Iaao-Glossary For Property Appraisal and Assessment
Iaao-Glossary For Property Appraisal and Assessment
Iaao-Glossary For Property Appraisal and Assessment
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Foreword
This most recent edition of the Glossary for Property Appraisal and Assessment
reflects the changing technologies and needs that affect the assessment profession.
The original glossary, Assessment Terminology, was published in 1937,
shortly after the founding of the National Association of Assessing Officers.
In 1956, Assessment Terminology was revised and reissued. Originally published in 1997, the Glossary for Property Appraisal and Assessment was
based on Assessment Terminology but had been expanded and updated.
The publication was converted to an online resource from 2004 to 2013
that did not follow the traditional book format. This edition, has been
convert-ed back to the more traditional book format, but will remain a
digital-only resource. Efforts have been made to expand the functionality of
the book to allow printing of pages, adding annotations to personal copies
and sharing definitions with colleagues.
Future plans for the glossary include making additional updates in 2014 and
providing more frequent updates as terms are added or redefined.
Suggestions for glossary entries are encouraged and can be sent to:
Attn: Technical Standards CommitteeGlossary
IAAO
314 W 10th St
Kansas City. Missouri 64104-1616
or to [email protected]
Chris Bennett
Director of Publications
Table of Contents
Numeric.............................................................................................. 1
A......................................................................................................... 1
B....................................................................................................... 17
C....................................................................................................... 23
D....................................................................................................... 45
E........................................................................................................ 56
F........................................................................................................ 65
G....................................................................................................... 71
H....................................................................................................... 77
I......................................................................................................... 80
J......................................................................................................... 87
K....................................................................................................... 87
L........................................................................................................ 88
M...................................................................................................... 97
N..................................................................................................... 108
O..................................................................................................... 112
P...................................................................................................... 117
Q..................................................................................................... 135
R..................................................................................................... 136
S...................................................................................................... 148
T...................................................................................................... 162
U..................................................................................................... 176
V..................................................................................................... 179
W.................................................................................................... 184
Y..................................................................................................... 185
Z..................................................................................................... 186
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Acknowledgments
IAAO is indebted to the many contributors who helped to draft precursors to
the Glossary for Property Appraisal and Assessment. Past participants include
Calvin C.Hicks, Jr, CAE; Renee T. True; Stephen C. Behrenbrinker, CAE;
Jonelle L. Boggs-Prince, CAE; Chuck Gerschefske; Thomas K. Tegarden, CAE;
Richard H. Hoffman, CAE; Bruce Belon, CAE; Lisa Hobart, PPS; Gregory J.
Landretti, CAE; William Selman; Robert Clatanoff; Roberta Hilleman; Hediye
Kerman; and Annie Aubrey.
Responsibility for the current glossary resides with the Technical Standards
Committee. The committee has been reviewing glossary terms since 2006
and plans a major revision in 2014. The 2013 committee members are Bill
Marchand, Chair, Alan Dornfest, AAS, Michael Prestridge, Mary Reavey,
Douglas Warr, AAS, Dennis Deegear, Christopher Bennett, Staff Liaison
Thank you also to Barbara Simmons for her editorial expertise.
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Preface
This glossary is a compilation of terms gathered from numerous resources,
primarily newer IAAO technical standards and textbooks. Changes in technology and assessment practices have prompted the addition of many new
terms in recent years. This digital edition is intended to be a living document
that can be updated frequently as new definitions are introduced.
A primary intent of using the e-format is to allow the glossary to be downloadable to user devices where it can be accessed without a continuous
Internet connection.
The downloaded version will allow notations and comments to be added
directly in the users copy. Other features such as the ability to share pages
and print portions of the document are also enabled. IAAO and the Technical
Standards Committee hope you find this new format useful.
Bill Marchand
Bill Marchand, 20132014 Chair
Technical Standards Committee
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Numeric
4-3-2-1 RuleAn empirical rule that ascribes 40 percent of the
value of a standard lot (see lot, standard) to the quarter of the lot
fronting on the street, 30 percent to the next quarter, 20 percent
to the third quarter, and 10 percent to the rear quarter. Compare
Harper rule; Hoffman rule; one-third, two-thirds rule. Note: Lots
with a depth greater than the standard lot cannot be valued in
accordance with this rule as stated above. The rule is sometimes
altered by omitting the word standard. It thereby becomes applicable to extra deep lots but produces inconsistent results as applied to lots of varying depths.
65/35 RuleRule states that the value of a triangular lot with its
base on the facing street will be approximately 65 percent of that
of a rectangular lot of the same frontage and depth. The value of
the triangular lot with its apex on the facing street will be 35 percent of that of a rectangular lot of the same base and depth.
A
AASSee Assessment Administration Specialist.
AbandonmentThe relinquishing of all rights and interests in real
property, including any fixtures, with no intention to reuse or reclaim.
Abatement(1) An official reduction or elimination of ones assessed valuation after completion of the original assessment. (2) An
official reduction or elimination of ones tax liability after completion of the tax roll.
Absolute OwnershipOwnership of all real property rights and
interests in a real estate parcel. See fee simple.
Absolute ValueThe value of a number or expression regardless
of its sign. For example, 3 and 3 (minus 3) both have an absolute
value of 3. The mathematical symbol for absolute value is one vertical bar on each side of the number in question, for example, |3|
AbstractTo reduce a legal description of a property to another
form; also, to identify a property from its legal description.
Abstract of TitleAn abstract is a complete summary of all recorded documents affecting the title to a property. These documents include all conveyances, such as deeds or wills, and all legal proceedings relating to ownership of the property. Abstracts are
arranged to show the history of ownership, describe the land and
improvements, and give the name(s) of past and present owner(s).
Abstraction MethodMethod of land valuation in the absence of
vacant land sales, whereby improvement values obtained from the
cost model are subtracted from sale prices of improved parcels
to yield residual land value estimates. Also called residual land
technique.
Acceleration ClauseA condition in a mortgage note or loan contract that allows the lender to demand immediate repayment of
the entire balance if the contract is breached or other repayment
conditions occur.
Access RightThe right of egress from and ingress to a property
from an existing highway or street. See bundle of rights.
AccountA record of a particular type of transaction expressed in
money and kept in the books of original entry.
AccountancyThe theory and practice of accounting, its professional responsibilities, and generally associated activities.
Accounting RecordsThe formal journals and ledgers, vouchers,
invoices, correspondence, contracts, and other sources or support
for such records; books of account.
Accounting ValuationThe historical money amount attaching to
any asset or expense, generally representing cost.
AccruedThe gain or loss due to all causes. See depreciation,
accrued.
AccuracyThe closeness of a measurement, computation, or estimate to the true, exact, or accepted value. Accuracy also can
be expressed as a range about the true value. See precision and
statistical accuracy.
AcknowledgmentA formal declaration attesting to the validity of
the declarers signature, usually made before an authorized public
official or a notary public. The signing is a free and voluntary act.
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, owners address, and mortgagees address.
AdjustmentsModifications 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 modifications 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.
Adverse Land UseA 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.
Adverse PossessionThe exclusive occupation and continuous
possession of (anothers) real property under an evident claim of
title or right.
AEPSee adaptive estimation procedure.
AerialRelating to the air or atmosphere, being applicable in a
descriptive sense to anything in space above the ground and within the atmosphere.
Aerial FilmA specially designed roll film supplied in many
lengths and widths to fit aerial cameras. Emulsion types include
panchromatic, infrared, color, and color infrared.
Aerial PhotographA photograph of a part of the earths surface
taken by an aircraft-supported camera.
Aerial Photograph, VerticalAn aerial photograph made with
the optical axis of the camera approximately perpendicular to the
earths surface and with the film as nearly horizontal as is practicable.
AffidavitA written form of an affirmed or sworn statement.
4 International Association of Assessing Officers
Allocation by AbstractionA method of separating a whole property value into land and improvement components. The appraiser
estimates 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 RatioA 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 subjects whole property value.
Allocation MethodA method used to value land, in the absence
of vacant land sales, by using a typical ratio of land to improvement value. Also called land ratio method.
Altitude(1) The distance of a location above a reference surface.
The most usual surface is sea level. (2) Height of sensor platform
above a specified datum, usually above mean sea level.
AmendmentA change correcting an error or altering part of an
agreement without changing the principal idea.
AmenityA feature of an improvement that enhances its suitability for its basic use. A fireplace in a single-family residence is an
amenity, as is covered parking at an apartment complex. By definition, amenities always increase value.
Amnesty, TaxAn act of pardon of tax liability by a legislative
body.
AmortizeThe 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.
Analog(1) The form of data display in which values are shown
in graphic form, such as curves. (2) A form of computing in which
values are represented by directly measurable quantities, such as
voltages or resistances. Note: Analog computing methods contrast
with digital methods, in which values are treated numerically.
Ancillary DataSubsidiary 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.
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(a usage not recommended). Note: Although this term is commonly used by assessors in the second of these senses to refer to a legal
assessment, the courts commonly use it in the first sense to mean
an illegal assessment. Compare assessment, doomage.
Assessment, Area-BasedOne of a small number of nonmarket
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.
Assessment, CentralAn original assessment made by an officer
or body whose jurisdiction with respect to the property so assessed
extends over two or more local assessment districts.
Assessment, DoomageAn assessment made without adequate
information when a taxpayer fails to comply with laws requiring
him or her to list his or her property for taxation. Compare assessment, arbitrary; assessment, penalty.
Assessment, FractionalAssessment at a fraction of full value, or
of such other standard as may be fixed by law. Note: Fractional assessment may constitute underassessment, or it may be sanctioned
by law as, for example, in Alabama, where all property is legally
assessable at 60 percent of full value, and in Minnesota, where
various classes of property are assessable at various percentages
of full value.
Assessment, JeopardyAn assessment made out of the regular
routine when there is reason to believe that adherence to such
routine will jeopardize the collection of taxes on the property so
assessed.
Assessment, Original(1) The official act of the assessor in discovering, listing, and appraising property for tax purposes up to the
point at which the assessment roll is first filed for public inspection. (2) The act of assessment which first places a property on the
assessment roll for the particular assessment date; the agency that
performs this act is the original assessing agency (or jurisdiction).
(3) The valuation at which property is listed in the assessment roll
at the time it is first filed for public inspection.
Assessment, PenaltyAn additional assessment, usually a given
percentage of the assessment otherwise applicable, intended as a
penalty for failure to comply with specified legal requirements.
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Assessment Administration Specialist (AAS)A professional designation conferred by the International Association of Assessing
Officers.
Assessment-Appraisal RatioThe ratio of the assessed value of a
property to an independent appraisal.
Assessment BaseThe total assessed value of all property within a
designated area; the property tax base.
Assessment DateThe status date for tax purposes. Appraised values reflect the status of the property and any partially completed
construction as of this date.
