IAAO GLOSSARY FOR PROPERTY APPRAISAL AND

IAAO GLOSSARY FOR PROPERTY

APPRAISAL AND ASSESSMENT

Third Edition

Revised and Approved September 2021

IAAO GLOSSARY FOR

PROPERTY APPRAISAL

AND ASSESSMENT

Third Edition

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Published by

International Association of Assessing Officers

314 W 10th St

Kansas City, Missouri 64105-1616

816-701-8100 • Fax: 816-701-8149

www.iaao.org

Library of Congress Catalog Card Number: ISBN 978-0-88329-160-3

Produced in the United States of America.

About IAAO

(IAAO) is a nonproﬁt, educational, and research association. It is a professional membership

organization of government assessment ofﬁcials and others interested in the administration of

the property tax. IAAO was founded in 1934, and now has a membership of more than 8,000

members worldwide from governmental, business, and academic communities.

Revision notes

This edition of the Glossary for Property Appraisal and Assessment replaces the 2013 edition.

iii

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

CONTENTS

Foreword: ..............................................................................................................................................1

NUMERIC ........................................................................................................................................... 2

A ............................................................................................................................................................. 2

B ............................................................................................................................................................13

C ............................................................................................................................................................ 17

D ..........................................................................................................................................................30

E ...........................................................................................................................................................38

F ...........................................................................................................................................................43

G ..........................................................................................................................................................48

H ..........................................................................................................................................................52

I ............................................................................................................................................................56

J ...........................................................................................................................................................62

K ..........................................................................................................................................................62

L ...........................................................................................................................................................63

M ........................................................................................................................................................... 71

N ......................................................................................................................................................... 80

O ..........................................................................................................................................................84

P ...........................................................................................................................................................89

Q ........................................................................................................................................................102

R ........................................................................................................................................................103

S ..........................................................................................................................................................113

T ..........................................................................................................................................................127

U.........................................................................................................................................................136

V ......................................................................................................................................................... 139

W.........................................................................................................................................................141

Y ......................................................................................................................................................... 143

Z ......................................................................................................................................................... 143

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

IAAO GLOSSARY FOR PROPERTY

APPRAISAL AND ASSESSMENT,

THIRD EDITION

FOREWORD:

On behalf of the International Association of Assessing Officers, we are honored to present the

IAAO Glossary for Property Appraisal and Assessment, Third Edition. IAAO is the international

leader in the mass appraisal and ad valorem taxation valuation.

This text is a fundamental part of the IAAO educational programs, enhanced member professional

development, and a resource for all users of ad valorem valuation services. This text is to provide

understanding in the application of property assessment valuation.

IAAO is grateful to the authors for their dedication, expertise, and commitment to this project:

• Lisa A. Hobart, CAE, PPS, FIAAO, ASA (Chair)

• Roland Altinger, CAE

• Joseph Dakers, Sr.

• John F. Ryan, CAE, FIAAO

• Lori-Ann Seethaler, RES

• William D. Shepherd, Esquire

• Irene E. Sokoloff, CAE, MAI

• Tammy Brown, IAAO Staff Liaison

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

NUMERIC

1031 Exchange — Internal Revenue Code Section 1031 enables a taxpayer to defer gain on the sale

of an investment property, provided the seller reinvests in other investment property. To defer all

capital gains, one must acquire a replacement property with a property value equal to or greater

than that of the sold property in a specified period of time.

4 - 3 - 2 - 1 Rule — A rule that allocates 40 percent of the value of a standard lot to the quarter of

the lot fronting the street, 30 percent to the second quarter, 20 percent to the third quarter, and

10 percent to the rear quarter.

65/35 Rule — A rule that values a triangular lot with its base fronting a street at approximately 65

percent of that of a rectangular lot of the same frontage and depth. The value of a triangular lot with

its apex fronting a street will be 35 percent of that of a rectangular lot of the same base and depth.

AAS — See Assessment Administration Specialist.

Abandonment — Voluntary relinquishment of all rights and interests in real property, including

title and possession. Relinquishing any future interest, right, or reclaim. An action involving relin-

quishment of rights in real property, by an owner, for the sole purpose of permanently terminating

ownership. The act of abandonment must be voluntary and intentional.

Abatement — 1) An official reduction or elimination of one’s assessed valuation after completion

of the original assessment; 2) An official reduction or elimination of one’s tax liability after

completion of the tax roll; 3) The temporary exemption of property from all or a portion of taxes

that would otherwise be paid; and 4) Remediation of a detrimental physical condition existing on

a property. See Property Tax Credit.

Absolute Auction — An auction in which the property is sold to the highest bidder regardless of

the amount. No minimum bid clause. See Auction.

Absolute Ownership — See Fee Simple Absolute.

Absolute Value — The value of a number (or variable) 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|.

Abstract of Title — 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).

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Abstraction Method — A valuation method used when the building value is known and there are

no unimproved land sales to support the land value. The application requires the improvements to

be recently constructed (or hypothetical) and must represent the highest and best use of the land.

The information needed to use this method includes: 1) Net operating income, 2) Building value,

3) Discount rate, 4) Recapture rate, and 5) Effective Tax Rate. See Highest and Best Use and Land

Residual Technique.

Abstractor — An individual who takes the information pertaining to a title in its full form and puts

all facts into an abbreviated form, the form being called an abstract of title.

Abuttals — Boundaries or adjacency of land; adjoiners and boundaries. See Adjacent and Adjoining.

Acceleration Clause — A provision contained in a mortgage or loan contract that allows the

lender to demand immediate repayment of the entire balance if the terms of the contract have not

been fulfilled. The lender may accelerate the terms of repayment and enforce payment in full for

the reasons stated within the clause.

Access Right — The right of egress from and ingress to a property from an existing highway or

street. See Bundle of Rights.

Accession of Real Property — The addition to value of property through labor or addition of

material. Land gradually deposited on the bank of a stream by imperceptible means becomes the

land of the upland owner.

Account — A record in the general ledger that provides details for all accounting transactions

including assets, liabilities, equity, revenues, cost of goods sold, and expenses.

Accountancy — The profession for the theory and practice of accounting.

Accounting Depreciation — 1) In appraisal, depreciation is a loss of market value of an asset

relative to its cost. Depreciation can stem from any cause that results in actual loss; 2) In accounting,

depreciation is a method providing for systematic allocation or recovery of cost over an asset life.

Accounting Records — The primary source of financial reporting documents including transac-

tions, journals, general ledgers, vouchers, trial balances, invoices, and all supporting documentation

for such records. Financial reporting statements include the balance sheet, depreciation schedule,

income statements, and all records conveying business activities and financial performance.

Accounting Valuation — Valuing a company’s assets and liabilities in accordance with generally

accepted accounting principles for the purpose of financial reporting.

Accretion — An imperceptible and gradual accumulation of land due to natural forces, typically

to land abutting water.

Accrued Depreciation — The loss in value of a property due to physical deterioration, functional

obsolescence, and economic (external) obsolescence. See Accumulated Depreciation.

Accumulated Depreciation — In accounting, the total amount of an asset’s cost that has been

expensed since the asset was placed into service. The accumulated depreciation account is credited

when the depreciation expense account is debited. See Accrued Depreciation and Expense.

Accuracy — See Statistical Accuracy.

Acknowledgment — A formal declaration attesting to the validity of the declarer’s signature,

usually made in the presence of an authorized public official or a notary public. It verifies the

authenticity of the signature but is not a verification of the truth of the contents of the document

acknowledged.

Acquisition Cost — The purchase price of an asset. The cost may reflect a used purchase price,

discounts, income tax deductions, and other adjustments appropriate for financial reporting. If

installation and other associated costs are included, the term “total acquisition cost” may be used.

Acquisition Date — See Date of Acquisition.

Acquisition Value — The market value of property at the time it was acquired by the present owner.

Acre — A unit of imperial or US customary land measurement equal to 43,560 square feet, 160

square rods or 10 square chains. An acre is a measure under the Weights and Measurements Act

of the British Empire and the United States. A parcel of 40,000 square feet is often referred to as

a Builder’s Acre.

Acreage — Land larger than one acre that refers to a large parcel of land. The term acreage can be

used to indicate a large parcel of land not necessarily measured in acres. Includes farms, timberland,

recreational acreage, idle land, and waste land in rural locations. Excludes vacant platted lots that

lie within or adjacent to a municipality and that usually carry a lot/block system designation rather

than acreage. Separately assessed timber or mineral rights are omitted from this category.

Active System — 1) A mechanical system used to produce heat or cooling. In agriculture an active

system can be a hydroponic system, and 2) A remote sensing system measuring electromagnetic

energy (EMR).

Actual Age — The number of years that have elapsed since the completed construction of an

improvement; also referred to as historical age or chronological age. See Age, Chronological Age,

Economic Life, Effective Age, Remaining Economic Life and Useful Life.

Ad Valorem — A Latin term translating to “based on value.”

Ad Valorem Tax — The amount of property taxes levied based on the value of the property, or a

proportion of the property value, subject to taxation. A tax that is measured by value. Note: This

term is often used to refer only to property taxes or to general property taxes, although technically

it is applicable to income taxes, ad valorem tariffs, special property taxes, etc.

Adaptive Estimation Procedure (AEP) — A computerized, iterative, self — referential procedure

using properties for which sale prices are known to produce a model that can be used to value

properties for which sale prices are not known. Also called Feedback.

Addendum — A list of material added to the end of a document or publication.

Addition — 1) A term sometimes used to denote a subdivision; 2) An increase in the value of fixed

assets due to the acquisition of a new property or the enlargement of an old one; and 3) For land

development, an extension of an existing subdivision that is developed at a later date, sometimes

referred to as addition 1, 2, 3, or Unit 1, 2, 3, etc. Compare Betterment.

Additive Model — A model in which the dependent variable is estimated by multiplying each

independent variable by its coefficient and adding each product to the constant.

Additivity — The assumption that the marginal contribution of any one independent variable is

unaffected by the other variables in the model.

Address — 1) A location, expressed in terms of a conventional spatial reference scheme, at which a

property or person may be found; 2) In a computer file, a specific juncture of circuits in computer

machinery at which information is stored in the form of magnetic polarities; 3) The name a

programmer uses to refer to such a juncture. Note: For a file of human — readable information, one

must establish rules about whether and how to record various relevant addresses, including the

situs address, owner’s address, and mortgagee’s address.

Adjacent — To be near, close, or contiguous, in the neighborhood or vicinity of, or adjoining or

contiguous to.

Adjoining — For land, means “next to” or “in contact with” and excludes the idea of intervening space.

Adjustable Rate Mortgage — A mortgage with periodic adjustments to its rate of interest to reflect

market conditions.

Adjusted Sale Price — The sale price that results from adjustments made to the stated sale price

to account for the effects of time, personal property, financing, etc. See Price.

Adjustments — Modifications in the reported value of a variable, such as sale price. For example,

adjustments can be used to estimate market value in the sales comparison approach by modifica-

tions for differences between comparable and subject properties. Note: Adjustments are applied

to the characteristics of the comparable properties in a particular sequence that depends on the

method of adjustment selected. See Assess and Assessed Value.

Administrative Review — An analysis of an individual property, typically requested by a property

owner, of an aspect of a property tax assessment (e.g., value, exemption) performed by a quasi-ju-

dicial body with the authority to adjust or modify the assessment.

Adverse Land Use — A land use that decreases the value of nearby properties, usually because the

adverse use is incompatible with the uses of the neighboring properties. A garbage dump near a

residential neighborhood is an example of adverse land use.

Adverse Possession — The method of acquiring property ownership via the open, notorious,

continuous, hostile, and exclusive occupation and continuous possession of (another’s) real

property under an evident claim of title or right. Various states have requirements as to the length

of time of occupancy necessary to establish adverse possession and other requirements such as

payment of taxes.

AEP — See Adaptive Estimation Procedure.

Aerial — Relating to the air or atmosphere, being applicable in a descriptive sense to anything in

space above the ground and within the atmosphere.

Aerial Film — A specially designed roll film available in many lengths and widths to fit aerial

cameras. Emulsion types include panchromatic, infrared, color, and color infrared.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Aerial Mosaic — A collection of aerial photographs whose edges have been matched manually or

digitally to form a continuous image across an area of interest.

Aerial Photograph — A photograph of a part of the earth’s surface taken by an aircraft, drone, or

other implement using a supported camera.

Aerial Triangulation — A process used in photogrammetric mapping that establishes the math-

ematical relationships among control points and adjusts them as a network of locational values.

Affidavit — A document containing a statement of facts sworn to as correct by the person signing

the document.

After-Tax Cash Flow (ATCF) — The amount remaining after property taxes.

Age — A generic term referring to the length of time a property has existed. See Actual Age,

Chronological Age, Economic Life, Effective Age, Remaining Economic Life, and Useful Life.

Age/Life Method — A method of estimating accrued depreciation based on allocating a uniform

percentage of value loss each year over the economic life of the improvement or personal property.

The age/life method measures depreciation on the accounting concept of Straight-Line depreci-

ation. See Accrued Depreciation, Economic Life, and Straight-Line Depreciation.

Agents of Production — The four ingredients available for the production of goods and services

that satisfy human wants: 1) Land; 2) Labor; 3) Capital; and 4) Management (coordination).

Maximum value is attained when the four ingredients attain the state of equilibrium. See Principle

of Balance.

Aggregate Mean — See Weighted Mean.

Agricultural Property — Property used in the production of crops and/or other agricultural

products, such as livestock, and agricultural support buildings. See Property.

Agricultural Value — The value of a property that is devoted to or available for the production of

crops and/or other agricultural products, livestock, and agricultural support buildings, assuming

that agricultural is the highest and best use of the property, or laws dictate current use is the

highest and best use.

AIA — See American Institute of Architects.

Air Rights — A right to use and occupy the space lying above a stated elevation or within certain

distances above the ground surface, in conjunction with specified spaces on the surface for the

support of foundations.

Akerson Format — A mortgage — equity valuation technique based on altering Elwood’s algebraic

formula to a series of simple arithmetic steps based on a band of investment calculations.

Alienation — The transfer of an interest in property from one person to another.

Alley Influence — 1) The effect of accessibility or proximity to a side or rear alley on the value of

a lot or parcel; and 2) The increment of value resulting from accessibility or proximity to a side or

rear alley.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Allocation by Abstraction — A method of separating a whole property value into land and

improvement components. The appraiser estimates the improvement’s replacement cost new,

subtracts an appropriate amount for depreciation, and subtracts the remainder from the whole

property value to estimate the land value.

Allocation by Ratio — A method of separating a whole property value into land and improvement

components, in which the appraiser develops proportions of land and improvement values for

comparable properties and applies those proportions to the subject’s whole property value.

Alluvion — See Accretion.

Along — “Along a line” means on and in the direction of the line. “Along the road” means along

the center line or thread of the road unless qualified as, for example, “Along the east side line of

the road,” “Along a line” may be changing in direction by curves or angles. Avoid “with a line” or

“on a line” where “along a line” is meant. The term “along” may mean “on”; thus “along” the shore

means “on” the shore and includes the shores.

Alternative Hypothesis — A hypothesis suggesting a relationship between variables. The opposite

of Null Hypothesis. See Hypothesis Test and Null Hypothesis.

Altitude — The distance of a location above a reference surface. The most usual surface is sea level. 

Amendment — A change altering or adding to an agreement.

Amenity — A feature of real estate that enhances its use or desirability. See Real Estate.

American Institute of Architects (AIA) — An organization of architects that developed a standard

form of documents between owners and contractors for use where the basis of payment is a stipu-

lated sum. Revenue is recognized at project completion (i.e., It contains completed contract billing

throughout the project).

AM/FM — Automated Mapping/Facility Management, a computer-based land information system

used to produce, edit, archive, and correlate automated map features with non-graphic facility-re-

lated design or operation attributes. See Land Information System.

Amnesty Tax — An act of pardon of tax liability by a legislative body.

Amortize — The process of repaying a loan or recovering a capital investment by means of a series

of scheduled payments; typically includes interest charges and principal repayment in each of the

scheduled payments.

Amortized Mortgage — A mortgage whereby there is a reduction of principal by constant payments

toward the principal balance, plus interest payments on the declining principal balance. There are

required level constant payments, including principal and interest, with each payment applying

first to the accrued interest, and the remainder reducing the principal. See Mortgage.

Ancillary Data — Subsidiary data used to define the area of interest, for example, topographic,

administrative, or geologic data. Ancillary data may be digitized and merged with the primary

image data to facilitate analysis. See Image.

ANN — See Neural Network.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Annex — To join a smaller, subordinate property to a larger or more dominant property.Includes

expanding incorporated government with additional land.

Annual Debt Service — The annual amount of income necessary to pay the principal and interest

on a mortgage.

Annuity — A monetary benefit received at regular intervals for a specified period.

Anticipated Use Method — A valuation method used to appraise vacant land when the expected

improvements to the land are specified and the total costs are estimated.

Anticipation — See Principle of Anticipation.

Appellant — A person who seeks review of an initial decision of a judicial or quasi-judicial body

in a higher court.

Apportionment — The process of distribution and allotment into proportional allocations.See

Allocation by Abstraction and Allocation by Ratio.

Appraisal — The act or process of developing an opinion of value; an opinion of value.

Appraisal Card — A card used by an assessor or appraiser on which typically is carried a sketch

or photograph of a building, a description of its location, a list of the principal factors affecting

its reproduction cost and depreciation, and the calculations by which such cost and depreciation

are estimated. Note: The building appraisal card is frequently combined with the land appraisal

card into a single document. In such an event, the combination card may be used for a composite

appraisal as well as for a summation appraisal. Also called a Property Record Card.

Appraisal Date — In ad valorem taxation, the date as defined by law to estimate a property’s value.

Appraisal Foundation — See The Appraisal Foundation.

Appraisal Level — The common or overall ratio of appraised values to market values. Three

concepts are usually the level required by law, the true or actual level, and the computed level based

on a ratio study. See Ratio Study.

Appraisal Practice — Valuation services performed by an individual acting as an appraiser,

including but not limited to appraisal and appraisal review. Only appraisers may offer services

that are considered appraisal practice. See Appraisal, Appraisal Standards Board, The Appraisal

Foundation, and Uniform Standards of Professional Appraisal Practice.

Appraisal Principles — The concepts evolved from economic doctrine providing the foundation

for the valuation process and highest and best use. See Highest and Best Use.

Appraisal Ratio — 1) The ratio of the appraised value to an indicator of market value; and 2)

By extension, an estimated fractional relationship between the appraisals and market values of a

group of properties. See Level of Appraisal.

Appraisal Ratio Study — A ratio study using independent — expert single — property appraisals,

and/or sales based on market value as indicators of market value. See Ratio Study.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Appraisal Report — Any form of communication of a completed appraisal or appraisal review. See

Appraisal.

Appraisal - Sale Price Ratio — The ratio of the appraised value to the sale price, or adjusted sale

price, of a property; a simple indication of appraisal accuracy. See Adjusted Sale Price, Appraised

Value, and Ratio Study.

Appraisal Standards Board — The independent board of The Appraisal Foundation that develops,

interprets, and amends the uniform standards of professional appraisal practice (USPAP).

Appraisal Uniformity — The extent to which appraisal procedures produce logical and consistent

results across individual properties. See Appraisal.

Appraisal 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 an estimate of market value produced through math-

ematical modeling. Credibility of an AVM is dependent on the data used and the skills of the

modeler producing the AVM. See Market Analysis, Market Value, and Model.

Appraise — To make an estimate of value for property. See Market Value and Value.

Appraised Value — The estimate of the value of a property. See Value.

Appraiser — The professionally skilled individual who estimates the monetary value of property.

Appraiser Licensing and Certification — A procedure whereby appraisers gain permission

from the United States, state, and territorial licensing agencies to practice without supervision

by demonstrating appropriate (pre — licensing) experience and education skills and by agreeing

to maintain and improve their skills and to conduct themselves in accordance with professional

standards set by either The Appraisal Foundation’s Appraisal Standards Board or an appraisal

organization.

Appraiser Qualifications Board — The independent division of The Appraisal Foundation that

establishes education, experience, and other criteria for licensing, certification, and reclassifi-

cation of qualified appraisers. See Appraiser.

Appreciation — Increase in value of a property, in terms of money, from causes other than addi-

tions and betterments. Contrast Depreciation. See Addition and Betterment.

Appurtenance — Real or personal property improvements that when attached or affixed become

part of the real or personal property.

Arbitrary Map — An office subdivision or map made by a title company, assessor, or others for

their own convenience in locating property in an area in which all the descriptions are by metes

and bounds. On this subdivision, the lots are given arbitrary numbers. See Assessing Officer, Metes

and Bounds, and Subdivision.

Arithmetic Mean — See Mean.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Arm’s-Length Transaction — A sale between a willing buyer and a willing seller that are unrelated

parties, each of whom is reasonably knowledgeable about market conditions and under no undue

pressure to buy or sell.

Array — An ordered arrangement of data, such as a listing of sales ratios, in order of magnitude.

Assemblage — The joining of parcels of land that are not necessarily contiguous resulting in

an increase or decrease in value, but when they are contiguous and increase value, they may be

considered plottage. See Parcel and Plottage.

Assembly Value — The increase of the value of a large parcel of land formed from a number of

smaller parcels over the sum of the values of the unassembled parcels. See Assemblage and Parcel.

Assess — Determining the value of property for ad valorem taxation. See

Ad Valorem Tax

and

Value

Assessed Value — The value placed on property subject to taxation at market value or some legally

authorized fraction thereof. See Assess, Market Value, and Value.

Assessing Officer — Any property tax official with professional responsibilities.

Assessment — See Assessed Value.

Assessment, Area-Based — One of a small number of non-market assessment valuation standards.

A property is placed on the tax roll at a value reflecting the land area or the surface area (floor area)

of an improvement. See Assess, Floor Area of Building, Improvements, Tax Roll,and Value.

Assessment, Original — The official act of the assessing officer to discover, list, and value property

for the purpose of ad valorem taxation for preparation of the assessment roll. See Ad Valorem,

Assess, Discovery, Listing, and Value.

Assessment, Penalty — A charge, levy, tax, or fee added to the original amount of tax due. Typically,

a sanction for failure to comply with specified legal requirements. See Property Tax Levy.

