-Test — A statistical test used to compare the means of two groups. It is often used in hypothesis testing to determine whether two groups are different from each other or if any difference is due to a meaningless random chance. More specifically, a t-test allows for the comparison of the average value of two data sets and to make a determination if they came from the same population. See z-Statistic. ASSESSMENT STANDARDS OF THE INTERNATIONAL ASSOCIATION OF ASSESSING OFFICERS Guide to Assessment Standards Standard on Assessment Appeal Standard on Automated Valuation Models Standard on Contracting for Assessment Services Standard on Digital Cadastral Maps and Parcel Identifiers Standard on Manual Cadastral Maps and Parcel Identifiers Standard on Mass Appraisal of Real Property Standard on Oversight Agency Responsibilities Standard on Professional Development Standard on Property Tax Policy Standard on Public Relations Standard on Ratio Studies Standard on Valuation of Personal Property Standard on Valuation of Property Affected by Environmental Contamination Standard on Verification and Adjustment of Sales TO DOWNLOAD THE CURRENT APPROVED VERSION OF ANY OF THE STANDARDS LISTED ABOVE, GO TO: IAAO TECHNICAL STANDARDS
IAAO Glossary for Property Appraisal and Assessment (3rd Edition), p. 150
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