Assessment DistrictThe administrative area in which the officer
or public body responsible for making the original assessment has
jurisdiction. Note: The local assessment district is usually coterminous with a county, township, or city, but the state itself may be
the assessment district for some types of property.
Assessment EquityThe degree to which assessments bear a consistent relationship to market value.
Assessment JurisdictionA geographical area within which an
assessing officer has the responsibility to determine the assessed
value of property for ad valorem taxation.
Assessment LevelThe common or overall ratio of assessed values to market values.
Assessment MapsSee cadastral map.
Assessment Period(1) The period beginning with the assessment
date and ending with the date on which the assessor is required
to complete the original assessment. (2) Sometimes used synonymously with assessment year.
Assessment Progressivity (Regressivity)An appraisal bias such
that high-value properties are appraised higher (or lower) than
low-value properties in relation to market values. See price-related differential.
Assessment Ratio(1) The fractional relationship an assessed value bears to the market value of the property in question. (2) By
extension, the fractional relationship the total of the assessment
roll bears to the total market value of all taxable property in a jurisdiction. See level of assessment and fractional assessments.
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Assumption of MortgageAn 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.
AttachmentProperty seizure by a court order.
Attestation ClauseThe witness clause in a document that affirms
the document is properly executed.
AttributeCharacteristic of a property.
AuditA systematic investigation or appraisal of procedures or
operations for the purpose of determining conformity with specifically prescribed criteria.
Audit, PerformanceAn analysis of an organization to determine
whether or not the quantity and quality of work performed meets
standards. Ratio studies are an important part of performance audits of an assessing organization.
Audit, ProceduralAn examination of an organization to determine whether established or recommended procedures are being
followed.
Audit ProgramThe procedures undertaken or particular work
done by an accountant in conducting an examination.
Audit TrailA set of records of the changes made to another set
of records.
Automated Valuation Model (AVM)A mathematically based
computer software program that produces an estimate of market
value based on market analysis of location, market conditions, and
real estate characteristics from information that was previously and
separately collected. The distinguishing feature of an AVM is that
it is a market appraisal produced through mathematical modeling.
Credibility of an AVM is dependent on the data used and the skills
of the modeler producing the AVM.
AverageThe arithmetic mean.
Average Absolute DeviationSee average deviation.
Average DeviationThe arithmetic mean of the absolute deviations of a set of numbers from a measure of central tendency, such
as the median. Taking absolute values is generally understood
without being stated. 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).
B
BailmentA 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 title shall pass to the second
party.
BalanceSee principle of balance.
Balance SheetAn accounting statement of financial position of
any economic unit, disclosing as of a given moment its assets, liabilities, and equity.
Balloon MortgageA mortgage not fully amortized at maturity
and requiring a lump sum (or balloon) payment.
Baltimore RuleSynonymous with Bernard rule.
BandA wavelength interval in the electromagnetic spectrum. For
example, in Landsat, the bands designate specific wavelength intervals at which images are acquired.
Band-of-Investment AnalysisA 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 + .14
= 0.0350) = 0.1025 = 10.25 percent.
Base LineA 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.
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Base-Home ApproachA method of appraising single-family residential properties whereby each residence to be appraised is compared with one having common or typical characteristics and of
known value, called the base home, and differences between the
two in terms of condition, size, number of garages, and the like are
weighted by the appraiser in the determination of the value of the
property to be appraised.
Base-Lot MethodA method of appraising land parcels whereby each parcel to be appraised is compared with a parcel having
common or typical characteristics and of known value, called the
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.
BearingThe angle between a given line and the direction in
which a magnetic needle points. Note: The bearing of a line is
expressed in terms of quadrants and degrees; for example, N 50
degrees E; S 10 degrees W.
Bearing WallA wall that supports a portion of a structure.
Before-Tax Cash FlowAmount of income remaining after deducting for operating expenses and debt service, but before income tax on operations is deducted.
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. (3) By
extension, a model property to be used in determining by comparison the grade or quality class of other properties.
Beneficial EstateAn estate of which the right to possession has
not yet passed.
Beneficial InterestsThe property interests resulting from equitable ownership in a property rather than legal ownership; for example, the interests of the beneficiary of a trust.
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
nonhappening of the assured event. See owner, equitable.
BermA mound of earth that diverts or controls surface drainage
flow, marks property boundaries, or alters topography.
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Blended ModelA 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.
BlockAn urban area, usually consisting of several lots, enclosed
on all sides by public streets or by public streets and a river, a
railroad right-of-way, or other more or less permanent boundary.
Sometimes called a Square.
Block FaceThe long edges of two city blocks that adjoin a street
for the length of one block.
BlueprintA detailed plan used as a guide by workers on a construction project.
Board of AppealsA public body (other than a court) charged with
the duty of hearing and deciding appeals taken by taxpayers or tax
districts on assessments established by public officers or bodies
other than the courts. Synonymous with Board of Tax Appeals.
Note: The decisions of such a board are subject to further review
by the courts on matters of law, but its findings are often made
conclusive as to matters of fact. Compare board of equalization;
board of review.
Board of EqualizationA public body (other than a court) having
jurisdiction over two or more assessment districts which together
make up a single tax district, charged with the duty of examining the assessment rolls of several assessment districts, and empowered, on appeal or on its own initiative, to revise assessments
by district totals and/or by totals for particular classes of property.
Compare board of appeals; board of review. Note: A board of
equalization may also be a board of review.
Board of Review(1) A public body (other than a court) having
jurisdiction over one or more assessment districts, charged with
the duty of examining the assessment roll or rolls, and empowered,
on appeal or on its own initiative, to revise individual assessments
(preferred). (2) Broadly, any such board or any board of appeals or
board of equalization.
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C
Cadastral MapA scale map displaying property ownership
boundaries and showing the dimensions 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.
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. Note: 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.
CAESee Certified Assessment Evaluator.
CalibrationThe process of estimating the coefficients in a mass
appraisal model.
CAMASee computer-assisted mass appraisal.
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Certificate of RedemptionThe evidence of buying back or redeeming a property by the owner after loss through a judicial sale.
Certificate of SaleA certificate, issued to the buyer at a judicial
sale, that entitles the buyer to a deed upon confirmation of the sale
by the court or if the property is not redeemed within a specified
time.
Certificate of TitleA document that states that the title to the
property is believed to be clear based on the examination of the
abstract of title for the property.
Certified Assessment Evaluator (CAE)A professional designation
conferred by the International Association of Assessing Officers.
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 ofAn 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.
Cestui Que TrustA beneficiary of property held in trust.
ChainA land measure of sixty-six feet or four rods or 100 links.
ChangeThe tendency of the social and economic forces affecting supply and demand to alter over time, thus influencing market
value.
Change PrincipleSee principle of change.
Chart of AccountsA list of accounts systematically arranged, applicable to a specific concern, giving account names and numbers.
ChattelTangible personal property. See property and mortgage,
chattel.
Chattel MortgageSee mortgage, chattel.
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ColorThat property of an object that is dependent on the wavelength of the light it reflects or, in the case of a luminescent body,
the wavelength of light that it emits. If this light is of a single wavelength, the color seen is pure spectral color; if light of two or more
wavelengths is emitted, the color will be mixed.
Color Infrared FilmPhotographic film sensitive to energy in the
visible and near-infrared wavelengths, generally from 0.4 to 0.9
micrometers; usually used with a minus-blue (yellow) filter, which
results in an effective film sensitivity of 0.5 to 0.9 micrometers.
Color infrared film is not sensitive in the thermal infrared region
and therefore cannot be used as a heat-sensitive detector.
Color of TitleColor of title refers to an appearance of legal ownership that arises from irregular conveyances. If, for example, an
owners claim to property depended on a deed that had never
been recorded, that owner would have color of title but would
not have full legal title. Color of title cannot arise from fraudulent
documents, such as forgeries.
Commercial PaperShort-term promise to pay issued by a corporation.
Commercial PropertySee property use category.
Common AreaThe total area within a property that is not designed for rental or sale, which is available for common use by all
tenants and owners. See undivided interest.
Common EquityOn 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.
Community PropertyProperty which is acquired by either spouse
during their marriage that becomes owned by them equally.
Comparable MatchThis concept involves the development of
value based on analysis of similar (but not identical) properties using some measure of utility (such as size or capacity) as the basis of
comparison. For example, when appraising an engine lathe manufactured by Company A, the appraiser has comparables of other
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Consignment(1) A shipment of goods from one person (the consigner) to another (the consignee). (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.
Consistent UseThe concept that land should not be valued on
the basis of one use while the improvements are valued on the
basis of another.
Construction in ProgressProperty that is in a process of change
from one state to another, such as the conversion of personal property from inventory to fixed asset by installation or the conversion
of personalty to realty by becoming a fixture.
ConsultingThe act or process of providing information, analysis
of real estate data, and recommendations or conclusions on diversified problems in real estate, other than an estimate of value.
Consumption ValueConsumption value expresses the worth of
a property in terms of its capacity to produce personal satisfaction
for the owner.
Contact PrintA photographic image produced by the exposure
of a sensitized emulsion-coated paper in direct contact with a negative or positive film.
ContiguousSharing a property boundary; adjacent.
Contingency TableA table that shows how a dependent variable
varies with respect to two independent variables.
Contingent FeeA fee determined by the results of the services to
be performed or by other future events.
Contingent Valuation Method (CV)In economics, a method of
valuing public goods. The CV method uses survey questions to
elicit peoples preferences for public goods by finding out what
they would be willing to pay for specified improvements in them.
The method is thus aimed at eliciting peoples willingness to pay,
expressed in dollar amounts.
Continuous DataData that can take any value in a given range.
They are often based on measurements (for example, lot size).
Quantitative and continuous data can be thought of as synonymous.
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Cost, OverheadA cost that is not directly traceable to any given unit of output, for example, salaries of managers, interest on
funded debt, and property taxes. Sometimes referred to as indirect cost. Note: An overhead cost does not ordinarily vary with
any close relationship to units of output. It is impossible to draw a
sharp line of demarcation between overhead and direct costs; the
difference is purely one of degree, and any classification of costs
into these two groups is necessarily somewhat arbitrary. Contrast
cost, direct.
Cost, TrendedThe original cost adjusted to current price levels
by means of composite or individual price indexes of items entering into such cost. Note: The trended cost should closely approximate the reproduction cost if the price indexes are appropriately
selected and properly constructed.
Cost, UnitSee unit cost.
Cost Approach(1) One of the three approaches to value, the cost
approach is based on the principle of substitutionthat a rational, informed purchaser would pay no more for a property than
the cost of building an acceptable substitute with like utility. The
cost approach seeks to determine the replacement cost new of an
improvement less depreciation plus land value. (2) The method
of estimating the value of property by: (a) estimating the cost of
construction based on replacement or reproduction cost new or
trended historic 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.