Assessment Administration — Management and oversight of all aspects of ad valorem taxation.

See Ad Valorem Tax and Assess.

Assessment Administration Specialist (AAS) — A professional designation conferred by the

International Association of Assessing Officers (IAAO) recognizing professionalism and compe-

tency in administration of a variety of functions for property tax purposes.

Assessment Appeal — See Administrative Review and Assess.

Assessment Base — The total of all the individual assessed values within a geographic area referred

to as the tax base. See Assessed Value and Tax Base.

Assessment Date — See Appraisal Date.

Assessment District — See Assessment Jurisdiction.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Assessment Equity — The degree to which assessments bear a consistent relationship to market

value. Relates to the fair and equitable treatment of individual properties. Requires that properties

be appraised equitably with groups or categories (use classes, neighborhoods), and that each of

these groups be appraised at the same level, or ratio, of market value. See Appraisal Ratio, Assess,

Class, Equity, Level of Appraisal, Market Value, and Value.

Assessment Jurisdiction — The geographic area for the assessment of property for taxation.

Generally consistent with the political boundaries of a state, county, city, or township. See Assess

and Jurisdiction.

Assessment Level — The relationship between the assessed value of property and its market

value, often expressed as a percentage. See Assess, Level of Assessment, Market Value, and Value.

Assessment Map — See Assess, Cadastral Map, and Map.

Assessment Progressivity — See Price-related Differential (PRD).

Assessment Ratio — See Appraisal Ratio and Appraisal Ratio Study.

Assessment Ratio Study — See Appraisal Ratio and Appraisal Ratio Study

Assessment Regressivity — See Price-related Differential (PRD)..

Assessment Review — See Administrative Review.

Assessment Review Board — A quasi-judicial panel that hears matters related to property

assessment and property classification. Also known as the Board of Assessment Appeals,

Valuation Adjustment Board, Board of Equalization, and Appraisal Review Board, and similar. See

Administrative Review and Classification.

Assessment Roll — The basis on which property tax levies are allocated among assessable property

within a taxing jurisdiction. A public record of the assessed value of every property in a taxing juris-

diction. Often includes a parcel identification number (account number), name of owner of record,

location address, mailing address, assessed value of land, assessed value of building, assessed value

of other real property improvements, assessed value of personal property, and exemption codes.

May be referred to as List, Grand List, Abstract, or other titles.

Assessor — See Assessing Officer.

Asset — Any item (tangible or intangible) having value to its owner; a source of wealth. For

accounting purposes, it is expressed in terms of its cost, depreciated cost (net book value), or

basis. May be capitalized to a balance sheet or expensed on an income statement when acquired.

See Acquisition, Balance Sheet, Capitalization, Cost, Depreciated Reproduction Cost, Expense,

Income Statement, Intangible Personal Property, Personal Property, and Value.

Asset, Current — An asset that is expected to be sold, exchanged, consumed, or disposed of in

generally less than one year. Unrestricted cash or other assets held for conversion within a rela-

tively short period into cash or other similar assets or useful goods or services. Usually, the period

is one year or less, but for some items, such as accounts receivable in installments, the period may

be longer by contract.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Asset, Fixed — A property having an economic life greater than one year. Does not typically

include current assets or inventory. Includes both real and personal property items. Fixed Assets

is not synonymous with personal property. See Asset, Current; Economic Life; Personal Property;

Property; and Real Property.

Assign — To transfer property or a specified interest in property.

Assignment — The transfer of any personal or real property or any rights in a property by, for example,

a deed, lease, or mortgage. See

Deed

Lease

Mortgage

Personal Property

, and

Real Property

Assume Plane Coordinates — A local plane coordinate system set up at the convenience of the user.

Assumption Fee — A lender’s fee for processing records when a new buyer assumes an existing loan.

Assumption of Mortgage — The conveyance of the remaining balance of an existing debt to the

purchaser of a financed property. An assumption of a mortgage is an agreement in which the buyer

accepts liability for repayment of an existing debt. Unless the seller is released, he or she remains

liable for the payment of such debt.

At — The place or location of an object not treated as definitively locative. It denotes nearness or

proximity. A boundary of land described as “at” a road, without qualifying terms means “to the center

of the road.” “To,” “on,” “at,” and “by” a stream, unqualified, means to the limit of private ownership.

ATCF — See After-Tax Cash Flow.

Attachment — Property seizure by a court order.

Attestation Clause — The witness clause in a document that affirms the document is

properly executed.

Attribute — Characteristic of a property.

Auction — A method of marketing and selling property whereby participants bid on the property.

See Absolute Auction.

Audit — A systematic set of procedures used by an auditor to validate information provided by the

property owner or to validate an estimated assessment. Often used in assessment administration

to validate personal property assessments. An audit may be informal or a formal book audit.

Audit Program — A systematic set of procedures used by an auditor as part of an ongoing activity

to validate information received by a property owner or to validate an estimated assessment. Often

assessing jurisdictions develop an audit program for personal property assessments.

Audit Trail — A method of documenting all changes made to a set of books and records of the

property owner by the auditor, leading to the final modified records on which assessments are

based. An audit trail is generally used by personal property auditors to record all changes from

accounting records to a personal property rendition (statement).

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Automated Valuation Model (AVM) — A mathematically-based model combined with databases

of existing properties and transactions to calculate real estate values. AVM’s include proprietary

algorithms, usually both a regression based model and repeat sales index, which are weighted and

analyzed to generate a single-point value estimate. Accurate value estimates require high-quality

data representative of the specific properties for which values are estimated.

Auto-Mosaicking — Producing a single image from multiple overlapping images.

Average — The arithmetic mean. The central value of a numerical data set expressed as the sum of

the values divided by the number of values in the data set.

Average Absolute Deviation — The arithmetic mean of the absolute deviations of a set of numbers

from a measure of central tendency, such as the median. The average deviation of the numbers 4,

6, and 10 about their median (6) is (2 + 0 + 4) ÷ 3 = 2. The average deviation is used in computing

the coefficient of dispersion (COD).

Average Tax Rate — Total taxes paid divided by the total base.

Average Total Cost — The total cost to produce something divided by the number of units

produced.

AVM — See Automated Valuation Model.

Avulsion — The sudden and perceptible tearing away or separation of land by violent action of water.

Azimuth — A direction measured clockwise from a given meridian.

Bailment — A transaction in which personal property is delivered by its owner (the bailor) to a

second party (the bailee) into whose possession it is put for safekeeping or for some other temporary

purpose or use with no intention that the title shall pass to the second party.

Balance — See Principle of Balance.

Balance Sheet — An accounting financial statement that reflects a company’s assets, liabilities,

and equity as of a specific date. Assets are equal to liabilities and equity.

Balloon Mortgage — A mortgage not fully amortized at maturity and requiring a final lump sum

payment.

Band-of-Investment Analysis — A perspective on (and a technique for estimating) the discount

rate. The discount rate is viewed as having two components, each weighted in proportion to typical

financing terms for properties of the type in question. For example, if 75 percent loans are available

at 9 percent interest and investors are known to seek a 14 percent return on equity, then the

discount rate is 10.25 percent, that is,

(0.75 + 0.09 = 0.0675) + (0.25 + 0.14 = 0.0350) = 0.1025 = 10.25 percent.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Baseline — A survey line running due east and west through the initial point of a principal

meridian, from which township lines are established by the government survey.

Base-Lot Method — A method of appraising land parcels whereby each parcel to be appraised

(base lot), and differences between the two in terms of location, size, shape, topography, and the

like are analyzed by the appraiser in estimating the value of the lot to be appraised.

Base Map — See Map, Base.

Batture — A term used to denote a bed of sand, stone, or rock rising toward the surface of a body

of water.

Bearing — Direction of a line measured as the acute angle from a reference meridian; usually

expressed in the form “N 30° W” or “S 87° E.”

Bearing Wall — A wall that supports a portion of a structure. Also called load bearing wall as it

bears the weight load of the roof to foundation.

Before-Tax Cash Flow (PTCF) — The amount remaining before property taxes. Often referred to a

Pre-Tax Cash Flow.

Being — A portion of a deed that denotes a secondary call: “to the northeast corner of Brown’s

land, being also a 2-inch iron pipe.” See Passing Call.

Benchmark — 1) A term used in land surveying to mean a known point of reference; 2) In property

appraisal, a property of known value and of known effective age and replacement cost; and 3) By

extension, a model property to be used in determining by comparison the grade or quality class of

other properties.

Beneficial Interests — The property interests resulting from equitable ownership in a property

rather than legal ownership; for example, the interests of the beneficiary of a trust.

Beneficiary — 1) The person for whose benefit property is held in trust; 2) The person to whom the

proceeds of an insurance policy are payable upon the happening of the event insured against or the

non-happening of the insured event.

Berm — A mound of earth that diverts or controls surface drainage flow, marks property bound-

aries, or alters topography.

Beta Coefficients — Standardized regression coefficients that measure the relative importance of

the independent variables in explaining or predicting the dependent variable.

Betterment — An expenditure on a fixed asset that increases its market value and extends the

property’s economic life.

Betterment Tax — See Special Assessment Area.

Bias — The tendency of a statistic to overestimate or underestimate a parameter. Statistics describe

a sample. A parameter describes an entire population.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Bill and Hold Goods — A type of inventory that has been invoiced but not shipped from the seller

to the buyer.

Binary Variable — Qualitative data items that have only two possibilities. Yes or No (for example,

corner location) where 1=Yes, and 0=No. Also called Dichotomous Variable.

Blanket Mortgage — A mortgage covering more than one property; used in, for example, subdi-

vision development and cooperative apartment ownership.

Blended Model — A model where more than one modeling technique is used in deriving the

estimate of value. Typically, the technique involves running a hedonic model and a repeat sales

index. The results are then compared and evaluated. Based on each result, the blended model

reports a final estimate of value. In addition to the hedonic model and repeat sales index, many

blended models also include the results of a tax-assessed value model.

Block — A block is a square or portion of a city enclosed by streets, whether it is occupied by buildings

or composed of vacant lots. In addition, blocks are often enclosed by the boundary of the subdivision.

Block Grants — Grants that are designated for a broad set of uses, such as economic development.

They are not as restrictive as categorical grants with broader goals, more discretion, and fewer

administrative requirements. However, block grants are not as flexible as revenue sharing.

Blueprint — A detailed plan for the construction of physical components for improvements or

personal property.

Bonds — Certificates of ownership of specified portions of a debt due to be paid by a government

or corporation to the holder(s), usually with a fixed rate of interest.

Book Audit — A detailed audit that entails comparing the cost of the assets as reported on the

listing or declaration to the historical costs of the assets.

Book Value — See Net Book Value.

Boot — Money or an asset added to a trade in order to make it reflect the fair market value of the

asset being traded.

Bootstrapping — Sampling with replacement from observed data to estimate the variability in a

statistic of interest. A related form of resampling. Reasons for using a bootstrap approach include

when there is no assumption concerning the distribution of the data, and that it can assess the

variability of virtually any statistic.

Boundaries — The physical and/or man-made lines that define a parcel, subdivision, neigh-

borhood, or district.

Bounds — The lines by which different parcels of land are divided. “Butts and bounds” or “butted

and bounded” are phrases sometimes used to introduce the boundaries of land.

Box Plot — A graphic representation of the distribution of a continuous variable with a qualitative

variable (or quantitative variable with limited data values). They are excellent for revealing outliers

and extremes.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Bracketing — A qualitative appraisal technique that compares properties similar to a subject

property by ranking them either as superior or inferior to the subject. There are no explicit lump-sum

dollar or percentage adjustments. The value of subject property is estimated by its relative position

in the array of comparable sales between the next highest and next lowest comparable sale.

British Thermal Unit (BTU) — A unit of heat required to raise one pound of water one

degree Fahrenheit.

Brownfield — A site whose use and value is affected by contamination or the potential of

contamination.

BTU — See British Thermal Unit.

Budget — A formal written statement of the financial plan for an organization that details how

resources will be used to accomplish an organization’s established goals and objectives.

Buildable Unit — A unit of comparison used when the market indicates that a site is sold on a

unit basis.

Building Capitalization Rate — The sum of the recapture and return rates on an income-pro-

ducing property. The rate applies only to the improved portion of a property.The ratio of building

or improvement income to building or improvement value. It can be used to convert a single year’s

building or improvement income into a building value.

Building Classification Schedule — A table giving standard specifications of a number of different

typical buildings, classified according to use (such as one-family dwelling or office building), type

of construction (such as wood frame or steel frame), exterior wall materials (such as brick or stone),

and other factors affecting reproduction cost.

Building Residual Technique — A capitalization technique used when land value is known

and residual income to the building or improvement is capitalized to obtain the building or

improvement value.

Build-up Method — A method that yields an overall capitalization rate from two components.

The building capitalization rate and the land capitalization rate are weighted by the percentage of

property value each represents and then added together to yield an overall rate.

Bundle of Rights — The six basic rights associated with the private ownership of property. They

are; 1) The right to sell. 2) The right to lease or rent, 3) The right to use, 4) The right to give away, 5)

The right to enter or leave (real property), and 6) The right to refuse to do any of these. Four rights

removed from the bundle of rights in favor of government control are: 1) Taxation, 2) Eminent

domain, 3) Police power, and 4) Escheat.

Buoyancy — The ability of tax yields to rise and fall with the economy and with revenue needs.

Business Assets — Tangible and intangible resources that are employed by a business enterprise

in its operation.

Business Enterprise — A commercial, industrial, or service organization pursuing an

economic activity.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Business Enterprise Value — A term applied to the concept of an intangible, non-realty component

of a property’s value probably ascribable to supramarginal management competence.

Business Equity — The value of assets after deducting liabilities. The interests, benefits, and rights

inherent in business ownership.

Business Premises — One type of situs that represents the more or less permanent location of

personal property that is highly mobile in nature.

But — “That which follows is an exception to that which has gone before” is the common meaning

of “but” in a sentence. May mean “except,” “except that,” “on the contrary,” or “yet.”

Buttal — Mans along the ends of the land.

Buyer — 1) One who purchases property; and 2) In real property sales, the grantee to whom property is

transferred by deed or to whom property rights are granted by a trust instrument or other document.

By — In a deed, “by a read” is construed as including the land to the center of the street, but “by the

east side of a road” means “along with east side” and not “along the center line. “To,” “on,” or “by” a

stream means to the limits of the grantor’s land.

CAD — Computer Aided Drafting, a process for interactively creating, modifying, and manipu-

lating geometric information. See Computer Aided Design.

Cadastral Genealogy — A graphic depiction of the lineage or history of parcel.

Cadastral Map — A scale map displaying property ownership boundaries and showing the dimen-

sions of each parcel with related information such as parcel identifier, survey lines, and easements.

Annotations on recent sale prices and land value are sometimes added.

Cadastral Mapping Specialist (CMS) — A professional designation conferred by the International

Association of Assessing Officers (IAAO) recognizing professionalism and competency in cadastral

mapping techniques that support property valuation for tax purposes, property tax administration,

and property tax policy.

Cadastre (or Cadaster) — A term commonly used in Europe to denote an official register or

inventory of all lands and/or buildings, giving the area, location, owner, and either the value or

estimated gross or net yield of each. This list remains substantially unchanged for a number of

years, except for names of owners, and serves more or less the same purpose as an assessment roll

in the United States.An official register of quantity, value, and ownership of real estate.

CAE — See Certified Assessment Evaluator.

Calibration — The process of estimating the coefficients in a mass appraisal model. Model cali-

bration is the development of the adjustments or coefficients through market analysis of the vari-

ables to be used in a mass appraisal model. Source: AVM Standard. See Mass Appraisal Model.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Call — Within a deed, the designation of visible natural objects, monuments, courses, distances,

or other matter of description as limits of the boundaries. Locative calls are particular or specific

calls exactly locating a point or line. Descriptive calls are general or directory calls that merely

direct attention to the neighborhood in which the specific calls are to be found.

CAMA — See Computer-Assisted Mass Appraisal.

Canadian Mortgage and Housing Corporation (CMHC) — A Canadian crown corporation. Its

mandate is to assist in housing for Canadians.

Canvass — Also called a “field canvass.” The practice of collecting the data needed in assessment

operations by systematically going from property to property coding the specified information.

Capital — Financial assets used as a source of financing for all business types. In accounting, the

capital account is the net worth of a business at a specific point in time. It is the difference between

capitalized assets and liabilities. May also be referred to as Owner’s Equity.

Capital Assets — All property generally having an economic life of greater than one year. Includes

all property, whether movable or affixed, tangible, or intangible. Examples include land, buildings,

plants and machinery, vehicles, furniture and fixtures, and goodwill.

Capital Expenditure — Cash investments to acquire or improve an asset that will have a life of

more than one year, as distinguished from cash outflows for expense items normally considered

part of the current operations.

Capital Gain — The profit realized through the sale of a property if the sale price of that property

exceeds the cost of acquisition and of any improvements the seller has added.

Capital Improvements — Improvements that include additions to the property made at any time.

Capital Market — The interaction of buyers and sellers as they buy and sell long-term financial

instruments, such as mortgages, bonds, and stock.

Capital Structure — 1) The manner in which a firm is financed, that is, the amount and kind of

equity and debt that satisfies the need for funds; and 2) The financing mix of debt and equity. Note:

Capital structure may be based on book values or market values.

Capital Value — Current market value of immovable property.

Capitalization — 1) Any rate used to convert an estimate of income to an estimate of market value;

the ratio of net operating income to market value, and, 2) For the assessment of personal property

and generally accepted accounting principles (GAAP), capitalization refers to the cost of an asset

that is placed in the asset category of a balance sheet, rather than as an expense on an income

statement. See Balance Sheet, Direct Capitalization, Income Approach, Income Capitalization,

Income Statement and Yield Capitalization. 

Capitalization of Ground Rent — Method of estimating land value in the absence of comparable

sales. Applicable where there is an income stream; for example, to farmland and commercial land

leased on a net basis.

Capitalization of Income — See Income Capitalization.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Capitalization Rate — The annual net operating income of a property divided by its value expressed

as a percentage. It converts the estimated net operating income of a property to an estimate of

market value. A capitalization rate is composed of: 1) A rate of return on the investment (interest); 2)

A rate of return of the investment (recapture); and 3) Effective tax rate. For ad valorem assessments,

the inclusion of the effective tax rate in the capitalization rate is referred to as a loaded cap rate.

Capitalized Cost — An accounting term expressing the total consideration expended necessary

to acquire asset(s) and may include invoice cost, trade-in allowances, sales tax, freight, installation,

and construction period interest.

Capitalized Leased Property — Property, which is intended for purchase by the lessee, subject to

the requirements of a lease agreement. Considered as an asset by the lessee within the financial

statements of the individual or organization. Often considered installment-sales agreements under

the provisions of generally accepted accounting principles (GAAP).

Capitalized Value — The value of a property estimated by the income approach to value.

Cardinal Direction — Direction is either due north, south, east, or west.

Cash Discount — A reduction in the billed amount to the purchaser if payment is made within a

specified period of time or if the purchaser meets the provisions of the discount offered by the seller.

Cash-Equivalent Sale Price — The price paid in cash that reflects the fair market value of an asset

after consideration of any favorable or unfavorable terms.

Cash Flow — See After-Tax Cash Flow and Before-Tax Cash Flow.

Categorical Grants — Grants that are designated for a particular use, such as development of

municipal parks.

Categorical Variable — A categorical variable (sometimes called a nominal variable) has two or

more categories, but there is no intrinsic ordering to the categories. For example, exterior wall type

is a categorical variable having a number of categories (wood, brick, stucco, and composite) with

no inherent order from highest to lowest. A categorical variable simply allows for the assignment

to specific categories without any clear order.

Caveat Emptor — A Latin phrase meaning, “Let the buyer beware.” A common maxim stating that

the buyer purchases at his or her own risk.

Center Line — Usually applies to the center of a street prior to widening or closing, i.e., the center

line of the original street midway between the sides. To avoid ambiguous conditions, if the street

has been narrowed or widened on one side or unequally, the center line should be defined.

Central Meridian — The central line of longitude used as the basis for the construction of many

map projections. An example would be the meridian at the center of each universal transverse

Mercator zone, which is numbered 500,000 meters and used as the reference for east-west

measurements within the zone.

Central Tendency — See Measure of Central Tendency.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Centralized Assessment — An assessment placed on property by an assessing officer whose juris-

diction extends over two or more local assessment districts. Often utilized by state agencies for

public utilities, aircraft, etc. Commonly referred to as State Assessed Property.

CERCLA — See Comprehensive Environmental Response Compensation and Liability Act.

Certificate of Redemption — The evidence of buying back or redeeming a property by the owner

after loss through a judicial sale.

Certificate of Sale — A certificate issued to the buyer at a judicial sale that entitles the buyer to a

deed upon confirmation of the sale by the court.

Certificate of Title — A document typically issued by the government or a title company that states

that the title to the property is believed to be clear or lists various encumbrances the property is

subject to.

Certified Assessment Evaluator (CAE) — A professional designation conferred by the International

Association of Assessing Officers (IAAO) recognizing professionalism and competency in a wide

range of matters covering property valuation for tax purposes, property tax administration, and

property tax policy.

Certified Public Accountant (CPA) — Accountants who, having met the statutory requirements

of a state and having been registered or licensed to practice public accounting, are permitted by

the state to call themselves certified public accountants and use the initials CPA after their names.

Certiorari, Writ of — An order issued by a superior judicial or quasi-judicial body requiring an

inferior judicial or quasi-judicial body to certify to the superior body the records of a case for

judicial review.

Chain — A land measure of 66 feet, four rods, or 100 links.

Chain of Title — See Abstract of Title.

Change Principle — See Principle of Change.

Charges — Non-tax revenue from fees and reimbursements for current services used in the devel-

opment of a nominal tax rate.

Chart of Accounts — A complete list of every accounting category contained within the general

ledger of the financial reporting documents of an entity. Often includes the account name and a

numeric reference.

Chattel — A term that is synonymous with tangible personal property. See Personal Property.

Chattel Mortgage — A mortgage in which the security consists of tangible personal property.

Note: A chattel mortgage usually takes the form of a bill of sale drawn in favor of the mortgagee

with a clause defeating the transfer during compliance by the mortgagor with specified conditions.