Cost IndexAn index showing the variations in construction costs
over time; sometimes, by extension, a set of similar numbers showing the relative costs of construction in different geographic areas.
Cost ManualA guide, containing pictures, specifications of structures, and cost schedules, used to help classify construction quality
and estimate the cost of replacing a structure.
Cost of CapitalThe opportunity cost of capital.
Cost-of-Development MethodA 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.
Cost of EquitySee equity yield rate.
Cost of Goods Sold (Cost of Sales)(1) 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. (2) Manufacturing: The cost of production of
the items sold, such as raw materials, direct labor, and overhead.
Cost of RepairsAll expenditures necessary to cure deterioration.
Cost SchedulesCharts, tables, factors, curves, equations, and the
like intended to help estimate the cost of replacing a structure from
a knowledge of some other factors, such as its quality class and
number of square feet.
Cost StudyThe determination of replacement cost new.
Cost to CureEstimated cost to correct or replace a component or
defect within a property.
Cost Trend FactorA factor derived from a cost index used to
estimate the contemporary cost of something based on its historic
cost.
Coupon RateThe coupon rate is 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).
COVSee coefficient of variation.
CovenantA covenant is a promise written into a legal agreement
(such as a deed) that binds the parties to abide by or refrain from
certain acts. A deed restriction is a special kind of covenant.
CreditA claim for money or moneys worth that is enforceable
at 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.
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D
DataInformation 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.
Data Collection Platform (DCP)The system on board Landsat
that acquires information from ground-based instruments such as
seismometers, flood gauges, and other measuring devices. These
data are transmitted to the satellite and in turn are relayed to an
earth receiving station.
Data EditThe process of examining recorded data to ensure that
each element of data is reasonable and is consistent with others
recorded for the same object, such as a parcel of real estate. Data
editing, which may be done by human beings or by computer, is
essentially a mechanical process, distinct from verifying the correctness of the recorded information by calling or writing property
owners.
Data ManagementThe human (and sometimes computer) procedures employed to ensure that no information is lost through
negligent handling of records from a file, that all information is
properly supplemented and up-to-date, and that all information is
easily accessible.
Date, AssessmentSee assessment date.
Date of AcquisitionThe effective purchase date of an asset. From
the date of acquisition, the asset must appear in the accounts and
in financial statements, and depreciation, if any, must be recorded.
Date of Sale (date of transfer)The date on which the sale is
agreed. This is considered to be the date the deed, or other instrument of transfer, is signed. The date of recording can be used as a
proxy if it is not unduly delayed as in a land contract.
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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). (2) A level surface to which elevations are referred; usually, but not always, mean sea level.
DebitAn accounting entry or posting recording the creation of
or addition of an asset or an expense, or the reduction or elimination of a liability, credit valuation account, or item of net worth of
revenue.
DebtIn general usage, debt is money owed.
Debt Capitalization RateDebt component of an overall direct
capitalization rate. Computed by dividing annual interest payments by the market value of debt.
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 capitalization rate (OAR) is OAR = DCR Annual debt cost Debt percentage of capital structure.
Debt RateThe interest rate on borrowed money.
Debt ServiceThe total payments of principal and interest on a
mortgage.
DeclarationA term occasionally used to designate a property list
filed by a taxpayer.
Declaration of RestrictionsA set of recorded restrictions that applies to a specific area or subdivision.
Declaration of TrustA written acknowledgment by the legal title
holder to property specifying the property is held in trust for the
benefit of another party.
Declining Terminal SeriesA type of income stream that declines
progressively and systematically and eventually ceases.
DeedA document (or written legal instrument) which, when
executed and delivered, conveys an interest in or legal title to a
property.
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Degrees of Freedom (d.f.)The number of values, in a set of observations, that could be assigned arbitrarily within the specification of a system. For example, in stratifying a sample of n objects
into k strata, there are k 1 degrees of freedom, because, if k 1
frequencies are specified, the remaining frequency is determined
by the total size n. The term is used in statistics in several slightly
different senses but is important primarily only in connection with
a certain aspect of inferential statistics, where it becomes a means
of relating the value of a statistic that has been calculated from a
sample to a table of critical values for such statistics that have been
calculated for a wide range of potential sample sizes and amounts
of information defined by the particular statistic of interest.
DemandThe amount of a good or service that would be purchased at various prices during a given period.
DemographicsCharacteristics of human populations, for example, size, density, and distribution.
DenominatorIn a fraction, the number by which another number (the numerator) is divided. For example, the denominator of
3/4 is 4.
Densification SurveyA control or cadastral survey that establishes accuracy or additional detail in an existing survey.
DensityThe total number of specific items present within a designated unit of area.
Dependent VariableA variable, such as sale price, the value of
which is predicted by the values of other variables, such as location and finished living area. Such a variable may be said to depend on the other (independent) variables.
DepletionA decrease in land value due to the removal of trees,
minerals, or other such resources. Contrast depreciation; obsolescence.
Depletion RateThe periodic percentage rate at which a quantity
is exhausted.
DepositionA discovery device, conducted under oath outside a
courtroom, by which one party asks questions of the other party or
of a witness for the other party.
Depreciable CostThe amount of cost to be recovered or allocated in accounting depreciation. It may represent either the total cost
or cost less estimated salvage value.
DepreciationLoss in value of an object, relative to its replacement cost new, reproduction cost new, or original cost, whatever
the cause of the loss in value. Depreciation is sometimes subdivided into three types: physical deterioration (wear and tear), functional obsolescence (suboptimal design in light of current technologies or tastes), and economic obsolescence (poor location or
radically diminished demand for the product).
Depreciation, AcceleratedAn accounting term implying a method of accruing greater depreciation expense in the early years of
a propertys life and less in the later years according to an established formula.
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.
Depreciation, BookAn accounting term referring to the total accruals recorded on the books of the owner of property summarizing the systematic and periodic expenses charged toward amortizing the investment of limited-life property over its expected life.
Depreciation, CurableThat part of depreciation that can be reversed by correcting deferred maintenance and by remodeling to
relieve functional obsolescence. See cost to cure.
Depreciation, Economic(1) Depreciation due either (a) to an increase in supply of the property under consideration or (b) to a reduction in monetary demand for properties of the type under consideration unaccompanied by shifts in demand from such properties to other properties and/or personal services (preferred). (2)
Depreciation of any sort other than physical depreciation. Note: A
depression is accompanied by economic depreciation of the type
49
indicated in 1(b) because of a general decline in purchasing power. Depressions are also accompanied by obsolescence because of
changes in the relative distribution of purchasing power. Contrast
depreciation, physical; obsolescence.
Depreciation, FunctionalSynonymous with the preferred term
obsolescence.
Depreciation, ObservedThe amount of depreciation, expressed
as a percentage of original or reproduction cost new, estimated on
the basis of an actual inspection of the property.
Depreciation, PhysicalDepreciation arising solely from a lowered physical condition of the property or a shortened life span as
the result of ordinary use, abuse, and action of the elements.
Depreciation, StructuralSynonymous with the preferred term
physical depreciation.
Depreciation in Accounting(1) In accounting, a method providing for systematic allocation or recovery of cost over an asset life.
(2) In appraisal, a loss of market value of an asset relative to its cost.
Depreciation may stem from any cause that results in actual loss.
Depreciation Method, AnnuityA 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. Note: For example, take
a property that costs $1,000 and has an expected economic life
of ten years. From annuity tables, it is ascertained that a ten-year
annuity of $135.87 can be purchased for $1,000, assuming an interest rate of 6 percent. For the first year, the charge to depreciation
expense is $135.87, the credit to interest earned is $60.00, and the
credit to depreciation reserve is $75.87. For the second year, the
charge to depreciation expense is $135.87, the credit to interest
earned is $55.45, and the credit to depreciation reserve is $80.42.
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DispersionThe degree to which data are distributed either tightly or loosely around a measure of central tendency. Measures of
dispersion include the average deviation, coefficient of dispersion,
coefficient of variation, range, and standard deviation.
Displacement, ReliefThe difference in the position of a point
above or below the datum, with respect to the datum position of
that point, due to the perspective of an aerial photograph. Relief
displacement is radial from the photo center. In truly vertical photography, relief displacement is radial from the principal point of
the photograph.
DisplayA graphic representation of output data from a device or
system, for example, on a computer screen. The cathode ray tube
(CRT) is a widely used display device for output of electronic
sensor data.
Dissimilarity FunctionAn algorithm used to assign an index of
dissimilarity (or similarity) to properties as compared to a subject.
DistortionAny shift in the position of an image on a photograph
that alters the perspective characteristics of the photograph. Causes
of image distortion include lens aberration, differential shrinkage
of film or paper, and motion of the film or camera.
Distribution-Free StatisticsA 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. See parametric statistics.
Divided RightsRights to property that have been divided among
several owners in partnerships, joint tenancy, tenancy in common,
and time-share units.
Dividend YieldThe ratio of cash dividends to cash invested.
DividendsEquity investment income earnings.
Domain, EminentSee eminent domain.
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 else-
55
where. In case one has more than one place of abode, domicile is
determined with reference to ones attitude rather than in accordance with ones physical presence in one or other of such places.
Compare residence.
Dominant Estate (Affirmative Easement)The right to perform a
specific action on a property owned by another.
DoomageSee assessment, doomage.
Doppler ShiftThe difference between the frequency of radiation
received at a point and the frequency of the radiation at its source,
when observer and source are moving with respect to each other.
Dummy VariableSee binary variable.
Duty, MinisterialSee ministerial duty.
E
EarningsA 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 specific 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.
Earnings StatementAn accounting statement of income and expense (or profit and loss).
Easement(1) Broadly, any nonpossessory interest held by one
person in land possessed by another whereby the first person is
accorded partial use of such land or the second person is restricted
in the use of his or her land. (2) A right held by one person to use
the land of another for a specific purpose, such as access to other
property. (3) In a restricted sense, a nonpossessory interest held by
one person, by reason of his or her possession of a given piece of
land (the dominant estate), in a second piece of land possessed by
another (the servient estate), whereby the first person is accorded
partial use of the second piece of land without the privilege of taking a portion of its substance. Note: The nonpossessory interests in
land that are included in the first of the above definitions but not
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Escape AssessmentAn assessment made outside the regular assessment period in order to correctly tax property that was not assessed during the regular assessment period.
EscheatThe 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.
Escrow(1) A written instrument that by its terms imparts a legal
obligation but that is placed by the grantor in the hands of a third
party, to be held by him or her until the occurrence or non-occurrence of a specified event, and then only to be delivered to the
grantee and to take effect. (2) The agreement under which such
instrument is so placed, held, and conditionally delivered.
Estate(1) The interest which a person possesses in a single concrete article of property. (2) The aggregate interests of any person
in articles of property of all descriptions. (3) The aggregate property
of all descriptions left by a decedent. See tenancy; real estate.
Estate, LeaseholdAny possessory interest in land less than estate
of freehold, that is, an estate for years, an estate from year to year
(periodic estate), an estate at will, or an estate at sufferance. See
leasehold.
Estate, RealSee real estate.
Estate, TrustSee trust estate.
Estate for YearsA possessory interest in land which cannot endure beyond a date specified in the conveyance or a date precisely
determinable at the time the interest becomes possessory.
Estate in Fee SimpleAn inheritable, possessory interest in land
that may endure until the extinction of all lineal and collateral heirs
of the first owner and that may be freely conveyed by its owner; the
largest possible estate in land.
Estate in SeveraltyAny estate held by a single person is an estate
in severalty.
Estate of FreeholdAny one of the three types of possessory interests in landfee simple, fee tail, and estate for lifethat 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.
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F
FacadeThe main exterior face of an improvement.
Face ValueSee value, face.
Factor(1) An underlying characteristic of something (such as a
house) that may contribute to the value of a variable (such as its
sale price), but is observable only indirectly. For example, construction quality is a factor defined by workmanship, spacing of
joists, and materials used. Factor definition and measurement may
be done subjectively or by a computer-assisted statistical algorithm
known as factor analysis. (2) Loosely, any characteristic used in adjusting the sale prices of comparables. (3) The reciprocal of a rate.
Assessments may be equalized by multiplying them by a factor
equal to the reciprocal of the assessment ratio, and value can be
estimated using the income approach by multiplying income by a
factor equal to the reciprocal of the discount rate.
Factor, DepthSee depth factor.
Factors of ProductionThe four ingredients available for the production of goods and services that satisfy human wants: land, labor, capital, and management. Also called agents of production.
Fair Rate of ReturnA fair rate of return is that amount of profit
that represents a fair, reasonable, and appropriate compensation
to the owners for (1) their investment in the enterprise, (2) their assumption of the risks and uncertainties of operation, and (3) management functions not otherwise rewarded.
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First In First Out (FIFO)An inventory cost procedure in accounting whereby unsold inventory, including inventory carried over
from prior years, is valued at the prices most recently paid for inventory purchases.
Fiscal YearThe period covering a full year (not necessarily a calendar year) to which the annual budget and accounts apply. At the
end of the fiscal year, the books of account of a government, person, firm, or association are closed in order to determine financial
condition and the results of current operations.
Fixed Assets(1) Personal property that has been brought to the
point of highest and best use, that is, fully installed and used to produce income in an economically feasible manner. (2) In a business,
permanent assets required for the normal conduct of a business.
Fixed LiabilityLong-term (over one years duration) debts.
Fixed Operating ExpensesFixed operating expenses are those
costs of doing business that do not vary with occupancy or output
and that have to be paid whether the property is occupied or vacant. Fire insurance and property taxes are examples.
Fixture(1) Attached improvements that can be real or personal
property. If attached to the realty in such a manner that its removal
would damage the real property or the fixture, the fixture is realty.
If the fixture is removable without damage, it is generally considered personal property. (2) An item of equipment that, because of
the way it is used, the way it is attached, or both, has become an
integral part of a building or other improvement. A fixture, such as
a bathtub, is classified as real property, but trade fixtures (fixtures
used in the conduct of business) are classified as personal property.
Floor Area of BuildingThe total area of all floors within the finished portion of a building, measured to the center of party walls
and to the outside surfaces of other exterior walls. Compare cubic
content of building; ground area of building.
Floor Planned GoodsInventory in the possession of a seller in
which the seller has no equity. They differ from consigned goods
in that the seller does have control of the merchandise, may set the
selling price, and earn profit rather than commission. Such property may not be reported by the business and may not be easy to
locate in the accounting records. Therefore, the assessor must be
careful not to overlook it.
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responsible for appraising properties by type: personalty, residential property, agricultural property, commercial property, industrial
property, and vacant land. Improved land is generally the responsibility of the appraiser of the improvement.
Functional SpecializationIn assessment, appraiser specialization
by type of property being appraised; sometimes also used to mean
specialization by appraisal approach used, namely cost, income,
or sales comparison. Compare geographical specialization.
Functional UtilityThe ability of improvements to satisfy market
standards and demands.
FurlongA land measure of 1/8 mile or ten chains or forty rods.
Future Gross IncomeThe estimated gross income for a particular
future year.
Future Net IncomeThe estimated net income for a particular future year.
Future Worth of 1(Also called the compound amount of 1 or
the amount of 1 at compound interest.) The amount to which one
dollar will grow at compound interest over a specified number of
years and at a specified interest rate.
Future Worth of 1 per Period(Also called compound amount
or accumulation 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 and at a specified interest rate.
G
Gantt ChartA form of bar chart used in project management.
Each element (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 to begin. The length of
each bar indicates the duration of the task. The right end of each
bar indicates when the task is to be completed.
General EquilibriumSimultaneous equilibrium of all individual economic units in the economy. Implies a condition in which
consumers maximize their welfare given their income, producers
maximize profits, and resources are employed in their most productive uses.
Glossary for Property Appraisal and Assessment
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General Equilibrium AnalysisAn economic analysis that attempts to understand how resources should be allocated to maximize a societys welfare.
General JournalThe book of original (chronological) entry listing
all transactions and indicating the accounts to which they belong.
General LedgerA 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.
General Tax PolicyAny purposeful course of action by governmental bodies that affects or determines the way taxes are created,
levied, collected, or spent.
General Warranty DeedThe most common type of deed, a general warranty deed, implicitly promises that (1) the grantor owns
the property and may convey title, (2) there are no hidden liens
against the property, (3) no one else has better title to the property,
(4) the grantor will obtain and deliver any documents needed to
make good the transfer, and (5) the grantor will be liable for damages if future competing claims to the property prove valid.
Generally AcceptedGiven authoritative recognition by professional bodies such as the Financial Accounting Standards Board
and its Generally Accepted Accounting Principles (GAAP).
GeocodeA code used to locate or identify a point, such as the
center of a parcel of real estate, geographically. The code is composed of the east-west and north-south coordinates of the point
relative to some standard point of reference.
GeocodingGeographical referencing or coding of data.
Geodesy(1) The science concerned with determining the size
and shape of the earth. (2) The science that locates positions on the
earth and determines the earths gravity field.
Geodetic Control NetworkA system of monuments that are used
as reference points in calculating, through triangulation, the location of other points on surveys and maps.
Geographic CoordinatesSee rectangular coordinates.
Geographic Information System (GIS)(1) A database management system used to store, retrieve, manipulate, analyze, and display spatial information. (2) One type of computerized mapping
system capable of integrating spatial data (land information) and
attribute data among different layers on a base map.
Geographical SpecializationSpecialization of personnel, especially appraisers, by region rather than by type of property.
Compare functional specialization.
GeoidA 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 earths gravity field.
Geometric MeanA 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.
Geometrical TransformationsAdjustments made in image data
to change its geometric (spatial) character.
GIMSee gross income multiplier.
Ginnie MaeSee Government National Mortgage Association.
GISSee geographic information system.
Global Positioning System (GPS)A navigational and positioning
system by which the location of a position on or above the earth
can be determined by a special receiver at that point interpreting
signals received simultaneously from several of a constellation of
special satellites.
GlobeA spherical body.
Going-Concern ValueThe enhanced or synergistic value of assets due to their existence within, or assemblage into, an operating
and economically viable business that is expected to continue its
operation in the future with no intention or necessity of liquidation
or the material alteration of the scale of operation.
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H
Habendum ClauseThe clause in a real estate document that defines the extent of ownership interest conveyed.
Harmonic Mean RatioThe 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 arithmetic mean or the geometric mean.
Harper RuleAn empirical rule that states that the value of a lot
varies directly with the square root of its depth. For example, if
a lot 100 feet deep is worth $100 per front foot, then a lot 49
feet deep is worth seven-tenths as much, or $70 per front foot.
Compare Hoffman rule; 4-3-2-1rule; one-third, two-thirds rule.
Hazardous SubstancesAny substance designated under various federal acts as toxic or hazardous, including hazardous solid
waste, toxic air pollutants, and imminently hazardous chemicals
and mixtures. This term does not include petroleum and natural
gas products or synthetic fuel gas.
Hazardous WasteA solid waste that may pose a present or potential hazard to health or to the environment. This includes any
solid waste that is ignitable, corrosive, toxic, or reactive.
HectareUnit of land measure equal to 100 meters square.
Equivalent to 2,471 acres.
Hedonic ModelHedonic pricing attempts to take observations
of the overall goods or services and obtain implicit prices for the
goods and services. Prices are measured in terms of quantity and
quality. When valuing real property, the spatial attributes and property-specific attributes are valued in a single model. Calibration of
the attribute components is performed statistically by regressing
the overall price onto the characteristics.
HeterogeneousUnlike; without interrelation. The opposite of
homogeneous.
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the relationship or statement to be proved (the alternative hypothesis), and analyze the available data to determine whether the null
hypothesis can be rejected (and hence the alternative hypothesis
accepted) at some confidence level.
I
IAAOInternational Association of Assessing Officers.
ImageThe 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 nonphotographic methods.
Image EnhancementAny 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.
ImageryCollectively, the representations of objects reproduced
electronically or by optical means on film, electronic display devices, or other media.
Improper ExpensesExpenses incurred in the ownership of income-producing property that are not used to calculate value in
the income approach.
ImprovementAnything done 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.
Improvement to LandDesigned to enhance a sites utility for
general use (fill, water, and wastewater lines, for example), or to
reshape the lands natural contours for more specific use (stock
tanks, for example). Any publicly constructed improvement that
does not fulfill a specific usesuch as curbs, gutters, and sidewalksconstitutes an improvement to land.
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J
Joint estateSee tenancy, joint.
Joint tenancy See tenancy, joint.
Jurisdiction(1) The right and power to interpret and apply the
law; also, the power to tax and the power to govern. (2) The territorial range of authority or control.
K
KilometerUnit of length equal to 1,000 meters. Equals 0.6214
statute miles.
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L
Land(1) In economics, the surface of the earth and all the natural
resources and natural productive powers over which possession of
the earths surface gives man control. (2) In law, a portion of the
earths surface, together with the earth below it, the space above it,
and all things annexed thereto by nature or by man. See improvement.
Land, ImprovedLand that has been made more valuable by the
application of labor or labor
and capital to it or public property adjacent to it.
Land, Parcel ofSee parcel.
Land, PatentedLand 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.
Land, PlattedLand 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 ContractAn executory contract for the purchase of real
property under the terms of which legal title to the property is retained by the vendor until such time as all conditions stated in the
contract have been fulfilled; commonly used for installment purchase of real property. See contract for deed.