Chi-Square — A nonparametric test of statistical significance for categorical variables.

Chord — A straight line connecting the tangents of a curve.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Chronological Age — The age of an item as measured from when the item was new to a spec-

ified date. Often referred to as Historical Age. See Age, Economic Life, Effective Age, Remaining

Economic Life, and Useful Life.

Circuit Breaker — A credit or rebate of specified amounts of property taxes incurred whenever

such taxes exceed specified percentages or amounts of household income. In instances where

renters are included, rent or rent equivalents substitute for property taxes.

Class — A set of items defined by common characteristics; 1) In property taxation, property classes

such as residential, commercial, agricultural, industrial, and personal property may be defined;

2) In assessment, building classification systems based on type of building design, quality of

construction, or structural type are common; 3) Class use may be subject to regulation and/or law;

4) May have differing tax classes and tax (millage) rates.

Classification — The process of grouping items with common characteristics. See Class.

Classified Property Tax System — A system with either different statutory assessment levels or

different tax mill rates for discrete property classes typically based on property use.

Claw back — A provision in a property tax relief measure designed to recover some or all of the

taxes forgone when it is found that the property or the taxpayer is not or never was qualified for

the relief.

Client — Any party for whom a fee appraiser performs a service.

Closing — The act of finalizing a real estate transaction that executes and delivers mortgage or

property title documents.

Closing Costs — Settlement fees and expenses incurred in transferring property ownership that

are paid at the real estate closing.

Closing Statement — A listing of incurred closing costs of the buyer and seller in closing a real

estate transaction.

Cloud on Title — Any claim, encumbrance, or lien that may impair the title to real property.

CMHC — See Canadian Mortgage and Housing Corporation.

CMS — See Cadastral Mapping Specialist.

COD — See Coefficient of Dispersion.

CODw — See Weighted Coefficient of Dispersion.

Coefficient of Concentration — The percentage of observations within a given percentage of the

median. Typically used in assessment ratio studies. A high coefficient of concentration for low

percentages, say 15 percent, indicates high performance.

Coefficient of Correlation — See Correlation Coefficient.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Coefficient of Determination (R2) — The proportion of the variation in the dependent variable

accounted for by the variation in the independent variables. R2 varies between zero (no linear

relationship) and one (perfect linear relationship).

Coefficient of Dispersion (COD) — Expresses as a percentage the average deviation of the ratios

from the median. The COD is used throughout the property assessment field as a measure of

appraisal uniformity.

Coefficient of Price-Related Bias (PRB) — Indicates the percentage by which assessment ratios

change whenever values are doubled or halved. For example, a PRB of −0.03 means assessment

levels decrease by 3 percent when value doubles. The PRB should range between −0.05 and +0.05.

PRBs outside the range of −0.10 to +0.10 are considered unacceptable.

Coefficient of Variation (COV) — A measure of relative variability. It is the ratio of the standard

deviation to the mean. The COV is particularly useful when comparing results from two groups. For

example, in an assessment ratio study, when comparing jurisdictions with widely varying levels of

assessment, the COV provides a common basis for reviewing the relative level of assessment equity

among the different jurisdictions.

Coincidence Line — See Line, Coincidence.

Collection Loss — Nonpayment of rent. Also known as Credit Loss. See

Vacancy

and Collection Loss.

Color of Title — An appearance or claim of legal ownership that arises from a document.

Commercial Paper — Short-term promise to pay issued by a corporation.

Commercial Property — Generally any non-industrial, non-single family residential real or

personal property used in conjunction with a commercial enterprise. Includes real and personal

property used as retail stores, convenience stores, restaurants, bars, supermarkets, discount stores,

offices, medical offices, banking institutions, theaters, auto service establishments, hotels/motels,

hospitals, etc.

Common Area — The total area within a property that is not designed for rental or sale and is

available for common use by all tenants and owners. Also known as Common Elements.

Common Equity — On the books of a corporation, the amount of common stock, plus premium

on common stock, plus retained earnings, less reacquired common stock, less common stock

expense, plus any additional paid-in capital associated with common stock. The equity interest in

a property.

Community Property — Property that is acquired by either spouse during their marriage that

becomes owned by the couple equally.

Comparable Sales — In the appraisal profession often referred to as “comparables” or “comps.”

Recently sold properties with similar value influencing attributes compared with the subject, i.e.,

the property being appraised.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Comparative Unit Method — Estimates the replacement cost new of a property by using a cost per

unit of comparison such as per linear foot, per square feet, per cubic feet, or for personal property,

per production rate. An appraisal technique that totals direct and indirect costs and divides that

sum by the appropriate unit of comparison. The result can then be applied to similar properties

to estimate market value.

Competition — See Principle of Competition.

Compilation — 1) In cartography, the production of a new or revised map from an existing map,

aerial photograph, survey, or other source material; and 2) In photogrammetry, the production of

a map, chart, or portion thereof from aerial photographs and geodetic control data by means of

photogrammetric instruments. Also called Stereo-Compilation.

Composite Rate — An overall rate of blended or weighted averages of various rates of return

expected for a single investment as represented by R in the Ellwood formula. See Mortgage-Equity

Analysis.

Compound Interest Table — A graphic presentation that specifies an interest rate and a

compounding period and gives six functions of a dollar at various yearly or monthly intervals: 1)

The future worth of $1 after one interval; 2) The future worth of the $1 deposited at the beginning

of each interval; 3) The sinking-fund factor; 4) The present worth factor; 5) The present worth of $1

per interval; and 6) The amount to amortize.

Comprehensive Environmental Response Compensation and Liability Act (CERCLA) — A

federal environmental program administered by the Environmental Protection Agency (EPA).

Computer-Aided Design (CAD) — A process for interactively creating, modifying, and manipu-

lating geometric information.

Computer-Assisted Mass Appraisal (CAMA) — A software package used by governmental agencies

and assessing offices to establish real and personal property valuations for property tax purposes.

It is composed of several applications that systemically value property. Often includes statistical

analysis such as multiple regression analysis to assist the appraiser in determining the value of

property for property taxation purposes.

Concave — The inside of a curve; toward the center of the circle.

Concession — A benefit granted by a lessor or seller as an inducement to lease or purchase.

Condemnation — 1) The exercise of the right of eminent domain to secure legal title to private

property required for a public use; and 2) A declaration by a constituted authority to the effect that

a structure is unfit for occupancy or dangerous to persons or other property, often accompanied

by exercise of the police power to limit or prohibit occupancy or to require demolition of the

structure. Note: The term “expropriation” is also used to convey the first of these meanings.

Condition — A qualitative measure of the overall desirability of a property’s physical improvements.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Conditional Sale — A sale, especially of chattels, in which the transfer of title is made to depend

on the performance of a condition subsequent to the making of the sales contract and delivery

of goods. Note: The most common condition is that the remainder of the purchase price be

paid. Property held under a conditional sales contract may be repossessed without foreclosure

proceeding, and the former holder has no equity of redemption.

Conditions — Restrictions created by a qualification by the grantor of a deed, upon breach of

which the estate is defeated and reverts to the grantor (or heirs).

Condominium — A real property ownership concept in which one can own an undivided interest

in a portion of the real property (typically called a unit) and own a shared interest with other unit

owners in the public areas of the real property (the common elements).

Condominium Unit — The portion of real property owned individually in a condominium

ownership concept (as opposed to the common elements in which ownership is shared with other

unit owners).

Confidence Interval — A range of values calculated from the sample observations that are believed,

with a particular probability, to contain the true population parameter (mean, median, COD). The

confidence interval is not a measure of precision for the sample statistic or point estimate, but a

measure of the precision of the sampling process.

Confidence Level — Indicates the probability with which the estimation of the location of a statis-

tical parameter (for example, arithmetic mean) in a sample survey is also true for the larger popu-

lation from which the sample is derived.

Confidence Score — The automated valuation model (AVM) confidence score is a value that indi-

cates the level to which each of multiple AVM models “agrees” with the other estimated values for

a given property.

Conformity — See Principle of Conformity.

Consideration — The amount of money and other valuable goods or services on which a buyer and

a seller agree to consummate a sale.

Consigned Goods — A type of inventory that is in the possession of a selling agent but owned by

another party. The agent has no equity interest in the inventory. The selling agent is often compen-

sated in the form of a sales commission paid by the owner of the inventory.

Consignment — 1) A shipment of goods from one person (the consigner) to another (the consignee);

and 2) (preferred) A bailment contract whereby one party (the consigner) places his or her goods in

the possession of a second party (the consignee or factor) for the purpose of sale by the second party.

Consistent Use — See Principle of Consistent Use.

Consolidation — See Assemblage.

Constrained Variable — A variable with a value set to either a specific number or constrained to

fall between a lower and upper bound. Typically used in valuation modeling techniques such as

multiple regression.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Construction Cost — The sum of direct costs of materials and labor plus contractors’ indirect

costs to construct an improvement of real or personal property.

Construction in Progress — 1) Real property that is not complete; 2) Personal property not fully

installed and in the process of going from inventory to fixed asset by installation, or the conversion

of personal property realty by becoming a fixture; and 3) Personal property that has been acquired

but not yet installed as of the date of valuation. Also known as Construction Work in Progress.

Construction Loan Mortgage — A short-term loan made for the purpose of financing new

construction. Usually, the land is initial collateral for the loan, and provisions are specified in the

mortgage for disbursing funds as the project develops. Improvements on land provide additional

security for the lender as the loan amount increases.

Contiguous — Sharing a property boundary.

Contingent Fee — A fee determined by the results of the services to be performed or by other

future events.

Continuous Data — Data that can take any value between two numbers, no matter how small.

There are an infinite number of values regardless of scale. See Discrete Data.

Continuous Variable — A variable for which it is conceivable that, given any two observed values,

a value lying between them may occur. For example, temperature and finished living area are

continuous variables; quality class and number of fireplaces are not. See Binary Variable and

Discrete Variable.

Contour Line — An imaginary line on the ground, all points of which are at the same elevation

above or below a specified reference surface.

Contour Map — A topographic map that portrays relief by means of contour lines.

Contract for Deed — An agreement for the sale of a property in which the seller retains title until

the buyer completes the contracted payments for the property. The agreement may be recorded;

however, the conveyance of the property is not complete until all contractual obligations are

fulfilled, at which time the deed for transfer of ownership may be recorded.

Contract Rent — The actual amount of rent that is specified in the lease.

Contribution — See Principle of Contribution.

Contributory Value — The amount a component of a property contributes to the total market

value of the property. See Principle of Contribution.

Control-Ground and Geodetic — A system of points that are used as fixed references of position

(horizontal) or elevation (vertical) or both. Ground control points are obtained from ground

surveys. These points can be used to rectify the accuracy of cartographic products to the actual

area on the ground that is represented. Geodetic control takes the size and shape of the earth into

consideration. See Aerial Triangulation.

Convex — The outside of a curve.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Conveyances — Legal documents that transfer ownership or rights (interests) of property.

Cooperative — A business entity, usually a corporation, that holds title to realty and that grants

rights of occupancy to its shareholders by means of proprietary leases or similar devices.

Coordinates — Linear or angular quantities that designate the position of a point in a given

reference system.

composer, designer, or such, or his or her heirs, legatees, or assigns, to reproduce, publish, and sell

copies of an original literary or artistic work.

Corner — In land surveying, a point on a land boundary at which two or more boundary lines meet.

Corner Influence — 1) The effect of location at, or proximity to, the intersection of two streets

upon the value of a lot or parcel; and 2) The increment of value resulting from such location or

proximity. Found most often in commercial properties because of greater ease of entry and exit,

accessibility to higher volume of traffic, and increased show-window and advertising space.

Corporation — A legal entity (business organization form) operating under a grant of authority

from a state in the form of a charter and articles of incorporation.

Corporation, Domestic — A corporation organized under the laws of a jurisdiction where it is

located or doing business.

Corporation, Foreign — A corporation organized under the laws of some jurisdiction other than

the jurisdiction where it is located or doing business.

Correlation Coefficient — Used to measure the strength of association between two variables.

The most commonly used correlation coefficient, Pearson’s correlation (also called Pearson’s R)

represented with a lowercase r, ranges from – 1.0 to +1.0, with 0 meaning there is no association

between the two variables. A correlation coefficient of 1 means that for every positive increase in

one variable, there is a positive increase of a fixed proportion in the other. For example, the number

of bedrooms often increases with close correlation with increases in living area. A correlation

coefficient of – 1 means that for every positive increase in one variable, there is a negative decrease

of a fixed proportion in the other. For example, market value often decreases in correlation with

increases in effective age.

The absolute value of the correlation coefficient gives us the relationship strength. The larger the

number, the stronger the relationship. For example, | – 0.65| = 0.65, which has a stronger rela-

tionship than 0.40. The graphs below illustrate these relationships.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

It is a statistic that characterizes two or more sets of numbers and, when squared and multiplied

by 100, gives the percentage strength of the (linear) relationship between the two sets of numbers.

For example, if the coefficient of correlation between measures of the height and weight of a group

of people were 0.9, then one would deduce that knowing the height of someone would generally

explain or account for 81 percent of the weight.

Correlation Matrix — A table showing correlation coefficients between sets of variables. Each

variable in the table is correlated with each of the other values in the table. This allows you to see

which pairs have the highest correlation. The following correlation matrix shows the correlation

coefficients for a combination of eight variables:

Variables Sale Nbhd4 Nbhd5 SF1st SF_Other Baths Grade LotSize

Sale 1.0000 -0.4274 .2312 .5311 0.4914 .5937 -0.7165 0.2205

Nbhd4 -0.4274 1.0000 -0.6055 -0.4901 -0.0124 -0.3117 0.1402 -0.1657

Nbhd5 0.2312 -0.6055 1.0000 0.2930 0.0303 0.1469 -0.0759 -0.0156

SF1st 0.5311 -0.4901 0.2930 1.0000 -0.2383 0.3371 -0.1625 0.3193

SF_Other 0.4914 -0.0124 0.0303 -0.2383 1.0000 0.2999 -0.5856 -0.0484

Baths 0.5937 -0.3117 0.1469 0.3371 0.2999 1.0000 -0.3917 0.0927

Grade -0.7165 0.1402 -0.0759 -0.1625 -0.5856 -0.3917 1.0000 0.0956

LotSize 0.2205 -0.1657 -0.0156 0.3193 -0.0484 0.0927 0.0956 1.0000

Cost — The money expended in obtaining an object or attaining an objective; generally used in

appraisal to mean the amount spent to acquire an asset (personal property) or the amount spent,

including both direct and indirect costs, to construct a real property improvement.

Cost, Construction — See Construction Cost.

Cost, Depreciated Reproduction — See Depreciated Reproduction Cost.

Cost, Direct — See Direct Cost.

Cost, Hard — See Direct Cost.

Cost, Historical — See Historical Cost.

Cost, Indirect — See Indirect Costs.

Cost, Original — See Original Cost.

Cost, Overhead — See Overhead Cost.

Cost, Soft — See Indirect Costs.

Cost, Trended — See Trended Cost.

Cost, Unit — See Unit Cost.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Cost Approach — 1) One of the three approaches to value, the cost approach is based on the

principle of substitution—that a rational, informed purchaser would pay no more for a property

than the cost of building an acceptable substitute with like utility. The cost approach seeks to

determine the replacement cost new of an improvement less depreciation plus land value; and 2)

The method of estimating the value of property by: (a) Estimating the cost of construction based

on replacement or reproduction cost new or trended historical cost (often adjusted by a local

multiplier); (b) Subtracting depreciation; and (c) Adding the estimated land value. (The land value

is most frequently determined by the sales comparison approach.)

Cost Index — A factor or multiplier used to adjust variations in construction costs over time;

sometimes, by extension, a set of similar numbers showing the relative costs of construction in

different geographic areas.

Cost Manual — A guide, containing pictures, specifications of structures, and cost schedules, used

to help classify construction quality and estimate the cost of replacing a structure.

Cost of Capital — The required rate of return that investors expect for providing funds to a project.

Cost-of -Development Method — A method of appraising undeveloped land, whereby an estimate

is made of the probable proceeds to be obtained from selling the land as subdivided, developed

parcels. The cost of so developing the raw land is subtracted from this estimate to obtain an

estimate of the value of the raw land.

Cost of Equity — See Equity Yield Rate.

Cost of Goods Sold (Cost of Sales) — 1) In retail, the total cost of goods sold during a given

accounting period is determined by ascertaining the invoice costs of the materials purchased,

adding the value of the inventory on hand at the start of the fiscal period and subtracting the value

of the inventory remaining on hand at the end of the fiscal period; and 2) In manufacturing, the

cost of production of the items sold, such as raw materials, direct labor, and overhead.

Cost Schedules — Charts, tables, factors, curves, or equations intended to help estimate the cost of

replacing a structure from a set of known factors such as quality class and structure size and height.

Cost Study — An economic evaluation of costs to develop the replacement cost new of real or

personal property.

Cost to Cure — Estimated cost to correct or replace a component within an item of real or personal

property. The cost to remedy deferred maintenance or functional obsolescence.

Cost Trend Factor — A multiplier developed to adjust costs to a specific point in time.

Coupon Rate — The rate of return specified on the face of a debt instrument (such as a bond) as

opposed to the actual return (or effective yield).

Course — Direction of a line with reference to a meridian. Also, bearing or azimuth and length of

a line considered together.

COV — See Coefficient of Variation.

COVw — See Weighted Coefficient of Variation.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Covenant — A word used in deeds for the purpose of creating restrictions; imports an agreement

on the part of the grantee or subsequent grantees or heirs to make, or to refrain from making,

some specified use of the land conveyed.

Credit — A claim for money or money’s worth that is enforceable by law, whether due or accruing

and whether secured or not; for example, accounts receivable, notes, bonds, accrued interest and

rent, and bank deposits, but not corporate stock. In accounting, the right-hand column of a double

entry accounting system where debits equal credits.

Critical Value — A factor used to compute the margin of error. In hypothesis testing, a critical

value is a point on the test distribution that is compared to the test statistic to determine whether

to reject the null hypothesis.

Cross Validation — A technique for validating an automated valuation model (AVM) where, iter-

atively, a subset of sales is held out of the model and the model is re-fit to the remaining sales.

The analyst could then examine either the predictive results for the subsets of holdout sales or the

model coefficients over the various iterations.

Cross-tabulation — A two-way frequency distribution that shows the joint distribution of two variables.

Cubic Content of Building — A method of obtaining value typically used for multistory

construction. Estimates the cost of the building based on its volume. Calculated by the length

times width times height of the structure (L x W x H). It is then multiplied by the forecasted cost

factor to arrive at the value.

Cultural Details — Human-made features of the terrain. Included are such items as roads,

buildings, and canals.

Curable Depreciation — That part of depreciation that can be reversed by correcting a deficiency.

Current Asset — See Asset, Current.

Current Liability — A debt normally due within one year. See Liability.

Curves — A continuously bending line without angles. 1) Center of line of a curve is the midpoint

along the arc of the curve and is not the “center of the circle” describing the curve; 2) Parallel curves

are curves that are concentric; 3) Radius of a curve stops at the arc of the curve. (A description

intending to extend beyond the arc should state “and on the prolongation of the radius”); 4)

Compound curves are tangent at the point of compounding (changing of radius); 5) Reverse curves

are tangent at the point of reversal; and 6) Tangent curves have a common tangent where the curves

meet.

Customer Survey — A tool for gathering information on the public’s opinion of the assessment

office.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Data — Information expressed in any of a number of ways. “Data” is the general term for masses of

numbers, codes, and symbols generally, and “information” is the term for meaningful data. “Data”

is the plural of datum, one element of data.

Database — An organized grouping of data within the structure of a database management system

that has been defined by a particular use, user, system, or program.

Data Edit — The process of examining recorded data to ensure that each element of data is

reasonable and consistent with others recorded for the same object, such as a parcel of real estate.

Data editing, which may be done by human beings or by computer, is essentially a mechanical

process, distinct from verifying the correctness of the recorded information by calling or writing

property owners.

Data Integrity — The degree to which data sets remain unaltered after changes or updates are

made in a database. The validity and accuracy of the information. Protected accurate information

in a database to be used for analysis.

Data Maintenance — The process of organizing and curating data. Properly maintaining and

caring for data is essential to ensuring that data remain accessible and usable for their intended

purposes.

Data Management — An administrative process that includes acquiring, validating, storing,

protecting, and processing required data to ensure the accessibility, reliability, and timeliness of

the data for users.

Data Model — A generalized, user-defined view of data representing the real world. A description

of the structure of a database. It describes how data are represented and accessed.

Data Scraping — A technique using software programs that can analyze human-readable data,

typically unstructured, from websites and store them in a structured data file. Collection methods

included text filtering, analysis, and capture and image analysis and optical character recognition.

Data Steward — A term commonly used to identify an entity responsible for maintaining data in

various map layers.

Date of Acquisition — The effective date of the purchase of an asset. The date that the asset is

recorded into the books and records of the purchaser for financial reporting and tax purposes.

Date of Sale (Date of Transfer) — For real property, the actual date of conveyance between grantor

and grantee of the bundle of rights. Referred to as the execution date, which may or may not be the

date of recordation. For personal property, the date that the buyer and seller convey the property

in exchange for money or another item of value.

Datum (Geodetic) — 1) A reference surface consisting of five quantities: the latitude and longitude

of an initial point, the azimuth of a line from this point, and two constants necessary to define

the reference spheroid; the basis for the computation of horizontal control surveys in which the

curvature of the earth is considered (leveling); and 2) A level surface to which elevations are referred;

usually, but not always, means sea level.

DCF — See Discounted Cash Flow Analysis.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

DCR — See Debt Coverage Ratio.

Debit — An accounting entry recording the creation of an addition of an asset or an expense, or

the reduction or elimination of a liability, or item of net worth (capital). The left-hand side of a

journal entry in a double-entry accounting system.

Debt — Money owed.

Debt Coverage Ratio (DCR) — The ratio of net operating income to debt service, which is used to

estimate the overall capitalization rate in direct capitalization. The formula for the overall capital-

ization rate (OAR) is OAR = DCR × Annual debt cost × Debt percentage of capital structure.

Debt Rate — The interest rate on borrowed money.

Debt Service — The total payments of principal and interest on a mortgage.

Declaration — A statement by a property owner.

Declaration of Restrictions — A set of recorded restrictions that applies to a specific area

or subdivision.

Declaration of Trust — A written acknowledgment by the legal titleholder to property specifying

the property is held in trust for the benefit of another party.

Declining Balance Method — A method of accounting depreciation that allocates higher amounts

of depreciation in the earlier years of an asset, on the premise that actual depreciation is greater

during that time.

Declining Terminal Series — A projected income stream that declines progressively and system-

atically and eventually ceases.

Decree — A judgment by the court in a legal proceeding.

Decree of Distribution — The judicial decision made by a probate court determining who is legally

entitled to the real estate and personal property of a decedent.

Deed — A document that when executed and delivered conveys an interest in or legal title to a property.

Deed, Quitclaim — See Quitclaim Deed.

Deed, Recordation — See Recordation/Recording.

Deed, Special Warranty — See Special Warranty Deed.

Deed, Tax — See Tax Deed.

Deed, Trust — See Trust Deed.

Deed, Warranty — See Warranty Deed.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Deed Restriction — Limitations on property rights, typically on the use of a property, contained

in a deed.

Deferred Maintenance — Postponed maintenance and repairs to real or personal property that

were not performed and have been delayed.

Degree — One 360th of the circumference of a circle.

Degree of a Curve — Along railroads, the central angle of a curve subtended by a 100-foot chord

on the curve. Along highways, usually, but not always, defined as the central angle subtended by a

100-foot arc of said curve.

Degrees of Freedom (d.f.) — The total number of observations minus the number of independent

constraints imposed on the observations. The easiest way to understand degrees of freedom

conceptually is through an example:

Consider a data sample of five positive numbers with no known relationship among them. This

data sample then has five degrees of freedom.

If four of the numbers in the sample are {3, 8, 5, and 4} and the average of the entire data sample is

6, then the fifth number has to be 10. It can be nothing else. It does not have the freedom to vary.

The degrees of freedom for this data sample is 4.

Therefore, the formula for degrees of freedom equals the size of the data sample minus one:

DF = N — 1; where DF = degrees of freedom N = sample size

Degrees of freedom are calculated to test the validity of various inferential statistical tests.

Depending on the specific type of statistical analysis, degrees of freedom typically (but not always)

relate to the size of the sample. Because higher degrees of freedom generally result fromlarger

sample sizes, a higher degree of freedom provides a stronger likelihood of finding a statistically

significant result.

Degressive Tax — A progressive tax in which the rate increases with the size of the base but by

a decreasing increment. Note: Most progressive taxes are of this character in at least the higher

brackets. Compare Progressive Tax, Proportional Tax, Regressive Tax System, and Tax.

Delineation — The visual selection and distinguishing of map-worthy features by outlining on a

map or manuscript (as when operating a stereo-plotting instrument); also, a preliminary step in

compilation.

Delinquent Taxes — Past due and unpaid taxes.

Delphi Forecasting — A type of forecasting where predictions are reconsidered after other experts

comment on the original forecast. Several rounds of forecasting are carried out, and anonymous

responses are aggregated and shared with the group after each round using a feedback technique.

The experts are allowed to adjust their answers in subsequent rounds. Because multiple rounds

of questions are asked and because each member of the panel is told what the group thinks as a

whole, the Delphi method seeks to reach the “correct” response through consensus.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Delta Angle — Angle at the center of a circular curve.

Demand — The amount of a commodity that consumers would purchase at a given price.

Demographics — Characteristics of human populations; for example, size, density, and distribution.

Denominator — In a fraction, the number by which another number (the numerator) is divided.

For example, the denominator of 3/4 is 4.

Densification Survey — A control or cadastral survey that establishes accuracy or additional detail

in an existing survey.

Density — The total number of specific items present within a designated unit of area.

Dependent Variable — A variable whose value will change depending on the value of either one

or several independent variables. It is also called the endogenous variable, because it demonstrates

a reaction to changes in the independent (exogenous) variable. In valuation analysis, a dependent

variable such as sale price is analyzed by testing various property-related variables representing

either a property characteristic or some combination/transformation of property characteristics.

Depletion — A decrease in land value due to the removal of trees, minerals, or other such resources.

Contrast Depreciation and Obsolescence.

Depletion Rate — The periodic percentage rate at which a quantity is exhausted.

Deposition — A discovery device, conducted under oath outside a courtroom, by which one party

asks questions of another party or witness.

Depreciable Cost — The amount of the cost to the current owner that is to be recovered or allo-

cated in accounting depreciation. It may represent the current cost, including sales tax, freight,

installation, and other costs associated with placing the asset into service, and less any estimated

salvage value.

Depreciated Reproduction Cost — The reproduction cost of a given property, less the estimated

amount of accumulated depreciation on such property. See Reproduction Cost New.

Depreciation — Loss in value of an object from any cause, relative to its replacement cost new,

reproduction cost new, or original cost, whatever the cause of the loss in value. Depreciation is

sometimes subdivided into three types: physical deterioration (wear and tear), functional obso-

lescence (suboptimal design in light of current technologies or tastes), and economic (external)

obsolescence (poor location or radically diminished demand for the product). See Accounting

Depreciation.

Depreciation, Accelerated — An accounting term implying a method of accruing greater depre-

ciation expense in the early years of a property’s life and less in the later years according to an

established formula.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

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, Book — An accounting term referring to the total accruals recorded on the books

of the owner of property summarizing the systematic and periodic expenses charged toward amor-

tizing the investment of limited-life property over its expected life.

Depreciation, Curable — That part of depreciation that can be reversed by correcting deferred

maintenance and by remodeling to relieve functional obsolescence. See Cost to Cure.

Depreciation, Incurable — See Incurable Depreciation.

Depreciation, Observed Method — Requires the separation of elements of depreciation into cate-

gories based on the causes of loss in value. A method not easily adaptable to mass appraisal, as the

appraiser is required to identify the specific causes and individual measurementsof depreciation.

Depreciation, Physical — See Physical Deterioration.

Depreciation, Straight Line — A method of writing off the cost of a property over the period of its

expected economic life involving: (a) Equal annual debits to depreciation expense, each being equal

in amount to an annuity that could be purchased for the price of the property (less the present

worth of any anticipated scrap value) and that would have a life equal to the expected economic

life of the property; (b) Decreasing annual credits to interest earned, each of which is equal to an

assumed rate of return on the then depreciated book value of the property; and (c) Increasing

annual credits to depreciation reserve, each of which is equal to the difference between the amount

debited to depreciation and the amount credited to interest earned.

Depreciation Method, Unit of Production — An accounting method of expensing the cost of

an asset over the period of its expected economic life measured in terms of units of production

rather than in years. The means of periodical charges measured by the number of units produced

during the period, the sum of which charges are approximately equal to the original cost of the

machine less any scrap value remaining at the end of the expected economic life. Referred to as

Service Hours.

Depreciation Schedules — In mass appraisal, tables that provide typical loss in value at various

effective ages for different property types. In accounting, a worksheet that summarizes the amount

of annual and accumulated depreciation for each depreciable asset.

Depth Curve — A graph of depth factors showing the estimated percentage relationships between

the front-foot value of a given lot and the front-foot value of a lot of standard depth as the depth

of the given lot varies. Note: Usually the depth of the given lot is plotted on the x-axis, and the

percentage relationship between the front-foot value of the given lot and that of a lot of standard

depth on the y-axis.

Depth Factor — The ratio of the estimated front-foot value of a lot of more or less than standard

depth to the estimated front-foot value of a lot of standard depth.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Depth Influence — 1) The effect of increasing depth on the value of a lot or parcel having a given

frontage; and 2) The increment or decrement of value arising from a depth greater or less than that

of the standard lot. See Lot, Standard.

Depth Table — A schedule of depth factors containing the estimated percentage relationship

between the front-foot value of parcel of land of any given depth and the front-foot value of a lot of

standard depth. See Depth Factor.

Descriptive Statistics — Statistics that summarize and organize characteristics of a data set. A

data set is a collection of variables from either a sample or population.

Diazo Process — A means of reproduction using a coating of diazonium compounds that is

decomposed by exposure to ultraviolet light and ammonia fumes.

Differential Assessments — Assessments in a system of laws that require different classes of

property to be assessed with different assessment ratios. The term “differential assessments” is

usually reserved for systems in which the classes are broad and easily visible, such as classified

property tax systems and use-value farmland assessment systems, although much the same effect

is achieved by partial homestead exemptions, temporary exemptions to encourage rehabilitation or

industrial location, and the like.

Differential Taxation — A legislated difference in effective tax rates between groups of properties

classified according to use, value, or some other criterion. Differentials may be affected by applying

different legal assessment ratios, tax rates, or both. Systems that provide differentials are generally

known as classified property tax systems in the United States.

Digital Image Processing — Computer manipulation of the digital values for picture elements of

an image.

Digital Terrain Model (DTM) — A digital representation of the earth’s surface. Its construction

includes a basic elevation model (i.e., a digital elevation model,) that is typically enhanced with

break line data to accentuate abrupt changes in terrain features, such as pavement edges, road

crowns, riverbanks, ridgelines, creek beds, and so on.

Digitization — 1) The process of converting spatial information originally compiled on orthographic

materials or base maps into digital form for incorporation into a geographic information system;

and 2) Referencing of ground control points or lines to a remotely sensed image.

Digitizer — A device used for scanning an image and converting it into numerical picture elements.

Digitizing Tablet — An electronic grid used for encoding digitized geographic features.

Diminished Utility — The difference in utility between a new improvement representing the

highest and best use of the site and the existing improvement in its current condition.

Direct Capitalization — A method of converting a single year’s income into an estimate of value

by dividing the expected annual net operating income by an overall capitalization rate. See Income

Capitalization and Yield Capitalization.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Direct Cost — The cost that can be traced directly to the construction of an improvement;

for example, cost of labor, materials, equipment, and permits used in the construction of an

improvement. Referred to as Hard Cost. Contrast with Indirect Cost.

Direct Equalization — The process of converting ratio study results into adjustment factors (trends)

and changing locally determined appraised or assessed values to more nearly reflect market value

or the legally required level of assessment. See Equalization and Indirect Equalization.

Direct Tax — Taxes that are imposed on a person or property. Direct taxes include income, property,

and sales taxes.

Disclosure — Information provided to another party or the general public.

Discount Rate — A rate of return that converts future payments to present value. Referred to as

Yield Rate.

Discounted Cash Flow Analysis (DCF) — A yield capitalization technique used to estimate value

of income — producing property by applying a discount rate to a series of income streams and a

reversion to convert future benefits to present value.

Discounting — Conversion of future benefits to present value. For example, the value of $100 due

three years from now, assuming a 6 percent discount rate, is $100 1.063 = $83.96; the value of a

perpetual annuity of $100 is $100/1.06 + $100/1.062 + $100/1.063 = $100/.06 = $1,666.67.

Discovery — 1) The process whereby the assessor identifies all taxable property in the jurisdiction

and ensures that it is included on the assessment roll; 2) The gathering of facts in preparation for

litigation or administrative proceedings; and 3) For personal property, the process whereby the

assessor identifies all taxable property in the jurisdiction and ensures that it is included on the

assessment roll.

Discrete Data — Are either categorical (pass or fail) or count data (number of bedrooms). This

type of data is often represented using bar charts or pie charts. Only a finite number of values are

possible, and the values cannot be subdivided meaningfully. For example, the number of bedrooms

in a house, as there cannot be a half bedroom.

Discrete Variable — A variable that may assume only a countable, and usually finite, number of values.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Dispersion — Dispersion describes the degree to which a set of data is spread, typically around

a measure of central tendency. The spread of a data set is described by a range of descriptive

statistics including variance, standard deviation, and interquartile range. Spread can also be shown

in graphs including dot plots, box plots, and stem and leaf plots.

Dissimilarity Function — An algorithm used to assign an index of dissimilarity (or similarity) to

properties compared with a single subject property.

Distance Between Points — Assumed to be the shortest possible horizontal distance unless

otherwise specified.

Distressed Sale — A sale made to meet the immediate and pressing needs of the seller at whatever

price the property will bring. Sale under duress.

Distributable Property — See Property, Distributable.

Distribution-Free Statistics — A set of robust nonparametric methods whose interpretation or

reliability does not depend on stringent assumptions about the distribution of the underlying

population from which the sample has been drawn.

District — An area within a city, county, or state set off from the surrounding territory for special

reasons, such as school districts, voting districts, etc.

Dividend Yield — The ratio of cash dividends to cash invested.

Dividends — Equity investment income earnings.

Domicile (or Domicil) — That particular locality wherein a person is legally deemed to have

his or her true home or place of abode. Note: A person always has one, and only one, domicile.

Domicile at one place is not lost until a new domicile is established elsewhere. In case one has

more than one place of abode, domicile is determined with reference to one’s attitude rather

than in accordance with one’s physical presence in one or other of such places.

Dominant Estate (Affirmative Easement) — The parcel of land benefitted by an easement on

another parcel of land.

Doomage Assessment — An assessment placed on property immediately or at any time allowed

by law, when there is reason to believe that delay in the normal assessment process will jeopardize

the collection of property taxes. Also referred to as Jeopardy Assessment.

Double Taxation — In general, the subjection of the same income or source of income, or both the

income and its source, to taxation by the same governmental unit, or by coordinate governmental

units, twice in the same tax period. Note: The courts generally recognize the existence of double

taxation when a single object is taxed by the same governmental unit, or by coordinate govern-

mental units, twice in the same tax period. Economists further recognize double taxation when

both wealth and representative intangible property are taxed; when both property and property

income are taxed; and when income is taxed to a corporation and subsequently to the stockholder

upon distribution as dividends.

DTM — See Digital Terrain Model.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Due — Where monuments or other deed terms do not limit the calls, “due north” means “astro-

nomical north.” “Due north” as originally used meant “true north” as determined by a declination

correction to a magnetic reading. The word has become ambiguous in meaning because of careless

usage. If astronomical north is meant in a deed, use “astronomical north,” not “true north.”

Dummy Variable — Used in regression analysis to quantify categorical variables that don’t have

any relationship. For example, the single variable exterior wall type may have mutually exclusive

options coded in no specific order, such as 1=wood, 2=composite, 3=stone/brick. etc. If your

dummy variable has only two options, 1=air-conditioning and 2=no air-conditioning, then this

dummy variable is also a binary variable.

Earnings — A general term embracing revenue, profit, or net income.

Earnings-Price Ratio (E/P) — The ratio of earnings per share available to common stockholders

of a company for an accounting period to the market price per share of the common stock of that

company. The reciprocal of the E/P ratio is the price — earnings ratio (P/E). The E/P ratio is a direct

capitalization rate for equity and not a yield rate.

Earnings Statement — Referred to as an income statement. Also referred to as a Profit and Loss

Statement. See Income Statement.

Easement — An interest in land created by grant or agreement that confers a right upon owners

to some profit, benefit, dominion, or lawful use of or over the estate of another; it is distinct from

ownership of soil.

Easement, Appurtenant — 1) The right to use another’s land as long as the first person owns a

specified piece of property. The easement attaches to the specified property, not to the person

who owns it; when the title transfers, the easement also transfers; 2) An encumbrance on property

transferring rights to use the property to another parcel of land. May be perpetual or terminate

after a period of time or upon a certain event.

Easement by Necessity — Arises when an owner of land sells a portion of the property, and the

purchaser cannot access that part of the property purchased without crossing the seller’s property.

The purchaser may then acquire an easement over the seller’s property by judicial order.

Easement by Prescription — Arises when a non-owner continuously and openly uses property

over a period of time and is not impeded by the property owner. Must be ordered by a court.

Easement in Gross — A right to use another’s property, usually for a specified purpose. Utility

easements and railroad rights-of-way are examples of easements in gross.

Economic Area — A geographic area, typically encompassing a group of neighborhoods, defined

on the basis that the properties within its boundaries are more or less equally subject to a set of

one or more economic forces that largely determine the value of the properties in question.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Economic Life — The total number of years during which the improvements and/or personal

property contribute to the total property value. Economic life is equal to the effective age plus the

remaining economic life and is often referred to as the Total Economic Life. See Age, Chronological

Age, Effective Age, and Useful Life.

Economic Obsolescence — See External Obsolescence.

Economic Rent — See Rent, Economic.

Economies of Scale — Unit costs fall as the scale of production increases.

Effective Age — The age of a property based on the amount of observed deterioration and

obsolescence, which may be less than, greater than, or equal to the chronological age. See Age,

Chronological Age, Economic Life, Remaining Economic Life, and Useful Life.

Effective Gross Income (EGI) — The potential gross rent, less vacancy and collection loss, plus

miscellaneous (other) income.

Effective Gross Income Multiplier (EGIM) — The factor that can be multiplied by the effective

gross income to obtain the market value of a property. See Effective Gross Income (EGI).

Effective Interest Rate — The nominal interest rate divided by the number of conversion periods

in one year. For example, if the nominal interest rate is 10 percent, the effective interest rate for

quarterly compounding is 2.5 percent. See Nominal Interest Rate.

Effective Tax Rate — The rate expressing the ratio between the current tax bill and the property

value; the official tax rate of the taxing jurisdiction multiplied by the assessment ratio (statutory

level of assessment). It is expressed as a percentage of market value. Differs from nominal tax rate

when the assessment ratio (statutory level of assessment) is not 100 percent. The rate may be

calculated either by dividing the amount of taxes by market value or by multiplying a property’s

assessment level by the nominal tax rate.

Effective Yield — Actual percent return on an investment held to maturity in contrast to the

stated, nominal rate of return promised or anticipated at the time of investment. For example: 1)A

bond selling for more than its face value gives an effective yield less than the coupon (stated or

nominal) rate; it trades at a discount; 2) A bond selling at less than its face value gives an effective

yield greater than the couponrate; it trades at a premium; and 3)Coupon reinvestment gives an

effective yield greater than the stated/nominal rate of return.

EGI — See Effective Gross Income.

EGIM — See Effective Gross Income Multiplier.

Egress — An outlet or exit from a property.

Elasticity — 1) The responsiveness of supply and demand to changes in price. Supply or demand

that changes rapidly in response to price changes is “elastic.” Supply or demand that changes

slowly in response to price changes is “inelastic”; and 2) A measure of the responsiveness of tax

yields to changes in economic conditions. The yield of an elastic tax increases rapidly in a growing

economy. The yield of an inelastic tax increases slowly. Often measured by the formula: percent

change in tax ÷ percent change in personal income.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Elevation — The distance of a point above a specified surface of constant potential; the distance is

measured along the direction of gravity between the point and the surface.

Ellipsoid — A closed surface whose planar sections are either ellipses or circles.

Ellwood Formula — See Mortgage-Equity Analysis.

Emblements — Annual crops.

Eminent Domain — The right by which a sovereign government or some person acting in its

name and under its authority may acquire private property for public or quasi-public use upon

payment of reasonable compensation, but without consent of the owner. The process is called

condemnation.

Encroachment — The unauthorized trespassing of an improvement on the domain of another

person’s land.

Endogenous Variable — A variable explained by other variables within a model. When using

regression models, appraisers are interested in understanding the relationship between one or

more independent variables and a dependent variable such as sale price.

Encumbrance — Any limitation that affects property rights and value.

Engineering Breakdown Method — A detailed age/life method that can be used in conjunction

with the quantity survey or unit-in-place methods of estimating replacement cost new.

Enterprise Zone — A designated area within an economically challenged area in which property

owners are given favorable tax treatment and freedom from a number of planning constraints.

Entrepreneur — One who assumes the risks and management of an enterprise or business.

Entrepreneurial Incentive — A market-derived figure that represents the amount an entre-

preneur expects or wants to receive as compensation for providing coordination and expertise and

assuming the risks associated with the development of a project. Incentive is the forecasted reward

entrepreneurs expect and is projected before completion of the construction.

Entrepreneurial Profit — A market-derived figure that represents the amount an entrepreneur

receives for his or her contribution to a project and risk; the difference between the total cost of

a property (cost of development) and its market value (property value after completion), which

represents the entrepreneur’s compensation for the risk and expertise associated with development.

Environmental Assessment — A report showing the results of an investigation into environmental

contamination. This report is often required by environmental regulatory agencies to establish the

extent of contamination. The depth of analysis depends on the type and extent of contamination

suspected.

Environmental Contaminant — Any tangible substance or intangible occurrence that may

degrade property, resulting in decreased utility or having an effect on value.

E/P — See Earnings-Price Ratio.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Equalization — The process by which an appropriate governmental body attempts to ensure that

all property under its jurisdiction is assessed at the same assessment ratio or at the ratio or ratios

required by law. Equalization may be undertaken at many different levels. When assessed values are

not at the statutorily required level of assessment, the appropriate governmental body develops a

multiplier to modify the assessed value to an equalized value. The multiplier is less than 1 when

assessed values exceed the statutory level of assessment, and greater than 1 when assessed values

are less than the statutory level of assessment. When the assessed values are determined to be at

the statutory level of assessment, the equalization factor is 1.

Equalized Values — Assessed values after the equalization process. See Equalization.

Equilibrium — The point at which the forces of supply and demand meet. The point of balance

when the factors of production are used in the array of consumer goods that maximize consumer

welfare. See Principle of Balance.

Equitable Ownership — The interest or estate of a person who has a beneficial right in property

legally owned by another; for example, the beneficiary of a trust has equitable ownership in the

trust property.

Equity — 1) In assessment, the degree to which assessments bear a consistent relationship to

market value. Measures include the coefficient of dispersion, coefficient of variation, and price-re-

lated differential; 2) In popular usage, a synonym for tax fairness; 3) In ownership, the net value of

property after liens and other charges have been subtracted; and 4) In accounting, the net worth of

a business enterprise as reported on the financial statements of an entity.

Equity Capitalization Rate — Calculated by dividing one year’s equity cash flow by the equity

investment.

Equity Dividend — See Before-Tax Cash Flow.

Equity Dividend Rate — See Equity Capitalization Rate.

Equity of Redemption — A right recognized by courts of equity whereby a person who has transferred

legal title to property as security for an obligation is permitted, after defaulting on the obligation, to

retain possession of the property for such period as may be prescribed by law or by the court and to

reacquire legal title to the property upon fulfillment of the obligation within such period.