Land CoverThe biophysical materials covering the surface of the
land, including soil, water, vegetation, and human cultural activities.
88 International Association of Assessing Officers
Land Description SystemsOrganized uniform written descriptions of the physical boundaries of property rights; commonly referred to as legal descriptions.
Land GrantA legal document in which the federal government
conveys land title to an individual.
Land RatioThe 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.
Land Ratio MethodA 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. See allocation method.
Land Residual TechniqueSee abstraction method.
LandlordSynonymous with lessor.
LandsatA series of unmanned earth-orbiting NASA satellites that
transmit multispectral images in the 0.45- to 12.5-micrometer region of the spectrum to earth receiving stations. Formerly ERTS.
Land-to-Building Ratio (Land-to-Improvement 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.
Last In First Out (LIFO)An inventory cost accounting procedure
whereby unsold inventory, including inventory carried over from
the prior year, is valued at the prices paid for the earliest inventory
purchases.
LatitudeThe angular distance north or south of the equator, measured in degrees along a meridian, as on a map or globe.
Law of Variable ProportionsOften called law of decreasing returns or the law of proportionality. States that when the quantity
of one productive service is increased by equal increments, the
quantities of other productive services remaining fixed, the resulting increment of product will decrease after a certain point.
Glossary for Property Appraisal and Assessment
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LocationThe 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 other terms than coordinates. 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 AnalysisA 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 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.
Location VariableA 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.
Locational ObsolescenceA component of economic obsolescence; loss in value due to suboptimal siting of an improvement.
Log-Linear RelationshipA 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. (Recall
that logarithms permit multiplication to be done by means of adding logs.) For example, there is a log-linear relationship between x
and y in the following sequence:
x
y
20 30 45 67.5
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M
MacroeconomicsThe economics of the economy as a whole
the forces causing recession, depression, and inflation together
with the forces resulting in economic growth.
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MacroidentificationA method of studying an entire manufacturing process by identifying the major components contributing to
the design capacity of a plant.
MaintenanceAn expenditure on a fixed asset that increases or
tends to preserve the assets value but that, under accepted accounting procedure, is not reflected in an increase in its book value. Contrast betterment.
Management RateA rate that reflects the costs of managing the
property. This management rate is added to the risk rate, the safe
rate, and the nonliquidity rate to yield the return rate in the summation method.
Mann-Whitney TestA test in inferential statistics, similar to the
Kruskal-Wallis test, that seeks to determine whether the differences
in values between two sets of observations from any population
are statistically significant.
MapA conventional representation, usually on a plane surface
and at an established scale, of the physical features (natural, artificial, or both) of a part or the whole of the earths surface. Features
are identified by means of signs and symbols, and geographical
orientation is indicated.
Map, AerialA map constructed on the basis of aerial photographs.
Map, BaseA map with points of reference and other physical
features to facilitate data plotting.
Map, HighwayA (usually) planimetric map whose features are
roads and streets, access ways, railroads, airports, and other transportation activities and their support services.
Map, Land ValueA 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; base value map.
Map, Lot, and BlockA map of an urban area showing the division of land into lots and blocks, with dimensions.
Map, PlanimetricA map that shows only the horizontal positions
of the features represented. See map, topographic.
Map, TaxA 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.
Map, TopographicA map showing the horizontal and vertical
locations of natural and artificial features. It is distinguished from a
planimetric map by the presence of quantitative symbols showing
the relief.
Map, Unit-Foot ValueSee map, land value.
Map Book and Page SystemA system for parcel identification
in which a code (usually numeric) is used to identify each parcel,
each code containing four elements: the volume or book of maps
in which the parcel is to be found, the page on which it is to be
found, the block, and the individual parcel on the block.
Margin of ErrorA measure of the uncertainty associated with
statistical estimates of a parameter. It is typically linked to consumer surveys or political poll questions. 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.
Marginal CostThe change in a firms total costs per unit change
in its output level.
Marginal Physical ProductThe 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.
Marginal RevenueThe change in a firms total revenue per unit
change in its sales level; marginal revenue equals price in pure
competition only.
Marginal UnitThe unit last added to any economic process.
Marginal UtilityThe change in the total utility to a consumer that
results from a one-unit change in the consumption level of an item.
Marginal Utility TheoryA 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.
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Market ValueMarket value is the major focus of most real property appraisal assignments. Both economic and legal definitions
of market value have been developed and refined. A current economic definition agreed upon by agencies that regulate federal financial institutions in the United States is: The most probable price
(in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale,
the buyer and seller each acting prudently and knowledgeably,
and assuming the price is not affected by undue stimulus. Implicit
in this definition is the consummation of a sale as of a specified
date and the passing of title from seller to buyer under conditions
whereby: The buyer and seller are typically motivated.
Both parties are well informed or well advised, and acting in what
they consider their best interests.
A reasonable time is allowed for exposure in the open market.
Payment is made in terms of cash in United States dollars or in
terms of financial arrangements comparable thereto.
The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
MarketabilityThe salability of a property at a specific time, price,
and terms.
Market-Related AdjustmentAccounts for changes in market
conditions between the time a comparable sold and the effective
date of the appraisal. See market adjustment factors.
Market-to-Book MultipleSee equity market multiple.
Market-Value StandardA requirement of law or practice that
the assessment ratio of all properties be equal to 1. Two issues
are implicit here: that fractional assessment levels be avoided and
that all property be assessed on the basis of its market value and
not on the basis of its value in some particular usefor example,
agricultureunless that use is the only use to which the property
can legally be put (in which case its use value would be equal to
its market value).
Mark-upA mark-up is an amount added to a cost in calculating
a selling price to account for overhead and profit.
Glossary for Property Appraisal and Assessment
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Multiplicative ModelA 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.
Multiplicative TransformationA transformation of a set of variables accomplished by multiplying a variable by one or more other
variables. For example, room area is a multiplicative transformation of length and width.
MultispectralRefers to remote sensing in two or more spectral
bands, such as visible and near-infrared regions of the spectrum.
Multispectral ScannerA 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 TechniqueAny of a number of statistical
analyses in which data (such as the information on a single property record card) containing a number of variables (such as lot size,
number of rooms, and construction type) are analyzed to predict
the value of some other variable. See multiple regression analysis.
Municipal NotesShort-term promises to pay issued by local governments.
MVSMarshall Valuation Service, published by Marshall & Swift.
N
NAPLNon-aqueous phase liquids. Liquid contaminants often
trapped in soil or bedrock.
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
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Normal DistributionA theoretical distribution often approximated in real-world situations. It is symmetrical and bell-shaped; 68
percent of the observations occur within one standard deviation of
the mean, and 95 percent within two standard deviations.
Normal GoodsGoods the consumption of which increases as
consumers income increases.
NoteAn agreement acknowledging and promising to repay a
debt.
Null HypothesisA hypothesis that one chooses to accept in the
absence of sufficient evidence to the contrary.
NumeratorIn 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, 4 is the denominator.
O
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) above, 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 given above. Compare measure of tax; subject of
tax; tax base.
ObjectiveThe quality of being definable by specific criteria without the need for judgment. Quantitative variables are objective.
Objective DataObjective data are variables for which the correct value can be verified. Examples include zoning, corner lot (yes
or no), land area, and front feet.
ObservationOne recording or occurrence of the value of a variable, for example, one sale ratio among a sample of sales ratios.
Observed Condition Breakdown MethodThis divides depreciation into all its various componentscurable physical deterioration, incurable short-lived-item physical deterioration, incurable
basic structure (long-lived items) physical deterioration, curable
functional obsolescence, incurable functional obsolescence, and
economic (external) obsolescenceoften for each major building
component.
ObsolescenceA decrease in the value of a property occasioned
solely by shifts in demand from properties of this type to other
types of property and/or to personal services. Some of the principal causes of obsolescence are: (1) Changes in the esthetic arts;
(2) changes in the industrial arts, such as new inventions and new
processes; (3) legislative enactments; (4) change in consumer demand for products that results in inadequacy or overadequacy; (5)
migration of markets that results in misplacement of the property.
Contrast depreciation, physical; depreciation, economic.
OccupancyThe act of taking or holding possession of property.
Occupancy Ratio(1) 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. (2) The ratio of the actual gross income
from leased units of a property to the total gross income that would
be obtained if all units were leased at standard rates.
Off-Line EquipmentComputing machinery not under the direct
control of the computers central processing unit.
OffsetsEnvironmental 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 intra-company) are called offsets.
On-LineSee interactive.
One-Third, Two-Thirds RuleAn empirical rule that ascribes half
of the value of a lot to the front third and the other half to the rear
two-thirds. Compare 4-3-2-1 rule; Harper rule; Hoffman rule.
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OutlotA 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).
Outputs(1) Goods produced by a firm. (2) The information returned by a computer to its user.
OveradequacyThe inability of a property to yield a reasonable
return on value of the land and the reproduction cost of improvements (less accumulated physical depreciation) because of its adaptation to the production of more goods or services that can be
profitably sold in the market available to it. See superadequacy
and functional obsolescence.
Overall Age/Life MethodMethod of estimating accrued depreciation based on straight-line depreciation in which the building is
assumed to depreciate by a constant percentage each year over its
economic life.
Overall Property Tax Rate LimitsA 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 (OAR)A capitalization rate that blends all requirements of discount, recapture, and effective tax rates for both land
and improvements; used to convert annual net operating income
into an indicated overall property value.
OverimprovementAn 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. Contrast underimprovement.
OverlapThe amount by which one photograph duplicates the
area covered by another photograph, 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.
P
PanchromaticPhotographic emulsion sensitive to all colors of
light.
Panel(1) A target used for ground control or point identification
during aerial photography. (2) A group of individuals who are engaged for some service because of their expertise.
PanelingMarking points on the ground with material of suitable
contrast, size, and shape to provide images that can be positively
identified on aerial photographs.
Par ValueThe 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.
ParallaxThe apparent displacement of position of a body with
respect to a reference point or system of coordinates, caused by
moving the point of observation.
Parallel, GeographicA line on the earth, or a representation
thereof, that represents the same latitude at every point. Also called
a parallel of latitude or, when no misunderstanding is possible, a
parallel.
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PercentileThe 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.
Perfect CompetitionThe requirements of pure competition plus
an additional condition of perfect knowledge on the part of buyers
and sellers about all activity in the marketplace.
Perfect MarketIn economics, a market in which neither sellers
nor buyers individually or collectively have a competitive advantage and in which the things traded are homogenous. The stock
market is a more nearly perfect market than a real estate market.
Performance BondInsurance issued by a third party to guarantee
the satisfactory completion of a contract.
Performance RatioA ratio of the income of an investment to its
cost that reflects historical performance of the investment.
Perimeter SketchA graphic presentation of the boundaries of a
property, either the land or the buildings on the land.
Period, AssessmentSee assessment period.
Personal EffectsPersonal effects are items of tangible personal
property that an individual normally wears, carries, or uses in activities that do not involve the production of income.
Personal JudgmentCourts may issue a personal judgment against
the defendant in a delinquent tax suit. This judgment holds the person named in the suit personally liable for a delinquent property
tax and exposes his or her personal assets to payment of the obligation.
Personal PropertySee property.
Personal Property Specialist (PPS)A professional designation
conferred by the International Association of Assessing Officers.
PersonaltyA synonym for personal property.
Phase I and II ReportsUsed 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
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PoleSee rod.
Police PowerThe power of the state that curtails individual rights
for the health, safety, and general welfare of all society.
PolygonA line chart.
Pooled RegressionCombining two or more strata to form one
regression model.
PopulationAll the items of interest, for example, all the properties in a jurisdiction or neighborhood; all the observations in a data
set from which a sample may be drawn.
PositionA numerical or other description of the location and orientation (attitude) of a point or object. In particular, in geodesy and
navigation, (a) data that give the location of a point in a specific
coordinate system, (b) the place occupied by a point on the earth,
(c) the coordinates giving the location of a point on the geoid or
ellipsoid.
Position, GeographicThe 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.
Positioning SystemGenerally, a system (equipment, procedures,
and personnel) used for locating a vehicle or, less frequently, an
instrument. A navigation system can also be used for positioning,
but a system designed specifically for positioning generally gives
more accurate locations.
Positioning System, DopplerA positioning system consisting of
a radio receiver at the point whose coordinates are to be determined, one or more beacons in orbit about the earth, and a computing system for determining the orbits of the beacons.
Positioning System, InertialA positioning system consisting of a
computer and an assemblage of three accelerometers and two or
three gyroscopes.
Positioning System, RadioA positioning system in which the
travel time or phase shift of radio waves is measured.
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PrecisionThe level of detail in which a quantity or value is expressed or represented. It can be characterized as the number of
digits used to record a measurement. A high level of represented
precision may be used to imply a greater level of accuracy; however, this relationship may not be true. Precision also relates to the
quality of an operation or degree of refinement by which results
are obtained. A method of measurement is considered precise if
repeated measurements yield the same or nearly the same numeric
value. See accuracy and statistical precision.
Preferred Capitalization Rate(1) The capitalization rate applicable to the band of investment financed by preferred stock. (2) A
component of the overall direct capitalization rate calculated by
dividing dividends by the market value of preferred stock.
Preferred StockSee stock, preferred.
PreprocessingApplication of digital image processing techniques to the raw remote sensor data before visual or further machine-assisted image analysis.
Present Worth(1) The value of something after discounting future payments and receipts. (2) The present value of income that is
expected to be received at some future date or dates, as ascertained
by the process of discounting both the income and the anticipated expenses incident to its receipt, that is, the amount of money
that, if presently invested and allowed to accumulate at compound
interest, would yield net income in the same amounts and at the
same intervals as is anticipated of a given property. Synonymous
with capital value and present value.
Present Worth of 1(Also called the reversion factor.) The lumpsum 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.
Present Worth of 1 per Period(Also called the annuity factor, or
Inwood coefficient). 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.
PriceThe amount asked, offered, or paid for a property. (See
USPAP for additional comments.)
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Private RestrictionsPrivate parties, such as a group of homeowners, may establish private restrictions on ownership rights. Deed
restrictions are a common form of private restriction.
Procedural EditAn audit, or review of operations, intended to
discover erroneous and inefficient practices.
Production FunctionThe physical relation between a firms resource inputs and the output of goods and services per unit of time.
Productive ValueIn monetary terms, the capacity of a property
to produce or contribute to production.
Productivity ValueProductivity 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
valuation (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 use value.
Profit and Loss StatementAn accounting statement that shows
the income and expenses of a business over a specified time.
ProgressivitySee assessment progressivity (regressivity).
ProjectionA 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.
Property(1) An aggregate of things or rights to things. These
rights are protected by law. There are two basic types of property:
real and personal. (2) The legal interest of an owner in a parcel or
thing (see bundle of rights).
Real PropertyConsists 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.
Personal PropertyConsists of every kind of property that is not
real property; movable without damage to itself or the real estate;
subdivided into tangible and intangible. Also called personalty.
Glossary for Property Appraisal and Assessment
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Tangible Personal PropertyPersonal property that has a substantial physical presence beyond merely representational. It differs
from real property in its capacity to be relocated. Common examples of tangible personal property are automobiles, boats, and
jewelry.
Intangible Personal PropertyProperty that has no physical existence beyond merely representational, 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
trademarks), 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.
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 propertys actual or constructive tax
within such districts, for inclusion in the local assessment and/or
tax rolls. See assessment, central. (2) The personal property of an
intestate available for distribution by the administrator to the heirs.
Property, IncomeA property that yields to its owner a gross
money income.
Property, InvestmentA property that has been developed with
the intention and expectation of renting it, in whole or in part, for
profit. (Term not recommended for use.).
Property, NoninvestmentA property that has not been developed with the intention and expectation of renting it, in whole or
in part, for profit. (Term not recommended for use.)
Property, NonoperatingProperty not included in the unit being
appraised, usually where the nonoperating property is not necessary to the operation of the unit and is readily assessed locally.
Property, Nonrepresentative Intangible(1) Intangible property that, while constituting an asset of the owner, does not at the
same time represent a liability of another person; for example, patents, copyrights, trademarks, goodwill, and special franchises (preferred). (2) Intangible property that does not represent an interest
of any sort in specified tangible property; for example, goodwill,
patents, unsecured personal notes, accounts receivable. Note: The
term liability, as used in this definition, includes the equitable
obligations of a corporation to its stockholders.
Property, Operating(1) Property actually used in the business of
the owner, as distinguished from intangible property representing
investments in property actually used in the business of some other
person or persons. (2) As applied to public utilities, the property actually used in a public service enterprise conducted by the owner,
as distinguished from intangible property representing investments
in property actually used in the business of some other person or
persons and the property used by the owner in the conduct of a
nonpublic service enterprise. Synonymous with operative property. See property, nonoperating.
Property, PersonalSee property.
Property, Ratable (or Rateable)Taxable property.
Property, RealSee property.
Property, Representative Intangible(1) Intangible property that,
while constituting an asset of the owner, represents, at the same
time, a liability of another person (preferred). (2) Intangible property that represents an interest of some sort in specified tangible
property; for example, a mortgage or a share of stock. Note: The
term liability, as used in this definition, includes the equitable
obligations of a corporation to its stockholders.
Property, ServiceA property, such as a church, school, or hospital, that is not operated for profit and has no marketability in the
ordinary sense of the term. (Term not recommended for use.) Note:
The division of properties into investment, noninvestment, and
service properties is made on the assumption that investment
properties can be appraised by capitalization of income, noninvestment properties by comparison with properties recently sold,
and service properties by neither method.
Property LineThe boundary line that defines a parcel of land.
Glossary for Property Appraisal and Assessment
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Commercial PropertyGenerally any nonindustrial, nonresidential realty of a commercial enterprise. Includes realty used
as a retail or wholesale establishment, retail establishment with
living quarters, office building, hotel or motel, gasoline service
station, commercial garage, parking lot, warehouse, theater,
bank, clinic, nursing home, proprietary school, and the like.
Industrial PropertyGenerally any property used in a manufacturing activity, including a factory, wholesale bakery, dairy
plant, food processing plant, mill, mine, quarry, all locally assessed utility property, and the like.
Other and UnallocableIncludes 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.
Proprietary LeaseSee lease, proprietary.
ProtractionIn land and cadastral surveying, the subdivision of
land by drawing or extending lines on maps or plats of the region
being subdivided. The lines are drawn before surveying and monumenting the subdivisions and are therefore indicated by dashed,
straight lines.
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.
Public PolicyAny purposeful course of action by governmental
bodies (whether successful or unsuccessful and whether implementable or not).
Q
Qualified SaleA 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.
Qualitative DataPertaining to the subjective nature of some
variable of interest. For example, view, fire protection, quality, or
site/location.
Qualitative VariableSomething that can be appreciated but not
objectively reduced to an unambiguous scale. For example, view
is a qualitative variable.
Quality ClassA subjective 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.
Quantitative VariablePertaining to the objective nature of some
variable of interest, that is, something that can be measured or
counted with little ambiguity. For example, number of bathrooms
is a quantitative variable.
Quantity Survey MethodA method of estimating reproduction
cost in which a complete itemization 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.
Quarter SectionA 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.
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QuartilesThe 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.
Quasi RentSee rent, economic.
Quitclaim DeedSee deed, quitclaim.
Quotient TransformationA transformation of two or more variables accomplished by dividing one by the other. For example,
the length of a room is a quotient transformation of its area and its
width. Like the multiplicative transformation, many useful quotient
transformations are less intuitively obvious than the one in the example given.
R
Radar, Side-LookingA 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 airplanes line of flight. The ground is
mapped as a set of adjacent, overlapping strips.
Radar, Synthetic-ApertureA 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.
RadiationProcess by which electromagnetic energy is propagated through free space by virtue of joint undulatory variations in the
electric and magnetic fields in space.
RadonRadioactive gas that may enter structures from beneath
the ground level and contaminate the air within.
Random SampleA sample for which each item of the population
has an equal chance of being included and, by extension, each
possible combination of n items has an equal chance of occurrence.
Range(1) The maximum value of a sample, minus the minimum
value. (2) The difference between the maximum and minimum values that a variable may assume.
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Raw MaterialsGoods purchased for use as an ingredient or component part of a finished product.
RCNReplacement cost new or reproduction cost new.
RCNLDReplacement cost new less depreciation or reproduction
cost new less depreciation.
Read-and-Write InstructionA kind of command embedded in a
computer program that has the capability of both accessing a data
file and altering it.
Read-Only InstructionA kind of command embedded in a computer program that has the capability of only accessing the records
in a data file, not of altering them.
Real EstateThe physical parcel of land and all improvements
permanently attached. Compare real property.
Real Estate Transfer DocumentsThe various kinds of deeds
whereby real property is conveyed. Compare conveyances.
Real PropertySee property.
Real TimeTo make images or data available for inspection simultaneously with their acquisition.
Realty(1) Any tangible thing whose fee ownership constitutes
real property, that is, land or improvements. (2) A synonym for real
estate.
ReappraisalThe mass appraisal of all property within an assessment jurisdiction accomplished within or at the beginning of a reappraisal cycle (sense 2). Also called revaluation or reassessment.
Reappraisal Cycle(1) The period of time necessary for a jurisdiction to have a complete reappraisal. For example, a cycle of five
years occurs when one-fifth of a jurisdiction is reappraised each
year and also when a jurisdiction is reappraised all at once every
five years. (2) The maximum interval between reappraisals as stated in laws.