Equity Yield Rate — The rate of return on equity capital.

Error — The difference between the actual value of a variable and the expected value of the variable

exclusive of sampling problems. Errors may be positive or negative, although in common speech,

taking the absolute value of the errors is sometimes implied.

Escheat — The right to have property revert to the state for nonpayment of taxes or when there are

no legal heirs of someone who dies without leaving a will.

Escrow — Property or money deposited with a third party, to be held until the occurrence of an

event or until the specified terms are completed.

Estate — A present or future possessory interest in real estate.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Estate, Leasehold — See Leasehold.

Estate, Life — See Life Estate.

Estate for Years — A possessory interest in land that cannot endure beyond a date specified in

the conveyance or a date precisely determinable at the time the interest becomes possessory.

Estate in Severalty — Any estate held by a single person.

Estate of Freehold — Any one of the three types of possessory interests in land—fee simple

absolute, fee tail, and estate for life—that in feudal times were granted only to freemen. Note:

Estates of freehold are said to be estates of indefinite duration, and any other estate is said to be

“less than freehold.”

Estate Tax — A tax based on the value of the estate of a deceased person.

Estoppel — A legal principle that prevents a person from asserting a legal position that contradicts

a position they have taken previously, especially when that statement was relied upon by others.

Et Al. — And others, and another.

Et Seq. — And following.

Et Ux. — And wife.

Et Vir. — And husband.

Euclidean Distance Metric — A measure of Straight-Line distance between two points. In property

valuation, it is used to find the nearest neighbor or similar property based on an index of dissim-

ilarity between property location or attributes. When using multivariate selection, the squared

difference is divided by the standard deviation of the variable so as to normalize the differences.

Exception, Excepting — Withdraws a part of the rights described as granted, and which would

pass but for the excepting clause. Excluded from the deed or grant.

Exemption — An exclusion of part or all of the value of a category of property from taxation.

Exemption, Homestead — See Homestead Exemption.

Exogenous Variable — A variable not explained by other variables within a model. Exogenous vari-

ables are typically determined outside the model. Unlike endogenous variables, it is not possible

to manipulate exogenous variables. A variable representing time is an example of an exogenous

variable in a model estimating sale price. Whereas a variable such as living area is possibly influ-

enced by quality, a variable representing time is not influenced by other variables in the model.

Expense — The cost of operations that are incurred to generate revenue. In accounting, generally

chargeable against revenue for a specific period of time.

Expense Account — An accounting record maintained for categorizing expenses of a particular

type for a specified period of time.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Expense Ratio — See Operating Expense Ratio.

Expectancy Theory — A theory of motivation developed by Victor Vroom that relates to how a

person will evaluate and choose a behavior based on their desired reward.

Expert Witness — One who is qualified to render testimony on a specialized topic.

Exponent — A symbol usually written to the right and above an expression to indicate particular

mathematical operations. For example, 62 means 6 × 6, or 6 squared. Fractional exponents indicate

inverse operations; for example, an exponent of 1/2 signifies a square root. Exponents are also

called powers. Valuation models make use of the following properties of exponents: A number

raised to the exponent 0 is always 1.00; zero raised to any power is zero; any number raised to the

power 1 is itself. Negative numbers cannot have exponents less than 1.

Expropriation — See Condemnation.

External Obsolescence — A type of temporary or permanent depreciation caused by negative

factors outside of the property.

Extraordinary Assumption — An assignment-specific assumption as of the effective date

regarding uncertain information is used in an analysis that, if found to be false, could alter the

appraiser’s opinions or conclusions. Source: The Uniform Standards of Professional Appraisal

Practice (USPAP).

Façade — The main exterior face of an improvement.

Factor — A numeric value that can be divided or multiplied to produce another numeric expression.

Organized numbers that can be identified to produce a numeric component that can be mathe-

matically utilized to produce a statistical result.

Factor Analysis — An exploratory technique applied to a set of observed variables that seeks to

find underlying factors (subsets of variables) from which the observed variables were generated.

For example, sale price is influenced by underlying variables such as property characteristics both

within and outside the property boundaries. The underlying variables are the factors.

Fairness — See Equity.

Fannie Mae — See Federal National Mortgage Association.

FAR — See Floor Area Ratio.

FASB — See Financial Accounting Standards Board.

Feasibility Analysis — A study of the cost-benefit relationship of an economic endeavor.

Feature — Points, symbols, lines, and areas on a map representing natural and man-made geographic

features. An object in a geographic or spatial database with a distinct set of characteristics.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Federal Home Loan Mortgage Corporation (FHLMC) (Freddie Mac) — An organization that facil-

itates secondary residential mortgages, for savings and loan associations, to increase availability of

residential mortgage financing.

Federal Housing Administration (FHA) — A government-backed institution that provides

mortgage insurance on loans made by FHA-approved lenders throughout the United States and

its territories. FHA insures mortgages on single-family homes, multifamily homes, residential care

facilities, and hospitals.

Federal National Mortgage Association (FNMA) (Fannie Mae) — A quasi-governmental agency that

purchases mortgages from originators; intended to increase liquidity in the home mortgage market.

Federalism — Form of government in which power is constitutionally divided between a center or

national government and states or regional centers.

Fee — 1) A charge imposed by a government for the performance of a specific nonproprietary act

that is made in recognition of the special benefit conferred by such act, or the special cost incurred

thereby, and in an amount intended to be substantially equal to or less than the incurred cost; 2) A

form of compensation for occasional personal services, especially of public officers or professional

persons, measured in terms of services performed rather than in terms of time required for their

performance; and 3) An abbreviation of one of the fee estates in property.

Fee Appraisal — See Single Property Appraisal.

Fee Simple — See Fee Simple Absolute.

Fee Simple Absolute — An estate of infinite duration, freely alienable. The most complete

ownership in real estate possible, although still subject to the four powers of government. May still

be subject to other private encumbrances or restrictions.

Fee Simple Condition Subsequent — Ownership interest that gives the grantee fee simple title to

property so long as a specified event occurs. If the specified event does occur, the grantor has the

right to regain title to the property. (Example: “Grantee owns the property in fee simple absolute, so

long as it is used for residential purposes.”) Usually must contain the words “so long as” in the deed

or may be interpreted as a fee simple determinable and not a fee simple on a condition subsequent.

Fee Simple Determinable — Ownership interest that gives the grantee fee simple title to property

unless or until a specified event occurs. As opposed to a fee simple on a condition subsequent, if

the specified event does occur, the grantor automatically regains title to the property. (Example:

“Grantee owns the property in fee simple absolute, provided that it is used for commercial purposes.”)

Feedback — See Adaptive Estimation Procedure.

FHA — See Federal Housing Administration.

FHLMC — See Federal Home Loan Mortgage Corporation (Freddie Mac).

Fiduciary — Any person who occupies a position of special trust in certain of his or her relationships

to another person or persons; for example, an administrator, executor, guardian, receiver, or trustee.

Field Canvass — See Canvass.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Field Review — The practice of reviewing the accuracy of assessment data by viewing the subject

property, validating measurements, amenities, and other relevant data.

FIFO — See First-In, First-Out.

Financial Accounting Standards Board (FASB) — An independent organization that establishes

financial account standards for public and private companies. See Generally Accepted Accounting

Principles.

Finished Goods — A type of inventory existing as the end stage of manufacturing. Finished goods

is the end result of combining raw material with labor, capital, processing time, and other compo-

nents of production. Intended to be subsequently sold.

First-In, First-Out (FIFO) — An accounting procedure used to measure the cost of unsold

inventory, including inventory carried over from the prior year. This method is more reliable than

last-in, first-out (LIFO) because it assumes that the goods on hand are the most recently purchased

items and that the earliest purchased goods have been sold. May be used for income tax purposes

and is the method generally used by assessors for ad valorem taxation.

Fiscal Capacity — A measure of the own-source revenues a state could raise if it had a “represen-

tative tax system” and applied the national average tax rate to its own amounts of the major sources

of taxes and charges.

Fiscal Comfort — An index that combines fiscal capacity and fiscal need measures into a single

measure. Determined from the ratio of fiscal capacity to fiscal need.

Fiscal Federalism — An approach to federalism that emphasizes the nature of the goods and

services that government provides and derives the structure of government from that analysis.

Sometimes the term is used in a more general sense to refer to the financial analysis of federal

systems of government.

Fiscal Year — The accounting period covering 12 successive calendar months, which differs from

a 12-month calendar year. Annual budgets, income tax accounting, and accounting reports are

closed to develop financial reporting documents.

Fixed Asset — See Asset, Fixed.

Fixed Expense — A recurring expense that does not fluctuate with occupancy, such as taxes

and insurance.

Fixture — An article of personal property installed or attached to real property in such a manner

that it is considered to be a part of the real property.The three tests to determine whether an

article is a fixture are typically: 1) Extent of annexation to the real property (cannot be removed

without substantial damage to the real property; 2) Extent to which the article is a logical contri-

bution to and enhancement of the real property; and 3) Intention of the parties that the article is

part of the real property.

Flat Tax — A tax with a single rate applying to all income for a specified tax-exempt level. Note that

the existence of a tax-exempt level of income means that the burden of the tax can still be progressive.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Floor Area of Building — Total area of the horizontal surface of all floors above grade measured to

the center of party walls and to the outside surface of external walls.

Floor Area Ratio (FAR) — Indicates the correlation between the plot area on which the building

is contracted and the allowable building floor area. A higher floor area ratio implies an urban or

denser construction. FAR guidelines are determined by municipalities and differ from one locality

to another.

Floor Planned Goods — A type of inventory that is in the possession of a business for sale and

in which the possessor has no equity interest. Usually a lending institution, such as a bank, will

make the money available to the business and use the goods being floored as collateral. Assessors

in jurisdictions that assess inventories must be careful to look for this type of property since it may

not be reported by the business and may not be easy to locate on accounting records.

Flowchart — Any of a number of kinds of graphic descriptions of an algorithm showing the oper-

ations, data flow, equipment, and so on.

FNMA — See Federal National Mortgage Association (Fannie Mae).

Forced Sale — A sale made pursuant to law; usually an auction sale that is involuntary on the part

of the owner.

Foreclosure — The legal process by which a lien on a property is enforced, typically by forfeiture of

the property due to nonpayment of property taxes or a mortgage.

Forfeiture — Loss of property without compensation based on a violation of law, breach of obli-

gation, or a stipulated restriction on the owner.

Fractional Appraisal Method — Estimating value of individual components of a property rather

than value of the entire system or unit as a single operating entity. See Undivided Interest.

Fractional Assessment — A percentage of a full value as prescribed by law.

Fractional Section — A subdivision of a township containing more or less than 640 acres of land.

Typically, accounting for the overage or deficiency in acreage is done on the north and/or west side

of a section, and fractional sections are found on the north and/or west side of a township.

Franchise — 1) A privilege or right that is conferred by grant of government on an individual

or a group of individuals; and 2) Usually an exclusive right to furnish public services or to sell a

particular product in a certain geographical area.

Freddie Mac — See Federal Home Loan Mortgage Corporation (FHLMC).

Free Boundary — A boundary that is not limited by a call for a monument; for example, “thence

north 12° east, 120 feet.” “Thence north 12° east, 120 feet to Brown’s south line” is not a free boundary.

Freedom of Information Laws — Laws created with the purpose of protecting the public’s right to

access government records and meetings.

Freehold — General category of estates that includes the fee simple absolute and life estates.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Freight In — Freight paid on incoming shipments, treated as an element of cost of goods received.

Frequency Distribution — A table showing the number or percentage of observations falling in

the boundaries of a given set of classes. Used in ratio studies to summarize the distribution of the

individual ratios.

Front Foot — The unit or standard of linear measure used in measuring frontage.

Front Line Managers — Managers whose main task is to supervise and coordinate the activities

of the line employees.

Frontage — The extent of a parcel of land along a street, road, river, or other traffic artery that the

parcel is said to face.

Functional Obsolescence — The loss of value in a property improvement due to impairment,

deficiency in design, changes in style, taste, technology, needs, and demands. Can be either curable

or incurable. Functional obsolescence exists when a property suffers from poor or inappropriate

architecture, lack of modern equipment, wasteful floor plans, inappropriate room sizes, inadequate

heating or cooling capacity, deficiencies, and so on. It is the inability of a structure to perform

adequately the function for which it is currently used.

Functional Organization — A method of organizing personnel and practices under which the

primary division is what is done to achieve the goals of the organization (such as producing the

assessment roll) rather than where the activities are done. The latter method is called geographical

organization. Functional organization of assessment usually means that special divisions are

responsible for appraising properties by type: personal property, residential property, agricultural

property, commercial property, industrial property, and vacant land.

Functional Utility — The overall usefulness and desirability of a property. The criterion is whether

the improvement efficiently satisfies the wants and needs of the marketplace.

Furlong — A land measure of 1/8 mile or 10 chains or 40 rods.

Future Worth of $1 — The amount to which one dollar will grow at compound interest over a

specified number of years at a specified interest rate.

Future Worth of $1 Per Period — The amount to which a series of equal periodic payments will

accumulate at compound interest for a specified number of years at a specified interest rate.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

GAAP — See Generally Accepted Accounting Principles.

Gantt Chart — A bar chart that is used in project management. Each element or task of a project

is represented by a horizontal bar. The bars are placed on the chart according to a time scale. The

left end of each bar indicates when the task is expected to begin. The length of each bar indicates

the expected duration of the task. The right end of each bar indicates when the task is expected to

be completed.

GCP — See Ground Control Point.

General Data — A category of data that includes trends that affect value and might occur on

the national, regional, and neighborhood levels. These data also include physical (environmental),

economic, governmental, and social forces that affect value.

General Journal — An accounting tool used as the “book” of original chronological entry for all

financial transactions and sorted into the accounts of similar transactions.

General Ledger — A book of accounts in which all the transactions of a business enterprise are

classified in detail or in summary as final entry from original (chronological) postings.

General Property Tax — 1) Originally, an ad valorem property tax that, in contemplation of law, was

administered uniformly with respect to all tangible and intangible property (with the exception

of a few classes specifically exempt) and that involved a uniform rate throughout each tax district;

and 2) Currently, the remnants of such a tax after its continued curtailment through classification,

exemptions, use — value assessment laws, and special property tax laws applicable to various types

of personal property. Compare Classified Property Tax System, Special Property Tax, and Tax.

General Revenue — Government funds raised through taxation for any purpose.

Generally Accepted Accounting Principles (GAAP) — The accounting standards adopted by the

U.S. Securities and Exchange Commission (SEC) that are the basis for financial reporting, codified

by the Financial Accounting Standards Board (FASB) into a single authoritative source.

Geocode — A code (numerical or text) used to locate or identify a point, such as the center of a parcel.

Geodesy — 1) The science concerned with determining the size and shape of the earth; and

2) The science that locates positions on the earth and determines the earth’s gravity field.

Geodetic Control Network — A system of monuments that are used as reference points in calcu-

lating, through triangulation, the location of other points on surveys and maps.

Geodetic Densification — The augmentation of additional ground or geodetic control points to

an existing control network of data points.

Geodetic Surveying — A survey system that takes the earth’s curvature into account and is

therefore used primarily to survey very large areas.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Geo-economic Area — 1) The environment of a subject property that has a direct and immediate

effect on value; and 2) A geographic area (in which there are typically fewer than several thousand

properties) defined for some useful purpose, such as to ensure for later multiple regression

modeling that the properties are homogeneous and share important locational characteristics.

Geo-economic Area Analysis — A study of the relevant forces that influence property values

within the boundaries of a homogeneous area.

Geographic Coordinate System — A method of locating a point on the earth’s surface based on

its distance from each of the two intersecting grid lines knows as x and y axes.

Geographic Coordinates — A system of spherical coordinates that define the positions of points

on the earth. The declinations and polar bearings in this system are the geographic latitudes and

longitudes, respectively. See Coordinates.

Geographic Information System (GIS) — 1) An overall term encompassing the entire field of

computerized mapping; and 2) Also generally considered as a specific subset of the overall field.

The GIS can: a) Answer what exists at a specific location. The location can be described using place

name, ZIP code, latitude and longitude, or other location systems; b) Find locations satisfying spec-

ified conditions (e.g. undeveloped parcel of land zoned for light industry, at least 10 acres in size,

within railroad access); c) Spot changes in area over a certain period of time; d) Find patterns (for

example, it could test the hypothesis that proximity to PCB — laden transformers is a factor in the

incidence of cancer in children); and e) Could model various scenarios (for example, if 10 inches

of rain fell in a certain watershed, it could indicate where flooding would occur and at what hour).

Geographic Position — Or geographic coordinate, is a system for defining the position of points

on the earth, such as a northing and easting position based on a state plane coordinate system.

Geographic Organization — A method of organizing personnel and practices under which the

primary division is where the activities are done.

Geographically Weighted Regression (GWR) — A technique for weighting sales based on their

distance to the subject property. In effect, a unique equation is generated for each subject property

or group of properties in the same x–y grid.

Geoid — A theoretical figure of the earth using a continuous surface that is perpendicular at every

point to the direction of gravity. The geoid would coincide with the ocean surface if the latter were

undisturbed and affected only by the earth’s gravity field.

Geometric Mean — A measure of central tendency computed by multiplying the values of all of

the observations by one another and then taking the result to an exponent equal to one divided by

the number of observations. The geometric mean is particularly appropriate when a typical rate of

change is being calculated, such as an inflation rate or a cost index.

Geometrical Transformations — Adjustments made in image data to change its geometric

(spatial) character.

Georeferenced — To associate something with locations in physical space. The term is commonly

used in the geographic information system (GIS) field to describe the process of associating a

physical map or raster image of a map with spatial locations on the ground.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

GIM — See Gross Income Multiplier.

Ginnie Mae — See Government National Mortgage Association (GNMA).

GIS — See Geographic Information System.

Global Positioning System (GPS) — A network or constellation of satellites and receivers used to

find a location on earth.

Globe — A spherical body.

GNMA — See Government National Mortgage Association (GNMA).

Going Concern Value — The value all assets including real estate, tangible and intangible personal

property within, or assemblage into, used to operate an economically viable business. The value

of an entire property in active service and with an established clientele, as distinguished from its

value immediately before being put into service or upon retirement from service.

Goodness-of-it Statistics — A statistical estimate of the amount, and hence the importance,

of errors or residuals for all the predicted and actual values of a variable. In regression analysis,

for example, goodness-of-fit indicates how much of the variation between independent variables

(property characteristics) and the dependent variable (sales price) is explained by the independent

variables chosen for the model.

Goods — A type of inventory, which is tangible personal property that is exclusively held by the

owner for resale. See Goods Held for Sale (Resale).

Goods Held for Sale (Resale) — A type of inventory in the hands of a manufacturer, wholesaler,

distributor, or retailer, after having been passed through various channels/levels of trade, that is

exclusively held by the owner for resale. The appraisal of goods held for sale or resale must reflect

the full — accrued costs at the level of trade where the goods are located. See Goods.

Goods in Process — A type of inventory placed into the manufacturing process whose elements

have begun to change from its original form. Direct and indirect labor and other elements of

expense have accrued in the conversion or manufacturing process, thereby adding to the value of

the raw materials.

Goods in Transit — See In-Transit Goods.

Goodwill — An intangible property that has the favor, prestige, good name, clientele, or integrity

that a business has acquired beyond the mere value of its tangible assets.

Government Lot — A partial section of land established, measured, and computed by the public

land survey stem (PLSS). May be referred to as Fractional Lot or Fractional Section.

Government National Mortgage Association (GNMA) (Ginnie Mae) — A government-owned and

government — financed agency that subsidizes mortgages through its secondary mortgage market

and issues federally insured mortgage-backed securities. This agency falls within the Department

of Housing and Urban Development.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Government Rectangular Survey System — A ground survey authorized by the Continental

Congress in 1775 and by subsequent acts; conducted in 30 states in which the land was divided

into townships approximately six miles square, each township normally containing 36 sections

and each section normally containing 640 acres. See Public Land Survey System.

GPS — See Global Positioning System.

GPS Coordinates — A system of locating land on or above the earth through triangulation of

satellite signals.

Grade — See Classification.

Graduated Tax — A progressive tax in which certain brackets of wealth or income (or of whatever

else constitutes the tax base) are established, with a fixed or proportional increase in tax within

each bracket.

Grand List — See Assessment Roll.

Grandfathered Use — A use that was lawfully established and maintained but that no longer

conforms to the use regulations of the current zoning where the property is located.

Grant — The transfer of real property by deed.

Grantee — One who acquires property by voluntary conveyance; buyer.

Grantee Index — Lists alphabetically the name of every grantee who appears on a deed recorded

for the year the index covers.

Grantor — One who voluntarily conveys property, whether by sale, gift, lease, or otherwise; seller.

Grantor Index — Lists alphabetically the name of every grantor who appears on a deed recorded

for the year the index covers.

Graticule — A network of lines on a map representing geographic parallels and meridians.

Green Building — A building that is designed, constructed, or operated to reduce or eliminate

negative impacts on the environment by way of energy efficiencies and the conscious preservation

of natural resources.

Grid — A uniform system of rectilinear lines superimposed on aerial photographs, mosaics, maps,

charts, and other representations of the earth’s surface; used in defining the coordinate positions

of points.

GRM — See Gross Rent Multiplier.

Gross Assessed Value — The official dollar value listed on an assessment roll, including any

partial exemptions.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Gross Domestic Product — The aggregate annual flow of a country’s wealth, measuring value

of output as the sum of spending by consumers, investors, and government, or as the sum of

factor incomes.

Gross Income Multiplier (GIM) — A capitalization technique that uses a ratio between the sale

price of a property and its potential gross income. It is a factor that can be multiplied by the

potential gross income (PGI) to obtain the market value of a property. Referred to as the Potential

Gross Income Multiplier (PGIM).

Gross Lease — See Lease, Gross.

Gross Leasable Area — Total area of a building designed for tenants’ occupancy and exclusive

use. It is measured from the center of party walls to the outside wall surfaces. It can include areas

such as lobbies, basements, mezzanines, washrooms, and janitor closets. It excludes stairs, elevator

shafts, flues, vents, stacks, pipe shafts, and vertical ducts if they serve more than one floor.