Reassessment(1) The relisting and revaluation of all property, or
all property of a given class, within an assessment district by order
of an authorized officer or body after a finding by such an officer
or body that the original assessment is too faulty for correction
through the usual procedures of review and equalization. (2) The
138 International Association of Assessing Officers
revaluation of all real property by the regularly constituted assessing authorities, as distinguished from assessment on the basis of
valuations most or all of which were established in some prior
year. See revaluation.
RecaptureA portion of the overall capitalization rate in an income approach representing the return of an owners investment
in property, expressed as the current years percentage of the remaining economic life.
Recapture, Straight-LineThe recovery of capital invested in a
wasting asset in equal periodic amounts over the remaining economic life of the asset.
Recapture RateThe return of an investment; the annual amount
that can be recaptured from an investment divided by the original
investment; primarily used in reference to wasting assets (improvements).
ReceiverOne 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 law suit pending its outcome.
ReciprocalThe result obtained when 1 is divided by a given
number. For example, the reciprocal of 4 is 0.25. Factors are reciprocals of rates.
ReclamationThe process of physically changing economically
unusable land to be suitable for use.
ReconciliationThe final step in the valuation process wherein
consideration is given to the relative strengths and weaknesses of
the three approaches to value, the nature of the property appraised,
and the quantity and quality of available data in formation of an
overall opinion of value (either a single point estimate or a range
of value). Also termed correlation in some texts.
Recordation/RecordingThe filing of documents affecting real
property for public record, which usually requires the witnessing
and notarizing of the document.
Rectangular CoordinatesA land description system where
boundaries are described as lines running from points on an X and
Y grid.
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Regression LineThe line on a graph that represents the relationship defined by the regression coefficients. For example, the line
from the relationship given in the definition of regression coefficient would cross the y-axis at the value $10,000 and would go
up $5,000 for each movement of 1 to the right. This example illustrates one of the subtleties required in understanding regression
analysis: in fact, there is no line, because the independent variable
is not a continuous variable, but it is easier to talk about the relationship by pretending that the variable is continuous and represent the relationship by a line rather than the more nearly correct
series of vertical bars on a bar chart.
RegressivitySee assessment progressivity (regressivity).
Regressivity IndexSee price-related differential.
Regular SectionA one-square-mile subdivision of a township
containing 640 acres.
Regulatory LagThe time intervening between the initiation of a
proceeding before a commission and the effective date of the final
decision or disposition of the case.
RegulationFor public utilities, the action of government as arbitrator between a (usually monopoly) utility and its customers. The
goal is to balance just and reasonable rates and terms of service
with fair profits.
REITReal estate investment trust; combines capital of many investors to acquire or finance real estate through formation of a
corporation whose shares are traded in a market.
Reject CodeA flag applied to a record indicating that it should
not be used for certain purposes.
ReliabilityIn 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.
141
Rent, GroundThe rent paid for the right of use and occupancy
of a parcel of unimproved land, or that portion of the rent paid for
the right of use and occupancy of a parcel of improved land that
is imputed to the land as distinguished from the improvements.
Compare rent, economic. See lease, ground.
Rent, NetThe 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 lessors investment in the property, and income taxes payable by the lessor.
Rentable AreaA specified unit area of leasable space.
Repeat Sales Analysis ModelAggregates changes in value and
statistical means for properties sold more than once during a specified period of time in a given geographic area. For example, in a zip
or postal code area, estimate market-level housing price changes.
If an individual property has not been substantially changed since
its last sale, this analysis matches each pair of sales transactions
(thus the name repeat sales). The amount of appreciation (or depreciation) is calculated from the time of the first sale to the second
and so on, providing an estimate of the overall appreciation of
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 appreciation if the data contains pairs of sales
in which the second sales price reflects substantial improvements
(or other alterations) made to the property after the first sale. On
the other hand, repeat sales indices can and do provide very useful
valuation estimates in jurisdictions where the data is 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.
Glossary for Property Appraisal and Assessment
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Replacement Cost; Replacement Cost New (RCN)The cost, including material, labor, and overhead, that would be incurred in
constructing an improvement having the same utility to its owner
as a subject improvement, without necessarily reproducing exactly
any particular characteristics of the subject. The replacement cost
concept implicitly eliminates all functional obsolescence from the
value given; thus only physical depreciation and economic obsolescence need to be subtracted to obtain replacement cost new
less depreciation (RCNLD).
Replacement Cost New Less Depreciation (RCNLD)In the cost
approach, replacement cost new less physical incurable depreciation.
Replacement ReserveAn allowance in an annual operating
statement for replacement of short-lived items that will not last for
the remaining economic life of a property.
ReportAny communication, written or oral, of an appraisal, review, or consulting service that is transmitted to the client upon
completion of an assignment.
Representative SampleA 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; Reproduction Cost New (RCM)The cost of
constructing a new property, reasonably identical (having the same
characteristics) with the given property except for the absence of
physical depreciation, using the same materials, construction standards, design, and quality of workmanship, computed on the basis
of prevailing prices and on the assumption of normal competency
and normal conditions.
Repurchase AgreementA short-term financing arrangement
whereby those needing funds sell securities but agree to repurchase them at a fixed price at a specified time.
Required Rate of Return on EquityA 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.
RESSee Residential Evaluation Specialist.
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Residual ValueThe 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 plant efficiency.
Residual Value of ImprovementsA value ascribed to improvements on a parcel of land by deducting from the total value of
land and improvements (as determined by composite appraisal)
the value of the land alone (as determined by comparison with
other parcels). Contrast residual value of land. Note: A residual
value of improvements is usually estimated only when the land is
obviously not improved to its highest and best use.
Residual Value of LandA value ascribed to land alone by deducting from the total value of land and improvements (as determined
by composite appraisal) the value of the improvements (as determined by the depreciated reproduction cost method). Contrast residual value of improvements.
ResolutionA measure of the finest detail distinguishable in an
image. Resolution usually varies from point to point of an image,
so an average value (area-weighted average resolution) is often
used as the resolution of the entire image.
Resolution, GroundThe size, in length or area, of the smallest
pattern or region on the ground that can be distinguished on an
image.
Restricted-Use Value See use value.
RestrictionA described limitation on use of a property.
RevaluationA reappraisal of property; especially a complete reappraisal of real property after assessment for one or more years
on valuations most (or all) of which were established in some prior
year. Compare reassessment and reappraisal.
RevenueThe gross dollars received for materials furnished or services rendered. Operating revenue means revenue from the operations of the primary business, for example, electric revenues of an
electric utility.
ReversionThe right of possession commencing on the termination of a particular estate.
Reversion FactorSee present worth of 1.
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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. Compare equalization. (2) The
act or process of critically studying a report, such as an appraisal,
prepared by another.
Review, AdministrativeReview by any body that is not part of
the organized judiciary.
Review, JudicialReview by a body that is part of the organized
judiciary.
Right, AirA 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; for example, the rights granted by railroads to build
above their right-of-ways.
Right, LittoralAny right attaching to a parcel of land that appertains to standing water bordering on such parcel. Compare right,
riparian.
Right, RiparianAny right attaching to a parcel of land that appertains to running water bordering on or flowing over such parcel; for
example, the right to natural flow unobstructed by artificial checks
or barriers, to freedom from unreasonable pollution, of access to
the water, of accretion. Compare right, littoral; right, water.
Right, WaterThe right to a supply of water.
Right-of-Way(1) An easement consisting of a right of passage
through the servient estate (preferred). (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.
Rights, PropertySee bundle of rights.
RodA land measure of 16+ feet or twenty-five links. Also called
a pole.
Roll, AssessmentSee assessment roll.
Roll, TaxSee tax roll.
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Sale, Arms-LengthA sale in the open market between two unrelated parties, each of whom is reasonably knowledgeable of market conditions and under no undue pressure to buy or sell.
Sale, ConditionalA 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. Compare
mortgage, chattel.
Sale, DistressA sale made to meet the immediate and pressing
needs of the seller at whatever price the property will bring.
Sale, ForcedA sale made pursuant to law; usually an auction
sale that is involuntary on the part of the owner.
Sale, NormalA sale in which neither the buyer nor the seller acts
under legal or economic compulsion, in which both parties are
reasonably well informed, and in which both are primarily actuated by economic motives. Compare value, market and sale, armslength.
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Sales Ratio/Assessment RatioThe ratio of an appraised (or assessed) value to the sale price or adjusted sale price of a property.
See assessment-sale price ratio.
Sales Ratio StudyA ratio study that uses sale prices as proxies for
market values.
Salvage ValueSee value, salvage.
SampleA set of observations selected from a population. If the
sample was randomly selected, basic concepts of probability may
be applied.
Sampling ErrorThe error reflected in ratio study statistics that
results solely from the fact that a sample of the population is used
rather than a census of the population.
Sandwich LeaseSee lease, sandwich.
ScaleThe 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.
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. (2) A device for capturing and
digitally encoding images in computer files.
Scatter Diagram or ScatterplotA 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.
SceneThe area on the ground that is covered by an image or
photograph.
Schedule, Building ClassificationSee building classification
schedule.
Schedule, Building CostSee building cost schedule.
SchedulesTables, 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.
Scrap ValueSee value, scrap.
Secondary Mortgage MarketA 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.
SectionA unit of land approximately one mile square and normally containing 640 acres, as laid out by the government survey.
SensorAny device that gathers energy (electromagnetic radiation
[EMR] or other), converts it into a signal, and presents it in a form
suitable for obtaining information about the environment.
Separated RightsRights to property that have been separated by
deed, such as air, mineral, water, and leasehold rights.
Separation of SourcesThe act of allocating a particular subject
of taxation to some one or more, but not all, of the several levels of
government within whose jurisdiction the subject lies.
Service LifeThe period of time (or service) for an asset from the
date of its installation to the date of its retirement from service.
SettlorOne who transfers to a trustee title to property that constitutes the trust estate. Contrast trustee; cestui que trust.
Short RunA planning period so short that a firm is unable to vary
the quantities of some of the resources that it uses.
Short-Lived ItemsItems of a structure that have a shorter life than
the basic structure. For example, roofing, water heaters, floor covering, and interior finish.
Signature(1) Personalized evidence indicating authentication of
the work performed by the appraiser and the acceptance of the
responsibility for content, analyses, and conclusions in the report.
(2) A characteristic, or combination of characteristics, by which a
material or object may be identified on an image or photograph.
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SignificanceA measure of the probability that an event is attributable to a relationship rather than merely the result of chance.
Single-Property AppraisalSystematic appraisal of properties one
at a time.
Sinking FundA 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.
Sinking-Fund FactorThe 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.
Sinking-Fund MethodA 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 that sinking-fund factor to the discount rate
gives the recapture rate.