Gross Rent Multiplier (GRM) — A factor that can be multiplied by the potential gross rent of a

property to obtain the market value. It is the ratio between the sale price of a property and the

monthly economic rent. See Rent, Economic and Potential Gross Rent.

Ground Area of Building — Total area of a building measured at mean grade to the center of party

walls and the outside surfaces of external walls. It excludes patios, open decks, courts, steps, or

shafts, as well as areas under open porches, eaves, cornices, and similar projections.

Ground Area Coverage — Complete aerial photographic coverage of an area by conventional photog-

raphy with parallel flight lines and stereographic overlap between exposures in the line of flight.

Ground Control Point (GCP) — Points on the surface of the earth with known coordinates as

represented by some geographic grid reference system.

Ground Rent — The rent paid for the right of use and occupancy of land.

Guide Meridians — The north-south axes on a map that are counted east and west of the

principal meridian.

GWR — See Geographically Weighted Regression.

Habendum Clause — The first part of a deed that follows the legal description and limits and

defines the rights that the grantee is to have in the property conveyed.

Hack — A mark on a tree made by cutting out two horizontal V notch wells into the live wood.

Hard Cost — See Direct Cost.

Harmonic Mean — The reciprocal of the arithmetic mean of the reciprocals of each value in the

data set. The harmonic mean ratio is less affected by extreme values in the data set than the arith-

metic mean or the geometric mean.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Hectare — Equal to 2.471 acres.

Heterogeneous — Unlike; without interrelation. The opposite of homogeneous.

Heteroscedasticity — Exists when the variance of the error term in a regression equation is not

constant. Specifically, the standard deviations of a predicted (dependent) variable vary across

different values of an independent variable. Regression analysis assumes constant variance for all

values of a given independent variable. If a residual plot shows an increasing or decreasing wedge

or bowtie shape, nonconstant variance i.e., heteroscedasticity exists.

Hierarchy of Needs Theory — A theory of motivation developed by Abraham Maslow that states

that human beings have five basic needs: physiological, safety or security, social, esteem, and

self-actualization.

High-Water Mark — The line that water impresses on the soil by covering it for sufficient periods

of time to deprive it of vegetation.

Highest and Best Use — The appraisal principle that requires evaluation of all physically possible,

legally permissible, financially feasible, and maximally productive (most profitable) uses of a

property to determine the use that provides the owner with the highest net return on investment

in the property. Highest and best use is evaluated as if vacant land, and as improved.

Highway Right of Way — Normally a highway or road right of way is the limit of property acquired

to build the highway. It is usually marked by monuments or fences. Right of ways for roads where

no property was acquired originally is normally the limit being used as a road.

Histogram — Bar chart or graph of a frequency distribution in which the frequencies of the various

classes are indicated by horizontal or vertical bars whose lengths are proportional to the number

or percentage of observations in each class.

Historical Age — See Chronological Age.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Historical Cost — The cost of acquisition of a property by its present owner, plus the cost of

any additions and betterments made by such owner, whether or not such costs represent

prudent investments.

Hit Rates — The number of times the model or cascading models return a usable value estimate.

Not a measure of how well the models fit the data but a measure of the relative success of a model

in providing a usable result. Systems with high hit rates often result in a lower cost per valuation

because of the wider area of property they may be used on.

Holding Period — The length of time an investor expects to own a given property before selling it

to someone else.

Homestead — A building occupied by the owner of the freehold and his or her family with the

primary intention of making it their home, together with the parcel of land on which it stands and

the other improvements appurtenant to it. Note: This is a term variously defined by several states

and for several purposes. Most definitions pertain to the exemption of property from levy and sale

and, as such, are not concerned with the nature of the estate that a householder owns in his or her

home. The above definition, which is intended only for purposes of homestead tax exemption laws,

requires further elaboration to indicate what constitutes a family, what constitutes occupancy

primarily as a home, how large a parcel of land can be included as part of the homestead, and what

constitutes an improvement appurtenant to the home. There is as yet no substantial agreement on

these points among the states.

Homestead Exemption — An exemption removes part of the value of the property from taxation

and lowers the property taxes. Generally requires an application with the assessor’s office or

taxing jurisdiction.

Homogeneous — Possessing the quality of being alike in nature and therefore comparable with

respect to the parts or elements; said of data if two or more sets of data seem to be drawn from

the same population; also said of data if the data are of the same type (that is, if counts, ranks, and

measures are not all mixed in together).

Homoscedasticity — The opposite of heteroscedasticity, homoscedasticity exists when the variance

of the error term in a regression equation is constant. In other words, the error term is the same

across all values of the independent variables. The assumption of homoscedasticity is fundamental

in linear regression analysis.

Horizontal Control — Control stations whose grid coordinates have been computed on plane

surveys; known points can be converted to coordinate values.

Horizontal Coordination — Coordination between the various positions in an organization that

share equal responsibilities.

Horizontal Equity — Individuals/households in equal economic situations should be treated

the same. In property assessment, properties of the same value should be valued the same. See

Vertical Equity.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Horizontal Inequity — Different treatment for identical situations. For example, properties in one

neighborhood with a higher level of assessment compared with the level of assessment for similar

properties in a comparable neighborhood. See Vertical Inequity.

Hoskold Premise — A technique of capitalization that involves a split rate method: a “speculative

risk rate” for profit and a “safe rate” for a sinking fund to account for the recovery of invested

capital. The present value of the income stream is measured by a combination of the two rates.

Household Goods — Normal furnishings, appliances, utensils, and other tangible personal

property used primarily in the residence by owners, residents, and/or guests. Often exempted from

property taxation. Household goods may lose their status as an exempt property if converted to a

business enterprise.

Hue — Any pure color from the visible light spectrum (yellow, orange, blue, red, violet, green) or any

mixed color from the visible light spectrum where neither color is dominant.

Hybrid Model — A model with (that incorporates both) additive and multiplicative components.

See Additive Model and Multiplicative Model.

Hydrographic Map — A map showing a portion of the water of the earth, including shorelines, the

topography along the shores and the submerged portions, and as much of the topography of the

surrounding country as is necessary for the purpose intended. Also known as Hydrological Map.

See Map.

Hyperspectral — Camera systems able to record many spectral wavelength bands (up to several

hundred) extending from ultraviolet to visible, beyond infrared.

Hypothesis Test — Method for testing inferences about specific parameters using statistics and

sample data. See Alternative Hypothesis and Null Hypothesis.

Hypothetical Condition — Conditions contrary to known facts that help identify the prospective

value of a parcel, given specified constraints.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

IAAO — International Association of Assessing Officers.

IDW — See Inverse Distance Weighting.

Image — The representation of a scene as recorded by a remote sensing system. Although image is a

general term, it is commonly restricted to representations acquired by non-photographic methods.

Image Enhancement — Any one of a group of operations that improves the detectability of the

targets of interest. These operations include, but are not limited to, contrast enhancement, edge

enhancement, spatial filtering and noise suppression, and image sharpening.

Imagery — Collectively, the representations of objects reproduced electronically or by optical

means on film, electronic display devices, or other media.

Improved Land — Land that has been made more valuable by the addition of labor or labor and

capital. See Agents of Production.

Improvement to Land — Designed to enhance a site’s utility for general use (fill, water, and waste-

water lines, for example) or to reshape the land’s natural contours for more specific use (stock

tanks, for example). Any publicly constructed improvement that does not fulfill a specific use—such

as curbs, gutters, and sidewalks—constitutes an improvement to land.

Improvements — Buildings, other structures, and attachments or annexations to land that are

intended to remain so attached or annexed, such as sidewalks, trees, drives, tunnels, drains,

and sewers. Any physical enhancements to raw land with the intention of increasing its value. A

structure erected on the property constitutes one very common type of improvement, although

other actions, such as those taken to improve drainage, are also improvements. Although such

cases are rarely intentional, “improvements” can conceivably diminish the value of the land; note,

however, that easements restricting the use and value of land are not considered improvements.

In Personam — Against a person. Note: A property tax is said to be in personam when it is a charge

against a person, collectable out of any of his or her property or income, rather than a lien against

the property subject to the tax. Some taxes are both in rem and in personam.

In Rem — Against a thing. A legal term derived from Latin that means “against the thing” and is

used when property itself, rather than a person, is formally liable for the property tax.

Inadequacy — The inability of a property to yield a reasonable return on the value of the land and

the reproduction cost of the improvements (less accumulated physical depreciation) because of its

lack of capacity.

Inadequate Rate of Return — A percentage of income to investment that does not allow a company

both to service debt and to earn the required rate of return for shareholders and bondholders.

Incidence — Usually refers to the persons who ultimately bear a tax burden, as opposed to the

persons on whom the tax is initially imposed.

Income Approach — One of the three approaches to value that converts expected economic

benefits of owning a property into value through a direct capitalization method or yield capital-

ization process. Also called Income Capitalization Approach.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Income Capitalization — The conversion of annual net operating income and expected rate of

return into an estimate of market value. Components include income, rate, and value. They can be

used interchangeably using the IRV formula. See Direct Capitalization.

Income Capitalization Approach — See Income Approach.

Income Incidence — The determination of the percentage of a person’s income that is devoted

to paying a tax. For a given tax, if this percentage rises (falls) as income rises, the tax is considered

progressive (regressive).

Income Statement — A financial reporting document that shows an entity’s revenues and expenses

during a specific revenue period.

Income Stream — The series of payments (usually net income payments) receivable from an

investment over the life of the investment. The series, of course, may be of any conceivable nature,

including a constant series of equal payments (level), a series of decreasing payments that decrease

by equal amounts each period (arithmetically decreasing), a series of increasing payments that

grow larger each period at a constant rate (geometrically increasing), and so on.

Income Tax — A tax levied on the net income of an individual. In most cases these are broad-based

and include income from labor and other sources, but the Census definition includes distinctive

taxes on income from interest or dividends.

Increasing/Decreasing Annuity — An income stream with the characteristics of a systematic

change in income, either increasing or decreasing.

Incumbrances — Includes liens on real property such as taxes and assessments.

Incurable Depreciation — A part of depreciation for which it is not economical to correct the

condition, and if corrected, the cost of correcting the condition exceeds the value added. A defi-

ciency or defect in design in which the cost to cure exceeds the increase in value. See Obsolescence

and Physical Deterioration.

Indemnification — Bonds established to provide security against future costs resulting from previ-

ously existing contamination; usually provided by the seller to facilitate a sale of contaminated

property. To guaranty reimbursement for a loss or damage.

Indemnify — See Indemnification.

Independent Appraisal — See Single Property Appraisal.

Independent Variable — A variable that is manipulated to test its impact on a dependent

variable. A change in the independent variable may directly cause a change in the dependent

variable. Any effect on the dependent variable is typically measured and recorded. In valuation

analysis, independent variables are typically selected because of the expectation they will influence

dependent variables.

Index Map — A small scale map showing locations (typically in a grid) of larger scale maps, photos,

or supporting information for a given region or location of interest.

Indirect Capitalization — See Yield Capitalization.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Indirect Costs — Costs other than labor and materials incurred during construction. These

include architectural and engineering fees, ad valorem taxes, and property carrying costs (interest

on construction loans, financing costs, developer’s risk insurance), environmental studies, sales

and leasing commissions, marketing fees, and professional and administrative expenses. Also

known as Soft Costs.

Indirect Equalization — The process of computing hypothetical values that represent the over-

sight agency’s best estimate of market value, given the legally required level of assessment. It allows

proper distribution of intergovernmental transfer payments between state, provincial, and local

governments despite different levels of assessment among jurisdictions and/or property classes. It

is a tool to provide proper funding and fair apportionment of the tax base in a jurisdiction.

Indirect Tax — Taxes that are imposed on a commodity that are then shifted to the household. A

tax that is intended to have its incidence on some person other than the one on whom it is levied;

for example, an import duty or a sales tax.

Individual Income Tax — See Income Tax.

Industrial Property — Generally any real or personal property used in a manufacturing activity,

including production, assembly, or processing of products from raw materials, or fabricated parts.

Includes factories, wholesale bakeries, dairy plants, food-processing plants, automotive manufac-

turing plants, mills, mines, quarries, etc.

Inferential Statistics — Inferential statistics allow for predictions based on a representative

sample of characteristics from a larger population. In other words, it allows one to make assump-

tions about a larger (population) group, using a smaller portion from the same. There are two main

applications forinferential statistics: 1) Estimating parameters. Using statistics from a sample (for

example the sample mean) to say something about a population parameter (i.e., the population

mean), and 2) Hypothesis tests. Use of sample data to answer questions about the population. See

Descriptive Statistics.

Information Bias — Refers to a systematic error due to either inaccurate measurement or classi-

fication of variables. For example, if estimates of living area are inaccurate due to faulty property

measurement procedures, estimates of property value on such data are likely inaccurate.

Infrared Film — Photographic film sensitized to record near infrared wavelengths beyond the red

end of the light spectrum; also sensitive to blue and ultraviolet light and must be used with a red

filter to screen out these wavelengths.

Infrared Radiation (IR) — Pertaining to or designating that portion of the electromagnetic

spectrum lying between the red end of the visible spectrum (about 0.7 micrometers) and an

indefinite upper boundary sometimes arbitrarily set at 1,000 micrometers, the lower limit of the

microwave region of the spectrum.

Infrared Scanner — An instrument for obtaining thermal infrared imagery through

line-scanning techniques.

Infrared Thermal Sensing — Line-scanning techniques using infrared scanners with detectors.

Usually, the imagery is obtained from selected portions of the 3- to 14- micron region of the spectrum.

Ingress — Access or entrance to a property.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Initial Point — Independent points of origin established across those portions of the United States

covered by the public land survey system.

Innocent Landowner — A landowner who purchased property subsequent to contamination,

but who had no knowledge of and did not contribute to the contamination. The landowner

must have made all “appropriate inquiries” into the property prior to purchase. Purchasers who

qualify as innocent landowners are not liable under the Comprehensive Environmental Response

Compensation and Liability Act (CERCLA).

Insolvent — Being incapable of meeting current debts.

Installed Cost — Capitalized cost and other costs necessary to achieve normal utility of assets

within an operating unit but not including maintenance or other operating expenses. It should

include repairs that extend the life of the asset.

Installment Contract — A purchase contract in which payment is made in prescribed install-

ments that are usually forfeited if default occurs.

Instrument — A formal legal document such as a deed, contract, will, or lease.

Intangible Personal Property — Property that has no physical existence beyond merely represen-

tational, nor any extrinsic value; includes rights over tangible real and personal property but not

rights of use and possession. Its value lies chiefly in what it represents. Examples include corporate

stock, bonds, money on deposit, goodwill, restrictions on activities (for example, patents and trade-

marks), and franchises. Note: Thus, in taxation, the rights evidenced by outstanding corporation

stocks and bonds constitute intangible property of the security holders because they are claims

against the assets owned and income received by the corporation rather than by the stockholders

and bondholders; interests in partnerships, deeds, and the like are not ordinarily considered

intangible property for tax purposes because they are owned by the same persons who own the

assets and receive the income to which they attach.

Interactive — Possessing the quality of being able to get reactions to proposals or instructions

one at a time rather than merely all at once at the end of a session; usually said of a kind of

computer system.

Interactive Valuation Application AVM [Appraiser-Assisted] — This is a mathematical model

application, or a set of applications, that is/are developed, calibrated, and checked by analysts. This

provides estimates of value that are reviewed and used by valuer.

Intercept — Graphically, the point at which a line, such as a regression line, intersects the axis on

which the dependent variable is represented; the value of the predicted variable when the value of

all the other values in the model is 0; the constant b0. It defines the y–intercept (the y–coordinate

of a point where a line, curve, or surface intersects the y–axis). It is the value of y when the value of

x is equal to 0.

Interest (Interest Rate) — The premium paid for the use of money; a (rate of) return on capital;

the equilibrium price in money markets. The interest rate usually incorporates a risk factor, an

illiquidity factor, a time-preference factor, an inflation factor, and potentially other factors. See

Discount Rate.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Interest (Interest Transferred, Interest Acquired) — The ownership rights of a person in a property.

Intergovernmental Revenue — Revenue that is received from other governments such as grants,

payments, shared revenues, and payments in lieu of taxes.

Internal Controls — The elements of a system for monitoring performance and ensuring integrity

that are employed more routinely than procedural audits and are often performed automatically.

Internal Rate of Return — See Equity Yield Rate.

Internal Rate of Return for Equity — See Equity Yield Rate.

Interprogram Efficiency — The allocation of resources to a given governmental program that

provides greater net benefits than if those resources were allocated to any other program.

Interquartile Range (Interquartile Deviation [IQR]) — The result obtained by subtracting the

first quartile from the third quartile; 50 percent of the observations fall within the IQR.

Intersector Efficiency — The incremental spending that provides greater net benefits than could

be obtained if the resources were left with individuals and organizations in the private sector.

Intestate — The state of having died without leaving a valid last will and testament.

In-Transit Goods — A type of inventory in the hands of a common carrier or other similar carrier

that are being transferred from one location to another. Usually these goods are moving by some

conveyance from one point to another and, if traveling interstate, are controlled by the Interstate

Commerce Commission in the U.S. Based on federal law, in most such situations, the assessor

cannot assess the goods if they have not reached their final destination.

Intraprogram Efficiency — When resources are used to maximize net benefits for any given program.

Intrinsic Value — 1) The inherent worth of a thing; and 2) Value that remains when cost to cure a

contamination problem exceeds original market value. See Value-in-Use.

Inutility — An accounting concept that measures cost and capacity to estimate a loss in value.

Often used by non-appraisers as evidence of obsolescence. However, inutility calculations are often

inconsistent with appraisal methods of determining any loss in value.

Inventory — A group of personal property items whose value is exhibited by value-in-exchange, as

ownership is exclusively for the purpose of sale, rather than use. Property that is used occasionally

is not inventory, as inventory is solely held for resale. Inventory includes goods held for sale (resale),

raw materials, goods in process, finished goods, supplies, consigned goods, bill and hold goods,

floor planned goods, and in-transit goods. See Bill and Hold Goods, Consigned Goods, Finished

Goods, Floor Planned Goods, Goods Held for Sale (Resale), Goods in Process, In-Transit Goods,

and Raw Materials.

Inventory, Perpetual — An inventory that is kept up to date by recording and valuing additions to

stock and withdrawals therefrom as they occur. Synonymous with “running inventory.”

Inventory, Physical — An inventory that is determined on a periodic basis by observation, actual

count, weight, or measure of all items on hand.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Inverse Distance Weighting (IDW) — A method of estimating the value of a response variable (say,

elevation or sale price) by taking a weighted average of known values at surrounding points.

Investment Analysis — A study that evaluates the relationship between acquisition price and

anticipated future benefits of a real estate investment.

Investment Holding Period — The length of time that typical investors generally hold an

investment of a specified type.

Investment Trust — A type of investment company that sells its stock and invests the money

received in stocks and bonds of other companies, real estate, or other investments. Investment

trusts can be open-end or closed-end. See Real Estate Investment Trust.

Investment Value — The worth of an investment property to a particular investor. Investment

value may or may not coincide with market value depending on the requirements of the

specific investor.

Investment Yield — The rate of return on capital that is generated from an investment over a

period of ownership, including both income and resale.

Inwood Coefficient — A factor used to obtain the present worth of a level stream of income; also

known as the Present Worth of $1 Per Period factor.

Iowa Type Curve — A classification of survivor curves by their basic mathematical shape into three

families of, respectively, 6, 7, and 5 curves; hence the alternate designation of “Iowa 18 type curves.”

Type survivor curves are used to smooth original survivor curves, to help determine the probable

life of single units and as a means of checking the adequacy of the depreciation reserve balance or

of estimating an adjustment factor in the appraisal procedure.

Irregular Lot Valuation Table — A valuation table whose purpose is to convert the actual frontage

of irregularly shaped parcels to effective front footage.

Irrevocable — That which cannot be recalled or revoked.

IR — See Infrared Radiation.

IRV — A mnemonic (formula) for the basic equation of the income approach: Income =

(Capitalization) Rate × Value. Value = Income / Rate.

Iteration — One repetition or repeated cycle in a process of estimating values as close as

possible to actual values by repeated approximations. The results of each approximation are used

in the next one.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Jeopardy Assessment — See Doomage Assessment.

Joint Estate — See Tenancy, Joint.

Joint Tenancy — See Tenancy, Joint; Tenancy by the Entirety; and Tenancy in Common.

Joint Tenants — An estate owned by two or more persons in equal shares created by a single

transfer. Upon the death of a tenant, the surviving tenant takes the entire property, and nothing

passes to the heirs of the deceased.

Judicial Review — A review by a body that is part of the organized judiciary.

Judicial Sale — 1) A sale made under the process of a court having competent authority to order

it, by an officer duly appointed and commissioned to sell, as distinguished from a sale by an owner

in virtue of his right of property; and 2) A court action that enforces a judgment lien by selling

property to pay a debt.

Junior Mortgage — A lien on a property that is subordinate to any other prior mortgage claims.

Jurisdiction — 1) The right and power to interpret and apply the law; also, the power to tax and the

power to govern; and 2) The territorial range of authority or control.

Juxtaposition of Numbers — Figures used in a description that have differing units; for example,

“thence easterly along the north line of lot 21, 21 feet” can easily be changed to “2,121 feet or 2121

feet.” Insertion of a phrase such as “thence easterly along the north line of lot 21, a distance of 21

feet” is better.

Kilometer — Unit of length equal to 1,000 meters. Equals 0.6214 statute miles.

Kriging — A family of algorithms for interpolating or estimating the value of a response variable

from known values at different points on an x – y surface.

Kruskal-Wallis Test — Used to determine if there is a statistically significant difference among

the medians of three or more independent groups. This test is the nonparametric equivalent of

the one-way analysis of variance (ANOVA) and is typically used when the normality assumption is

violated. The Kruskal-Wallis test does not assume normality in the data and is much less sensitive

to outliers than the one-way ANOVA. Often used to analyze assessment ratios from three or more

classes of property as an indication of significant differences amongmultiple classes of property.

When only two classes are being compared, the appropriate test is the Mann-Whitney test.

Kurtosis — A statistic that indicates the sharpness of the peak of the distribution of a data set.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Land — 1) In economics, the surface of the earth and all the natural resources and natural

productive powers over which possession of the earth’s surface gives man control; and 2) In law, a

portion of the earth’s surface, together with the earth below it, the space above it, and all things

annexed thereto by nature or by man.

Land, Improved — The ground or base of property that has been partially or fully developed for

use or continued improvements. Land can be improved by changing the zoning requirements,

erecting a building or structure, establishing utility (gas, water, electric) hookups, and installing

access features or roadways.

Land, Parcel of — See Parcel.

Land, Patented — Land formerly owned by a state or national government as part of the original

public domain that has been voluntarily conveyed by such government to a private owner by a

proceeding authorized by general statute, the conveyance being evidenced by an instrument known

as a “land patent.”

Land, Platted — Land that has been surveyed and divided into marketable lots delineated on a

plat; applied especially to urban land used or intended for use as building sites.

Land Capitalization Rate (Rl) — The ratio of land income to land value; can be used to convert a

single year’s land income into land value.

Land Combination — Combining two or more parcels of land into a single parcel. May be required

when developing a large area of land for improvements. May be governed by the Land Division Act

or requirements of a governmental entity.

Land Contract — A contract for the sale of a property in which the seller retains title until the

buyer completes the contracted payments for the property. The contract may be recorded; however,

the conveyance of the property is not complete until all contractual obligations are fulfilled, at

which time the deed for transfer of ownership may be recorded. See Contract for Deed.

Land Cover — The biophysical materials covering the surface of the land, including soil, water,

vegetation, and human cultivation activities.

Land Description Systems — Organized, uniform written descriptions of the physical boundaries

of property rights; commonly referred to as legal descriptions.

Land Division — Separating land into two or more parts. May be governed by the Land Division

Act or statutory requirements of a governmental entity. The total value of land may increase when

divided into individual smaller parcels.

Land Grant — A legal document in which the federal government conveys land title to an individual.

Land Information System — A system for capturing, retaining, checking, integrating, manipu-

lating, analyzing, and displaying data about land and its use, ownership, and development.

Land Ratio — The ratio of land area to building area. The land ratio can be an important factor in

grouping properties for income approach appraisal by means of direct sales comparisons.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Land Ratio Method — A technique used to estimate the value of property from a knowledge of

normal net income, the discount rate, the remaining economic life of a property, the value of the

building, the income path attributable to the building, and the income path attributable to the

land. The technique estimates total value by discounting the income stream attributable to the

land and adding the result to an independent estimate of the value of the building.

Land Residual Technique — A value ascribed to land when the building value is known and

when there are no unimproved land sales to support land value. For this technique to be valid, the

building must be new (the improvements can be hypothetical) and must represent the highest and

best use of the land. The information needed to use the land residual technique includes: 1) Net

operating income; 2) Improvement value; 3) Proper discount rate; 4) Property recapture rate; and

5) Effective tax rate. See Abstraction Method, Discount Rate, Effective Tax Rate, Net Operating

Income, and Recapture Rate.

Land Split — See Land Division.

Land-to-Building Ratio — The proportion of land area to gross building (improvement) area. For a

given use, the most frequently occurring ratio will be that of a functioning economic unit.

Land-to-Improvement/Building Ratio — See Land-to-Building Ratio.

Land Value — The amount for which vacant land with the same location, area, shape, physical

characteristics, and allowable uses would sell in the open market.

Land Value Tax — An ad valorem property tax measured by the value of land exclusive of any

improvements thereon.

Last-In, First-Out (LIFO) — An accounting procedure used to measure the cost of unsold inventory,

including inventory carried over from the prior year. This method is less acceptable than first-in,

first-out (FIFO) because it assumes that the goods on hand are the earliest purchased items, and

that the more recently purchased goods have been sold. May be used for income tax purposes but

would rarely reflect inventory value for property tax purposes.

Latitude — The angular distance north or south of the equator, measured in degrees along a

meridian, as on a map or globe.

Law of Variable Proportions — Often called law of decreasing returns or the law of proportion-

ality. States that when the quantity of one productive service is increased by equal increments,

while the quantities of other productive services remain fixed, the resulting increment of product

will decrease after a certain point.

Layer — Set of related geographic features, such as streets, parcels, or rivers, and the attri-

butes (associated characteristics of those features) logically organized into groups that can be

displayed independently.

Leadership — The art of acting and conducting business in a way that causes people to want

to follow.

Lease — A written contract by which the lessor (owner) transfers the rights to occupy and use real

or personal property to another (lessee) for a specified time in return for a specified payment (rent).

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Lease, Graduated Rental — A long-term lease with increases or decreases (specified in a step-up

or step-down clause) in the rent that are to take effect at established intervals at set amounts or at

amounts to be reached by subsequent appraisal and arbitration.

Lease, Gross — A lease under the terms of which the lessor (landlord) receives stipulated rent

and which includes the expenses of operating and maintaining the leased property. Contrast Net

Lease.

Lease, Ground — A lease conveying possessory interest in land exclusive of any improvements

constructed thereon.

Lease, Net — See Net Lease.

Lease, Percentage — A lease in which the consideration is measured by or dependent on the oper-

ating earnings or sales of the business using the leased property.

Lease, Proprietary — A type of lease used by tenant-shareholders in a cooperative apartment;

the tenant purchases a specific number of shares of stock to occupy a unit, then makes monthly

payments for operations and debt service.

Lease, Sandwich — A lease that lies between the fee title and a subsequent lease. For example, A

leases to B and B to C; the first of these leases is a sandwich lease. The lessee in a sandwich lease

is not the person using the property. The lessor may or may not be the owner of the fee; if it is a

sublease, he or she is not.

Lease, Step-Up — A lease that calls for set increases in rent at specified intervals.

Lease, Straight — A lease that calls for a set amount of rent to be paid periodically over the term

of the lease.

Leaseback Sale — The transfer of building, land, or personal property to a buyer under a special

arrangement to simultaneously lease it back to the original builder/seller, usually involving a

long-term triple net arrangement with options to renew the lease.

Leased Equipment — Items of a particular purpose that are allowed to be used by someone other

than the owner through periodic lease payments.

Leased Fee Estate — A landlord’s interest in real property under a lease that includes the rights

to receive rental payments and to take possession of the property after the lease term ends. See

Reversion.

Leasehold — A tenant’s interest in real property under a lease. Sometimes called a Leasehold

Estate or Leasehold Interest.

Leasehold Improvements — Items of personal property such as furniture and fixtures associated

with a lessee (the tenant) that have been affixed to the real property owned by a lessor.

Legal Description — A delineation of dimensions, boundaries, and relevant attributes of a real

property parcel that serve to identify the parcel for all purposes of law. The description may be in

words or codes, such as metes and bounds or coordinates. For a subdivided lot, the legal description

would probably include lot and block numbers and subdivision name.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Lessee — The person receiving a possessory interest in property by lease, that is, the owner of a

leasehold estate.

Lessor — The person granting a possessory interest in property by lease, that is, the conveyor of a

leasehold estate, the holder of a leased fee estate.

Level Annuity — A pattern of income in which the amount of income does not change during the

term of the annuity, and the income is received in equally spaced and regularly scheduled payments.

Level of Appraisal — The common, or overall, ratio of appraised values to market values. Three

concepts are usually of interest: 1) The level required by law; 2) The true or actual level; and 3) The

computed level, based on a ratio study. See Level of Assessment.

Level of Assessment — The common or overall ratio of assessed values to market values.

Level of Trade — Refers to the production and distribution stages of a product. They are the: 1)

Manufacturing level; 2) Wholesale level; 3) Retail level; and 4) Consumer level. Personal property

should be assessed at the trade level at which it is located. See Uplift Factor.

Level Perpetual Annuity — A pattern of income in which both the property’s value and income are

expected to remain constant into perpetuity.

Leverage — The effect of borrowed funds on investment return.

Levy — See Property Tax Levy.

Liability — An amount that is owed by one person to another. Used to include obligations of

a business entity to its owners, employees, and creditors. Liability accounts are included on the

balance sheet for accounting purposes. Assets are equal to liabilities and net worth (equity). See

Asset, Balance Sheet, Equity, and Net Worth.

LiDAR — See Light Detection and Ranging.

Lien — 1) The legal right to take or hold property of a debtor as payment or security for a debt; and

2) Any legal hold or claim, whether created voluntarily or by operation of law, that a creditor has

on all or specified portions of the property owned by a person indebted to him.

Lien Date — The date on which an obligation, such as a property tax bill (usually in an amount

yet to be determined), attaches to a property, and the property thus becomes security against its

payment. Often synonymous with Appraisal Date.

Life, Economic — See Economic Life.

Life, Physical — See Physical Life.

Life Estate — An interest in property that lasts only for a specified person’s lifetime; thus, the

owner of a life estate is unable to leave the property to heirs.

Life Estate Per Autre Vie — Life estate in which the ownership interest is measured not by the

owner’s life but by the life of another person.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Life Tenant — The recipient of a life estate.

LIFO — See Last-In, First-Out.

Light Detection and Ranging (LiDAR) — An airborne collection system that uses a scanning

infrared laser sensor comprising a transmitter and receiver, global positioning system (GPS) receiver

and an inertial navigation system (INS) unit to obtain the geospatial x, y, and z coordinate value of

ground surface points. This data can be used to develop very accurate digital elevation, surface, and

terrain models. These models can form the base for orthoimagery and geospatial analysis.

Limits on Assessment Increases — A form of tax and expenditure limitation applicable to all local

governments in the state, in which an upper limit is placed on the dollar value of assessments, on

the dollar amount of assessment increases, or on the rate of the assessment increase.

Limits on General Revenue or Expenditure Increases — A form of tax and expenditure limitation,

applicable to all local governments in the state, in which an upper limit is placed on the dollar

value of increases in revenues gathered or on expenditures made, or on the rate of increase in

revenues gathered or expenditures made.

Line, Base — See Baseline.

Line, Coincidence — Synonymous with preferred term Merge Line. See Coincidence Line.

Line, Merge — See Merge Line.

Line, Property — See Property Line.

Line, Range — See Range Line.

Line, Township — See Township Line.

Line Graph — A type of graph that plots statistics for one variable (usually a continuous variable)

against values for a noncontiguous variable.

Line-Item Budgeting — A style of budgeting designed to achieve financial control and minimize

opportunities for corruption by controlling spending.

Linear Model — The relationship between one dependent variable and one or more independent

variables. Unknown parameters (population) are estimated. The response or dependent variable

assumes the errors are independent normal random variables with a mean of zero and constant

variance. The coefficients for each independent variable are used to predict the dependent variable.

Linear Regression Analysis — A kind of statistical analysis used to investigate whether a

dependent variable and a set of one or more independent variables share a linear correlation and,

if they do, to predict the value of the dependent variable on the basis of the values of the other vari-

ables. Regression analysis of one dependent variable and only one independent variable is called

simple linear regression, but it is the word simple (not linear) that distinguishes it from multiple

regression analysis with its multiple independent variables.

Linearity — The assumption that the marginal contribution to value of an independent variable is

constant over the entire range of the variable.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Link — A one hundredth of a surveyor’s chain, a linear measure of 66 hundredths of a foot, or

7.92 inches.

Liquid Assets — Assets that can quickly be converted into cash.

Liquidation Value — The estimated gross dollar amount that could be typically realized at a properly

conducted public auction held under forced conditions and under present-day economic trends.

Liquidation Value-in-Place — The estimated proceeds of a forced sale of an entire facility or

property. For personal property items the assets remain in the location of the business entity.

Liquidity — The ease with which an asset may be converted into cash.

Lis Pendens — A notice of a pending suit. A person dealing with property after a lis pendens has

been recorded takes the property subject to the decree of a court.

List, Grand — See Assessment Roll.

List, Tax — See Assessment Roll.

Listing — The process by which the assessor ensures that records for the taxable property iden-

tified during discovery are preserved with integrity, available for use in valuation activities, and

ultimately reflected in the assessment roll.

Littoral Rights — Rights held by owners and users of land adjacent to or abutting oceans, gulfs,

and lakes. See Riparian Rights.

Loan Constant — See Mortgage Constant.

Loan Term — The length of time over which a loan must be repaid.

Loan-to-Value Ratio (M) — The portion of the investment financed by the mortgage or debt. It

is the complement to the amount financed by equity. It is the relationship (often a percentage)

between the amount of a mortgage and the value of the security pledged for the mortgage.

Locally Assessed Property — Property for which the assessed value is set by the assessing official

of the local jurisdiction within which the property is located.

Local Multiplier — An adjustment to replacement or reproduction cost new or historical cost to

reflect local costs.

Location — The numerical or other identification of a point (or object) sufficiently precise so the

point can be situated. For example, the location of a point on a plane can be specified by a pair of

numbers (plane coordinates), and the location of a point in space can be specified by a set of three

numbers (space coordinates). However, location may also be specified in terms other than coordi-

nates. A location may be specified as being at the intersection of two specific lines by identifying it

with some prominent and known feature (for example, “on top of Pikes Peak” or “at the junction of

the Potomac and Anacostia Rivers”).

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Location Value Response Surface Analysis (LVRSA) — A mass appraisal technique that involves

creating value influence centers, computing variables to represent distances (or transforma-

tions thereof) from such points, and using the variables in a multiple regression or other model

to capture location influences. Implementation of the technique is enhanced by the use of a

geographic information system. Some geographic information systems permit the value influence

centers to be displayed and measured as a three-dimensional grid surface, the results of which can

be likewise used in calibration techniques to arrive at the contribution of location based on the

model specification.

Location Variable — A variable, such as the distance to the nearest commercial district or the

traffic count on an adjoining street, that seeks to measure the contribution of locational factors to

the total property value.

Log — Linear Relationship — A correlation between two variables such that if the value of one

variable changes by a certain percentage, the value of the other changes by a certain amount.

Logarithms permit multiplication to be done by means of adding logs.

Logarithm — The number that, when used as an exponent for another number (called the base),

results in a third number of some practical interest (called the antilogarithm). There are two bases.

The base 10 produces what are called common logarithms, and the base 2.71828 (e) produces

natural logarithms.

Long-Lived Items — Items that are the basic structure of a building and are not usually replaced

during economic life. For example: foundation, roof structure, and framing.

Long-Term Debt — See Long-Term Liability.

Long-Term Liability — The unpaid balance of notes, bonds, and other evidence of debt payable

after one year from the date issued, plus any unamortized debt discount and debt expense and

any reacquired long-term debt. An obligation or debt, such as a mortgage, that will not mature for

generally more than one year. Considered long-term debt.

Longitude — A linear or angular distance measured east or west from a reference meridian on a

sphere or spheroid.

Lot — A plot of land, generally a subdivision of a city, town, or village block, represented and iden-

tified by a recorded plat.

Lot, Corner — A lot located in the angle formed by two intersecting streets.

Lot, Government — One of the non-rectangular areas into which sections not evenly or approx-

imately divisible into square 40-acre tracts were divided in the course of the government survey.

Lot, Inside — A lot sufficiently far from the intersection of any streets to be assumed to be free of

corner influence.

Lot, Irregular — A lot that is not a conventional shape.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Lot, Restricted — A lot whose owner is restricted as to its use or sale by the terms of a private

contract or by operation of law; for example, a lot upon which construction is restricted to resi-

dential buildings of an approved style and of a minimum cost. Note: Restrictions are ordinarily

created by zoning laws and ordinances or by private contract on the deeding of property.

Lot, Standard — A lot that is selected as the standard in size, shape, grade, and alley influence,

usually because it is representative of the majority of lots within a given area.

Lot, Through — A lot fronting on two streets that are parallel, or that run in the same general

direction. Synonymous with Merged Lot. Note: The term “through parcel” is more appropriate if

the parcel was formed by assemblage of two lots with a common rear line.

Lot and Block Survey — A plat in which a larger parcel of land is subdivided into small units for

the purpose of sale. Conveyances need to refer only to the lot, block, and plat book designation.

Lot and Block Survey System — A system used to describe small parcels of land, primarily urban,

using in most cases a section or plat number or name, and a lot number.

Lot Coverage Ratio — The relationship between the improved portions of a lot (including buildings,

patios, decks, driveways, etc.) as compared with the total area of the lot.

Lot Line — The line shown on the map creating the lot. A lot line is permanent and does not

change with street openings.

Lot Line Revision — An adjustment or reallocation of property between two or more lots or parcels

of land that does not create a new lot or parcel of land.

Lot Split — A division of an existing lot, whether developed or not, into two or more lots.

See Land Division.

Low-Water Mark — The line to which a body of water receded, under ordinary conditions, at its

lowest stage.

Lower of Cost or Market — 1) An inventory accounting concept that states that the present

value of inventory is based on the lower of either historical cost or current selling price; and 2)

The accounting theory stating that property is recorded into the books and records at the lowest

amount. If the price paid (cost) is lower than market value, the entry into the accounting records

is the price paid. If the price paid (cost) is higher than market value, the entry into the accounting

records is the market value.

Luminance — The intensity of light per unit area of its source.

Lump-Sum Grant — A grant that does not depend on how much the recipient government spends

on a particular service.

LVRSA — See Location Value Response Surface Analysis.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Macroeconomics — The economics of the economy as a whole—the forces causing recession,

depression, and inflation together with the forces resulting in economic growth.

Macro-Identification — A method of studying an entire manufacturing process by identifying the

major components contributing to the design capacity of a plant.

Magnetic Declination — A deviation of the direction of the needle from astronomic north.

Magnetic Meridian — The north direction that a magnetic compass needle points to at any given

location. It is a deviation of the direction of the needle from astronomic north. An imaginary line

connecting the magnetic north and south poles.

Maintenance — Maintaining or preserving a property. Resources are expended that preserve the

asset in order to achieve the intended economic life.

Management — The coordination and administration of tasks to achieve a goal.

Management Rate — A rate that reflects the costs of managing the property. This management

rate is added to the risk rate, the safe rate, and the non-liquidity rate to yield the return rate in the

summation method.

Mandates — Federal regulations that impose costs on state and local governments. There are also

state mandates on local governments.

Mann-Whitney Test — A test in inferential statistics that seeks to determine whether the differ-

ences in values between two sets of observations from any population are statistically significant.

Manuscript Map — The original drawing of a map as compiled or constructed from various data

(such as ground surveys or photographs).

Map — A representation (usually on a flat medium) of all or a portion of the earth or other celestial

body, showing the relative size and position of features to some given scale or projection; also, a

representation of all or part of the celestial sphere. A map may emphasize, generalize, or omit the

representation of certain features to satisfy specific requirements. Maps are frequently categorized

and referred to according to the type of information they are designed primarily to convey, to distin-

guish them from maps of other types. 1) Topographic maps represent the horizontal and vertical

positions of features; distinguished from a planimetric map by the addition of relief in measurable

form. A topographic map uses contours or comparable symbols to show mountains, valleys, and

plains, and in the case of hydrographic charts, symbols and numbers to show depths in bodies of

water; 2) Control maps portray relief by means of contour lines; 3) Planimetric maps present only

the horizontal positions for the features represented; distinguished from a topographic map by the

omission of relief in measurable form. See Map, Base; Cadastral Map; Hydrographic Map; and

Manuscript Map.

Map, Aerial — A map constructed on the basis of aerial photographs. See Map.

Map, Base — A map with points of reference and other physical features to facilitate data

plotting. See Map.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Map, Land Value — A map that shows all streets, watercourses, railroads, and other principal

features, and the unit — foot values, square — foot values, or acre values assigned to all land in the

area covered. Synonymous with Equalization Map and Base Value Map. See Map.

Map, Lot and Block — A map of an urban area showing the division of land into lots and blocks,

with dimensions. See Map.

Map, Planimetric — A map that shows only the horizontal positions of the features represented.

See Map, Topographic.

Map, Tax — A map drawn to scale and delineated for lot lines or property lines or both, with

dimensions or areas and identifying numbers, letters, or names for all delineated lots or parcels.

See Map.

Map, Topographic — A map showing the horizontal and vertical locations of natural and artificial

features. See Map.

Map Book and Page System — A system for parcel identification in which a code (usually numeric)

is used to identify each parcel. Each code contains four elements: 1) The volume or book of maps

in which the parcel is to be found; 2) The page on which it is to be found; 3) The block; and 4) The

individual parcel on the block.

Map Projection — A mathematical model used to transform positions on the surface of the earth,

which is curved, onto a flat map surface. An orderly system (mathematical model) to portray all

or part of the earth, which is an irregular sphere, on a planar or flat surface. Some distortions of

conformality, distance, direction, scale, and area always result from this fitting process. Examples

include the Mercator and the Lambert Conformal Conic Projection.

Map Scale — The ratio of a distance on a photograph or map to its corresponding distance on

the ground. Scale may be expressed as a ratio, 1:24,000; a representative fraction, 1/24,000; or an

equivalence, 1 in. = 2,000 ft.

Map Scale, Fractional — A fractional scale is the ratio that any small distance on the map bears to

the corresponding distance on the earth. It may be written in the form of a fraction (1/100,000) or

as a proportion (1:10,000). Fractional scales are representative in any linear unit.

Margin of Error — A measure of the uncertainty associated with statistical estimates of a

parameter. A margin of error is a key component of a confidence interval. It reports a “plus or

minus” percentage or proportion quantity in a confidence interval at a specified level of probability

(typically 95 percent). See Confidence Interval.

Marginal Cost — The change in a firm’s total costs per unit.

Marginal Physical Product — The change in total output of a firm resulting from a one-unit

change in the employment of a resource, holding the quantities of other resources constant.

Marginal Revenue — The change in a firm’s total revenue per unit in its sales level. Marginal

revenue equals price in pure competition only.

Marginal Tax Rate — The proportion of the last dollar of income taxed by the government.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Marginal Unit — The unit last added to any economic process.

Marginal Utility — The change in the total utility to a consumer that results from a one-unit

change in the consumption level of an item.

Marginal Utility Theory — A theory of consumer choice that says that consumers will maximize

welfare by allocation of their budget such that the marginal utility per dollar is equalized across

all purchased goods.

Market — 1) The topical area of common interest in which buyers and sellers interact; and 2) The

collective body of buyers and sellers for a particular product.