Sinking-Fund Method-Annuity PremiseAssumes that the interest
rate on a sinking fund is equal to the investors discount rate.
SiteThe location of a person, thing, or event.
Site AmenitiesThe specific location-related positive attributes of
a property: topography, utilities, street traffic, view, and so on.
Site AnalysisA study that determines the suitability of a specific
parcel of land for a specific purpose.
Site Characteristics(1) Characteristics of (and data that describe)
a particular property, especially land size, shape, topography,
drainage, and so on, as opposed to location and external economic forces. (2) By extension, any characteristics of either the site or
the improvement.
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Site DevelopmentImprovements made to a land site (for example, grading, utility installation, roadways, and curbs) before a
building is constructed.
SitusThe 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.
Situs, BusinessThe place at which intangible property is given a
legal tax situs by reason of its association with a localized business.
Situs, ConstructiveThe 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.
Situs, TaxThe place at which property is legally taxable, that is,
the jurisdiction within which property actually lies or is said to lie
for tax purposes.
SkewedThe 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.
SlopeThe change in the dependent variable associated with a
change of one in the independent variable of interest. The slope is
given by the coefficient of the independent variable.
Software(1) Computer programs. (2) Those parts of a computer
system that are not machinery or circuits; thus procedures and possibly documentation are included along with programs.
Sole ProprietorshipA business enterprise net worth that belongs
entirely to one individual.
Somers SystemA system of standardized assessment developed
by the late William A. Somers and first used by him in the 1896
reassessment of St. Paul, Minnesota.
Glossary for Property Appraisal and Assessment
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StereoscopeAn 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).
Stereoscopic CoverageAerial photography taken with sufficient
overlap to permit complete stereoscopic observation. Sixty percent
forward overlap between frames is usually recommended for adequate stereoscopic coverage.
Stereoscopic PairTwo photographs of the same area taken from
different camera stations so as to afford stereoscopic study of the
overlap area. Also called stereo pair.
StigmaA perception that a property continues to be contaminated even though it has been cleaned up. Stigma may affect property
value.
Stock, CapitalThe 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. Compare surplus, corporate.
Stock, CommonCorporation stock that has a residual claim on
net profits and on assets, on dissolution of the corporation, after
satisfaction of the claims of all creditors and of the preferred stockholders, if any, or stock that is subordinate in any other respect to
a second issue of stock by the same corporation.
Stock, Preferred(1) In general, corporation stock that has preference in any request over the common stock. (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.
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T
Table, DepthSee depth table.
Tangible Property; TangiblesSee property.
Task ForceA kind of organizational unit, usually temporary,
composed of employees from different functional areas whose assignment is usually some kind of nonroutine task, such as assisting
in a system development effort.
TaxA 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.
Tax, Ad ValoremA tax levied on a base 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, and so on.
Contrast tax, specific.
Tax, BettermentSee assessment, special.
Tax, Classified PropertyAn ad valorem property tax that, in contemplation of the law, is administered uniformly with respect to
two or more classes of property, except that the effective tax rate
differs by law for different classes of property either through the use
of different tax rates or different fractional assessments. Compare
tax, special property. See classification; classified property tax
system.
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167
Tax Increment Finance (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 writedown subsidies to private investors. See enterprise zone.
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. (2) The amount of taxes authorized to be
placed in collection by a competent legislative body.
Tax Policy AnalysisThe process of gathering and interpreting
economic data to provide information that can be used by policymakers to formulate tax policy.
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. (2) For the 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.
Tax RollAn 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 sometimes
combined with the assessment roll into a single document.
Tax RollbackA 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 on the basis of) full market value.
Tax SaleSale of a taxpayers 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 delinquent taxes, and followed by a period during which the taxpayer
can redeem the property from the purchaser. See certificate of redemption; redemption.
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Taxpayer(1) A person who pays a tax in the first instance, whether he or she finally bears the burden or shifts it; generally defined
in law to include all persons liable for payment of a tax whether
or not they actually pay it. (2) Figuratively used to mean a more or
less temporary improvement that produces enough in earnings to
cover taxes and perhaps some of the other carrying charges on the
land. (Term should be placed in quotation marks when used in the
latter sense.)
TELsSee tax and expenditure limitations.
TenancyThe act of using or occupying property, especially real
property whose fee title is vested in someone other than the occupant.
Tenancy, JointA state of tenancy involving two or more persons
owning undivided possessory interests which 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; tenancy by the entirety.
Tenancy by the EntiretyA 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. Compare tenancy, joint.
Tenancy in CommonA state of tenancy involving two or more
persons owning undivided possessory interests that have arisen out
of separate and distinct conveyances, any one of the tenants being
free to create interest in his portion of the estate and the heirs or devisees acquiring the interest of any tenant who may die. Compare
tenancy, joint; tenancy by the entirety.
Tenancy in SeveraltyA state of tenancy involving one person
who owns a divided possessory interest.
TenantOne who holds or possesses a property.
Tenement(1) Real property and the rights to ownership, especially those of a permanent nature that relate to and pass with the
land. (2) A building intended for rental residence.
TerminalThe on-line device used to communicate with a computer.
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Time-Share UnitA 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.
TitleThe union of all elements constituting proof of property
ownership or the instrument that is evidence of ownership.
Title SearchAn examination of public records to ensure the
quality of the sellers title to a property. Preparation of an abstract
of title requires a complete title search, as does preparation to foreclose on a property in a delinquent tax suit.
ToleranceAn acceptable margin of error or inaccuracy.
Topographic MapRefers to the basic description and elevation
of a piece of land.
TopographyThe contour of land surface, for example, gently
rolling, mountainous, or flat.
Torrens SystemA 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.
Total Economic LifeThe period of time or units of production
over which the operation of an asset is economically feasible, not
necessarily the same as its physical life.
Total StationA fully automated surveying device that measures
both distances and horizontal and vertical angles, recording them
on a magnetic device.
Town(1) A small incorporated or unincorporated political subdivision of a state. (2) A civil township. (3) A small urban area.
TownshipAn approximately thirty-six-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.
Township, CivilAn 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.
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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.
UnderimprovementAn improvement that does not develop a
site to its highest and best use; usually a violation of the principle
of conformity. Contrast overimprovement.
Undivided InterestAn interest in a property that is not distinct
from the interest or interests of one or more other persons as to the
time during which the interest is possessory or as to the portion of
the property to which the interest attaches, for example, the interest of a joint tenant or a tenant in common.
Unencumbered Fund BalancesFunds 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, and the
like, chargeable to an appropriation.
Unencumbered ValueThe value of property without consideration of any detrimental environmental contamination.
Uniform Standards of Professional Appraisal PracticeAnnual
publication of the Appraisal Standards Board of The Appraisal
Foundation: These Standards deal with the procedures to be followed in performing an appraisal, review or consulting service and
the manner in which an appraisal, review or consulting service is
communicated. . . .Standard 6 sets forth criteria for the development and reporting of mass appraisals for ad valorem tax purposes
or any other universe of properties (p. 1).
UniformityThe equality of the burden of taxation in the method
of assessment.
UnitThe property being appraised. Everything used or useful
to the ongoing economic operation of the business (property).
Includes tangible and intangible property.
Unit AppraisalSee appraisal, composite.
176 International Association of Assessing Officers
Unit CostA 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.
Unit FootA rectangular portion of urban land with a frontage of
one foot and a depth equal to that of the standard lot. Synonymous
with standard unit foot and standard front-foot unit.
Unit-in-Place MethodA 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. Compare comparative unit method (sense 2); quantity
survey method.
Unit of ComparisonA property as a whole or some smaller measure of the size of the property used in the sales comparison approach to estimate a price per unit.
Unit ValueThe value of one of a number of similar items or units
contained in, or making up, a property. Compare unit cost.
Unitary Method of ValuationThe 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, telecommunications 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.
United States Federal Reserve SystemA United States banking
system charged with responsibility for maintaining the health of
the economy through its regulation of the money supply and the
rate of interest.
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V
Vacancy and Collection LossThe amount of money deducted
from potential annual gross income to reflect the effect of probable
vacancy and turnover, or 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.
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.
ValidityThe quality of a data element or procedure being what it
should be in terms of some ultimate purpose or use. See integrity.
Compare accuracy, precision.
Valuation(1) The process of estimating the valuemarket, investment, insured, or other properly defined valueof a specific
parcel or parcels of real estate or of an item or items of personal
property as of a given date. (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.
Valuation, AssessedSee assessed value.
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W
Wasting AssetA property or other thing of value whose value
diminishes with the passage of time. For example, buildings are a
wasting asset, but land and gold, traditionally, are not.
WavelengthWavelength 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.
WealthValuable material objects that are owned, either individually or collectively; that is, all tangible property. Note: In popular
usage, the term wealth is synonymous with property and, as
such, embraces intangibles as well as tangible property. This usage
is considered incorrect by economists and is not recommended.
Intangible property, with the possible exception of goodwill, patents, and the like, is not a real source of income, but only a means
of distributing income derived from the two primary sources, tangible property and persons. The adding together of tangible property
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Y
Yield CapitalizationAny of several methods used in the income
approach to value. Yield methods involve certain subtleties and assumptions that vary according to the particular method employed,
but include estimating such factors as the required rate of return on
investment, the remaining economic life of the property, an investment holding period, the income path, anticipated depreciation
or appreciation, and reversionary value. The yield methods stand
in contrast to direct sales analysis methods, in which a typical relationship between incomes and sale prices is found by simply
dividing observed incomes by sale prices for comparable properGlossary for Property Appraisal and Assessment
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ties, the fraction thus obtained then being applied (in the form of a
gross income multiplier or an overall rate) to the properties being
appraised. See building residual technique, discount rate, mortgage-equity analysis, and property residual technique.
Yield Rate(1) The return on investment applicable to a series
of incomes that results in the present worth of each. Examples of
yield rates are interest rate, discount rate, equity yield rate, and
internal rate of return. (2) The required rate of return on equity
capital; a component of the capitalization rate (or discount rate or
mortgage-equity overall rate) that must be separately specified in
band-of-investment analysis and mortgage equity analysis.
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.
Z
Zangerle CurveA corner influence graph devised by John A.
Zangerle, showing, for any given main street frontage, the percentage of the side street value to be added as corner influence to the
value of the lot computed as an inside lot fronting on the main
street. Compare Bernard rule.
ZoningThe exercise of the police power to restrict land owners
as to the use of their land and/or the type, size, and location of
structures to be erected thereon.
z-StatisticThe number calculated in a z-test, whose significance
is evaluated by reference to a z-table.
z-TableA table of critical values associated with the z-test.
z-TestA test of any of a number of hypotheses in inferential statistics that has validity if sample size is sufficiently large and the
underlying data are normally distributed.