Market Adjustment Factors — These factors reflecting supply and demand preferences are often

required to adjust values obtained from the cost approach to the market. These adjustments

should be applied by type of property and area and are based on sales ratio studies or other market

analyses. Accurate cost schedules, condition ratings, and depreciation schedules will minimize the

need for market adjustment factors.

Market Analysis — A study of the supply and demand metrics within a specific area for a specific

type of property.

Market Analyst — An appraiser who studies real estate market conditions and develops mathe-

matical formulas that represent those market conditions.

Market Approach — See Sales Comparison Approach.

Market Area — See Economic Area.

Market Condition Adjustment — A factor to reflect price changes in relation to the time the

property sold and the date of valuation. These factors account for changes in market conditions

between the time a comparable sold and the effective date of the appraisal.

Market Delineation (Segmentation) — The process of defining a geographic area to identify supply

and demand characteristics that affect the property’s ability to serve uses for which it is designed.

Market Price — See Price, Market. Compare with Market Value.

Market Rate of Return — The typical return on an investment in a given type of property in a given

market. It is distinct from the actual rate of return indicated by a property’s actual income.

Market-Related Adjustment — See Market Condition Adjustment.

Market Rent — See Rent, Economic.

Market Value — A value, stated as an opinion, that presumes the transfer of a property (i.e., a right

of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in

the value definition that is identified by the appraiser as applicable in an appraisal.

Market Value Standard — A requirement of law or practice that the assessment ratio of all prop-

erties be equal to 100 percent of market value.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Marketability — 1) The ease of which a property could be sold based on the desirability of the

property; 2) The extent to which a property is free of encumbrances that would preclude the owner’s

ability to sell the property.

Mark-up — An amount added to a cost in calculating a selling price to account for overhead

and profit.

Marshall Valuation Service (MVS) — A cost manual used for developing replacement costs and

depreciated values of improvements.

MAS — See Mass Appraisal Specialist.

Mass Appraisal — The process of valuing a group of properties as of a given date, using standard

methods, employing common data, and allowing for statistical testing. Source: IAAO Standard on

Mass Appraisal.

Mass Appraisal Model — A mathematical expression of how supply and demand factors interact

in a market. For purposes of appraisal, a representation (in words or an equation) that explains the

relationship between value or estimated sale price and variables representing factors of supply and

demand. Source: IAAO Standard on Mass Appraisal.

Mass Appraisal Specialist (MAS) — A professional designation conferred by the International

Association of Assessing Officers (IAAO) recognizing professionalism and competency in with

a wide range of property types, property appraisal and assessment administration issues, and

property tax policy.

Matching Grants — A grant that provides a certain amount for each dollar spent by the recipient

government. For example, a 50 percent matching grant would provide $1 to the recipient government

for each $1 it spent on a particular function.

Matte Print — Print made on photographic paper with a dull finish more suitable for pencil or ink

annotations than a glossy print but less suitable for interpretation than a semi-matte print.

Matte Fi — A coating or texture on the surface of polyester fi. Commonly used with cadastral maps

because of dimensional stability, ink adherence, erasing quality, translucence, and strength.

Mean — A measure of central tendency. The result of adding all the values of a variable and dividing

by the number of values. For example, the mean of 3, 5, and 10 is 18 divided by 3, or 6. Also called

arithmetic mean.

Mean High-Tide Line — The average height of the tide between all the lowest high tides and all

the highest tides.

Meander Corner — Location on a map where a meander line intersects with a regular section line.

Meander Line — A traverse of a body of water for the purpose of determining the size and location

of the body of water. Meander lines do not represent boundary lines; the body of water where it

exists represents the true boundary lines.

Measure of Central Tendency — Single values representing the center point of a set of data. Common

measures of central tendency are the mode, median, arithmetic mean, and weighted mean.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Median — A measure of central tendency. The value of the middle item in an uneven number of

items arrayed by value. The arithmetic average of the two central items in an even number of items

similarly arranged; a positional measure not affected by extreme values.

Median Absolute Deviation — The median of the absolute deviations from the median. In a

symmetrical distribution, the measure approximates one-half the interquartile range.

Median Percent Deviation — The median of the absolute percent deviations from the median;

calculated by dividing the median absolute deviation by one-hundredth of the median.

Mercator Projection — One of several mathematical projections of the curved surface of the earth

on an imaginary cylinder that is then flattened. The original Mercator projection was on a cylinder

the axis of which was in a north-south direction. Transverse Mercator projections are on imag-

inary cylinders with an east-west orientation. Transverse Mercator projections are more common

than the original Mercator projection. In addition to the universal transverse Mercator (UTM)

projection, there are the modified transverse Mercator system (MTMS) and the state transverse

Mercator (STM) system.

Merge Line — An imaginary line dividing a through lot or parcel into two parts, along which,

corner and alley influence being ignored, the value of the land is at its minimum and is the same

whether the depth be calculated from one street or the other. Note: It is customary to locate the

merge line of a rectangular through lot at a point at which the ratio of its distances from the

two streets is equal to the ratio of the respective unit-foot values of the two streets. This formula,

however, does not produce results consistent with the above definition when used in conjunction

with any of the standard depth tables.

Merge Point — Any point on the merge line. See Merge Line.

Merger — Union of two or more entities; absorption of a lesser entity by a greater one.

Meridian — A north-south line from which longitudes are referenced. All lines intersect the

equator (as well as other latitudes) and converge at the North and South Poles.

Meridian, Grid — A line of a map grid parallel to the line representing the central meridian. See

Meridian Line.

Meridian, Principal — A true meridian from which range lines are established by the government

survey. Contrast Baseline. See Meridian Line.

Meridian Line — Meridian line is any line running due north and south. Since meridian lines

converge at the North Pole, no two meridian lines are parallel. Practically, within the limits of a

property survey all lines shown as north and south are considered parallel.

Metes and Bounds — Measurement of angles and distances; a description of a parcel of land

accomplished by beginning at a known reference point, proceeding to a point on the perimeter

of the property being described, and then tracing the boundaries until one returns to the first

point on the perimeter, usually a corner. The angles are described by reference to points of the

compass, and the distances are described in feet or chains; curves are treated as arcs on a circle. A

description of real property starting at a known point and describing the bearings and distances of

the lines forming the boundaries of the property.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Microeconomics — The economics of units, such as firms and neighborhoods, of an economic

system (as opposed to macroeconomics, which studies the economy as a whole).

Micro-identification — The process of finding the individual characteristics of equipment.

Microwave Region — Commonly, that region of the electromagnetic spectrum in the wavelength

range from 1 micrometer to beyond 1 meter.

Middle Managers — The level of management whose job it is to take the goals and strategies

developed by the top managers and put them into practice.

Mill — One mill is one-thousandth of one dollar or one-tenth of one cent.

Millage — A tax rate expressed as mills per dollar. Also known as Mill Rate. For example, a 2

percent tax rate is $2 per $100, $20 per $1,000, or 20 mills per dollar. One mill is one-thousandth

of one dollar or one-tenth of one cent.

Mineral Rights — The right to extract ore, petroleum, or other minerals from a property.

Ministerial Duty — A duty prescribed by law that can be discharged without the exercise of official

discretion or judgment.

Minkowski Metric — A method of measuring distance used in the automated comparable sales

process to quantify the similarity of each candidate property to the subject property. Once the

distance is calculated for each candidate property, they are sorted from lowest to highest. The

properties with the smallest distances, or largest comparability, are closest to the subject property.

If all attributes of the subject property and candidate property match exactly, the distance will

be zero. The Minkowski Metric is interpreted as the average percent difference of the candidate

property from the subject property.

Minute — A one-sixtieth of a degree of the circumference of a circle.

Miscellaneous Revenue — See Revenue.

Mission Statement — A broad, comprehensive statement that describes the fundamental purpose,

aims, and values of an organization.

Mixed Use — Instances in which a single tract of land includes multiple use-types. Also known as

Multiple Use Property.

MLS — See Multiple Listing Service.

Mode — A measure of central tendency; 1) In an array of the values of a variable, the most frequently

occurring value; and 2) By extension for grouped data, the class with the greatest number

of observations.

Model — A representation of how something works. For purposes of appraisal, a representation

(in words or an equation) that explains the relationship between value or estimated sale price and

variables representing factors of supply and demand.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Model Calibration — A process used to develop adjustment factors based on market analysis that

identifies specific factors with an actual effect on market value.

Model Deployment — The application of a finalized model to data (existing or new), typically in a

platform outside of the statistical package used to specify, calibrate, and develop the model.

Model Specification — A process used for identifying and defining the property characteristics

used in a valuation model and how they related mathematically with one another.

Money Market — The interaction of buyers and sellers of short-term credit instruments.

Monument — Tangible landmarks indicating boundaries. 1) Physical monuments are existing

features such as a stone, stake, tree, hill, ocean, river, or lake, but not the line of an adjoiner. 2)

Natural monuments are naturally occurring objects such as a lake, river, tree, boulder, or hill. 3)

Artificial monuments are man-made objects such as a stake, fence, or set stone, etc. 4) Record

monuments are an adjoiner property called for in a deed, such as a street or particular parcel of

land. Frequently the boundary line of the adjoiner is referred to as the record monument; actually,

the entire property, rather than the line, is the monument. Physical monuments may or may not

mark a record monument. In court reports, record monuments are often referred to as natural

monuments. 5) Legal monuments are any monument controlling in a legal description. It is often

limited in meaning to be synonymous with record monument.

Moratorium — A period of suspension of legal remedies or rights commonly used by local

government agencies.

More or Less — In their ordinary use they are to be taken as words of caution, denoting some uncer-

tainty in the mind of one using them and a desire not to misrepresent. When used in connection

with quantity and distance, “more or less” are words of safety and precaution, intended merely to

cover some slight or unimportant inaccuracy. If “125 feet more-or-less to the point of beginning” is

used in a deed, the “more or less” indicates that the 125 feet is an informative term, whereas, “to the

point of beginning” is the controlling term. “About 12 acres more-or-less is indefinite and should

be avoided since the word “about” is very broad in meaning.

Mortgage — A contract under the terms of which the legal, but not the equitable, title to a specific

property of one person (the mortgagor) is conditionally conveyed to a second person (the mort-

gagee) as security for the payment of a debt or performance of some other act. Note: In some states,

legal title to mortgaged property passes to the mortgagee on execution of the mortgage; in others,

legal title passes when the debt secured by the mortgage is in default; in still others, the mortgage

is simply a lien, and legal title does not pass until foreclosure proceedings have been completed.

Mortgage, Balloon — See Balloon Mortgage.

Mortgage, Blanket — See Blanket Mortgage.

Mortgage, Chattel — A mortgage in which the security consists of tangible personal property.

Note: A chattel mortgage usually takes the form of a bill of sale drawn in favor of the mortgagee

with a clause defeating the transfer during compliance by the mortgagor with specified conditions.

Mortgage, Direct Reduction — A debt secured by real estate that is repaid in periodic, usually

equal, installments that include repayment of part of the principal and the interest due on the

unpaid balance, such as a level-payment, fixed-rate, fully amortizing mortgage.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Mortgage, Equitable — A lien on property established by a court when the technical requirements

of a mortgage are not met, but the intent was that the lender have a mortgage on the property.

Mortgage, First — The mortgage that has the highest priority for repayment over all other liens

on a property.

Mortgage, Insured — A mortgage insured by a party other than the borrower that satisfies the

balance in the event of default by the mortgagor.

Mortgage, Junior — A lien on a property that is subordinate to any other prior mortgage claims.

Mortgage, Open-End — A mortgage that permits the mortgagor to borrow additional money, with

certain conditions, under the same mortgage.

Mortgage, Package — A mortgage that covers both personal and real property.

Mortgage, Purchase Money — A mortgage given to the seller from the buyer to secure the unpaid

purchase price of the sale of the property.

Mortgage, Real — A mortgage in which the security consists of real property.

Mortgage, Second — A mortgage that ranks after a first mortgage in precedence. Legal priority

determines whether they are specified as a first, second, third, or so on, mortgage.

Mortgage, Wrap-Around — A junior or second mortgage that has a face value of both the amount

it secures and the balance due under a first mortgage.

Mortgage Annual Constant (Rm) — The ratio between the annual payments of principal and

interest on a mortgage to the original amount borrowed. It can be found by dividing the annual

debt service by the amount borrowed or by multiplying the partial payment factor by the number

of conversion periods in one year. Also known as the Mortgage Capitalization Rate.

Mortgage Capitalization Rate — See Mortgage Annual Constant.

Mortgage Coefficient — A component of the basic rate in the Ellwood variant of

mortgage-equity analysis.

Mortgage Constant (RM) — Annual debt service expressed as a percentage of the initial principal

amount of the loan; also called Mortgage Capitalization Rate.

Mortgage-Equity Analysis — A technique used to estimate the value of a property from a knowledge

of the equity yield rate, typical mortgage terms (including the interest rate, the loan-to-value ratio,

the term of the loan, and the amortization provisions), the holding period, and the percentage by

which the property will appreciate or depreciate over the holding period. The solution is reached

by using the Ellwood formula.

Mortgage Interest Rate (Ym) — The rate of return to the lender when there are not points or

other charges to increase the lender’s yield rate. It is a compound interest rate and can be used to

calculate the mortgage annual constant. Also known as the Mortgage Yield Rate.

Mortgage Yield Rate — See Mortgage Interest Rate.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Mortgaged Fee Interest — The borrower’s ownership interest in a mortgaged property.

Mortgagee — The person who lends money in a mortgage transaction.

Mortgagor — The person who borrows money in a mortgage transaction.

Motivation — A state of mind that causes an individual to voluntarily behave in a way that ensures

the accomplishment of a goal.

Movables (or Movables) — In civil law states, a term used instead of, and more or less synony-

mously with, the term “personal property.” All things that are subject to ownership other than land

and land improvements.

Moving Average — A statistic used to smooth the values of a variable when those values are erratic

over distance or time, as in the case of land values and mortgage commitments. For example, a

five-block simple moving average of land values along a major street would assign to block 16 the

average of the values for blocks 14 – 18; it would assign to block 17 the average of the values for blocks

15 – 19, and so on.

MRA — See Multiple Regression Analysis.

Multicollinearity — Occurs when there are high correlations between two or more variables. In

regression analysis, multicollinearity often causes misleading results.

Multiple Listing Service (MLS) — A computerized database subscription service used by real

estate brokers and agents to share information about properties for sale. Hundreds of systems are

located throughout the U.S. and Canada to serve local market areas.

Multiple Regression Analysis (MRA) — Also known as Multiple Regression. It is a statistical tech-

nique used to analyze data in order to predict the value of one variable (the dependent variable),

such as market value, from the known value of other variables (independent variables), such as

lot size, number of rooms, and so on. If there is one independent variable used, the technique is

known as simple regression. With two or more independent variables the technique is referred to

as multiple regression. See Linear Regression Analysis.

Multiplicative Model — A mathematical model in which the coefficients of independent variables

serve as powers (exponents) to which the independent variables are raised or in which independent

variables themselves serve as exponents; the results are then multiplied to estimate the value of

the dependent variable.

Multiplicative Transformation — A transformation of a set of variables accomplished by multi-

plying a variable by one or more other variables. For example, room area is a multiplicative trans-

formation of length and width.

Multipurpose Cadaster — A digital cadastral map rich in cadastral data and associated land data

and features to support the mission-critical functions and advanced analytics of the assessor.

Also provides a comprehensive platform for the spatial framework for the geospatial data of other

governmental agencies and private entities.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Multispectral — Camera systems sensitive to more than one spectral wavelength band.

Multispectral Scanner — A nonphotographic imaging system that uses a rotating mirror and a

fiber-optic bundle sensor. The mirror sweeps from side to side and sequentially records brightness

values (that is, signal strengths) on magnetic tape for successive pixels, one swath at a time. The

forward motion of the sensor platform carries the instrument to a position along the orbital path

where an adjacent swath can be imaged.

Multivariate Statistical Technique (Model) — Any of a number of statistical techniques used to

analyze more than two variables simultaneously. See Multiple Regression Analysis.

Municipal Notes-Short — term promises to pay issued by local governments.

MVS — See Marshall Valuation Service.

Naïve Forecasting — An estimating technique in which the last period’s actuals are used as this

period’s forecast, without adjusting them or attempting to establish causal factors. Assuming that

historical relationships hold constant, this year’s revenues are a constant function of last year’s

revenues.

NAPL — See Non-Aqueous Phase Liquids.

National Map Accuracy Standards (NMAS) — For horizontal accuracy maps at publication

scales larger than 1:20,000, 90 percent of all well-defined features, with the exception of those

unavoidably displaced by exaggerated symbolization, will be located within 1/30 inch (85 mm) of

their geographic positions as referred to the map projection; for maps at publication scales of

1:20,000 or smaller, 1/50 inch (50 mm). For vertical accuracy, 90 percent of all contours and eleva-

tions interpolated from contours will be accurate within one-half of the basic contour interval.

Discrepancies in the accuracy of contours and elevations beyond this tolerance may be decreased

by assuming a horizontal displacement within 1/50 inch.

National Priorities List (NPL) — The list of sites determined to pose enough risk to become

Superfund sites.

Natural Monopoly — A monopoly, or a single producer of a good, that arises due to economies

of scale throughout the relevant range of production of the good. This results in a continually

declining average total cost to produce, with the least expensive way to produce the good being a

single producer.

Navigation System, Doppler — In general, any navigation system that makes use of the measured

shift in frequency to determine the velocity of the receiving system relative to the signal source

and, from these measurements, the location of the receiver.

Navigation System, Inertial — Any navigation system in which gyroscopes or accelerometers are

used to provide a coordinate system that has a fixed orientation with respect to the distant galaxies.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Navigation System, Satellite — 1) A system used for the navigation of satellites; and 2) A system

having beacons or transponders placed on satellites rather than at fixed points on land.

Neat Line — On a map of the earth’s surface, a line that marks the limits of a specific area in

precise measurements; commonly encloses the map, legend, scale, title, and other information;

serves as the (imaginary) link to an adjacent map.

Needs Analysis — A systematic planning process through which the various essential consider-

ations are identified and evaluated. It can provide an in-depth understanding of what can and

cannot be accomplished.

Neighborhood — See Economic Area.

Neighborhood Analysis — A study of the relevant forces that influence property values within the

boundaries of a homogenous area.

Neighborhood Binary Variable — A binary is one of two possible variables used in a valuation

model to quantify the effects on value of distinct neighborhoods.

Neoclassical School — A school of management that arose in response to the classical school and

emphasized a focus on human behavior.

Net Assessed Value — The official dollar value remaining on an assessment roll after deducting

the amount of any applicable partial exemptions from the gross assessed value.

Net Book Value — The value of a fixed asset according to the balance sheet. It is the cost of the

fixed asset less book (accounting) depreciation.

Net Lease — A lease under the terms of which the lessee pays the agreed rent plus all or a portion

of the expenses for operating and maintaining the leased property. Contrast Gross Lease.

Net Income — See Net Operating Income (NOI).

Net Income Multiplier (NIM) — A factor that can be multiplied by the net income (NOI) to obtain

the market value of a property. It is the relationship between value and net operating income.

Net Income Ratio (NIR) — The ratio of net operating income to effective gross income. It may

also be expressed as a percentage of potential gross income. It is the complement to the operating

expense ratio (OER) and can be found by the formula 1 – OER. See Effective Gross Income, Net

Operating Income, Operating Expense Ratio, and Potential Gross Income.

Net Leasable Area (NLA) — The area within a building or structure that is actually occupied by an

individual tenant. Net leasable area does not include any of the common areas, such as lobbies and

restrooms, shared by other tenants.

Net Lease — A lease in which the landlord (lessor) receives a stipulated rent amount and the tenant

(lessee) pays all operating expenses and taxes attributable to the property. A net lease produces net

income to the lessor.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Net Operating Income (NOI) — The amount of income remaining after operating expenses are

subtracted from effective gross income. See Capitalization Rate, Effective Gross Income, Income

Approach, Operating Expenses, and Potential Gross Income.

Net Profit — Excess of revenue over operating expenses.

Net Rent — See Rent, Net.

Net Worth — The aggregate of the equities representing proprietary interest; the excess of the

going-concern value of assets over liabilities to outsiders; in the case of a corporation, the total of

paid-in capital and retained earnings; in a sole proprietorship, the owner’s capital account; in a

partnership, the sum of the partners’ capital accounts. Used in accounting for financial reporting.

Included on the balance sheet. Assets are equal to liabilities and net worth (equity).

Net Worth Tax — An ad valorem property tax based on the difference between the total assets and

total liabilities of the taxpayer. Note: This is a tax that is used in a number of countries but not in

the United States.

Neural Network (ANN) — A collection of mathematical models that emulate some of the observed

properties of biological nervous systems and draw on the analogies of adaptive biological learning.

An artificial neural network has several key elements: input, processing (calibration), and output.

Other names associated with neural networks include connectionism, parallel distributed

processing, neurocomputing, natural intelligent systems, and machine learning algorithms.

Neutral/Neutrality — Refers to a tax that does not distort economic decisions. Closely related to

the concept of efficiency, the situation in which patterns of consumption maximize the general

welfare of society.A common economic objective that has to do with designing the property tax so

that it does not distort economic decisions.

Nexus — The legal question of what constitutes sufficient presence in a state or jurisdiction to be

held responsible for paying or collecting a tax.

NIM — See Net Income Multiplier.

NIR — See Net Income Ratio.

NLA — See Net Leasable Area.

NMAS — See National Map Accuracy Standards.

NOI — See Net Operating Income.

Nominal Data — Qualitative variables without a natural order, such as property class, location,

building style, etc. See Ordinal Data.

Nominal Interest Rate — The stated interest rate on an annual basis. The nominal interest rate

is the same as the effective interest rate only when there is annual compounding. See Effective

Interest Rate.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Nominal Tax Rate — The rate expressing the ratio between the current taxes and the property

assessment; the official tax rate of the taxing jurisdiction. Differs from effective tax rate when the

assessment ratio (statutory level of assessment) is not 100 percent. The rate may be calculated by

dividing the amount of the taxes by the assessed value of a property. See Effective Tax Rate.

Nominal Value — Either a price or value deemed insignificant, or de minimis.

Nominal Variable — Also referred to as a categorical variable, a variable with two or more cate-

gories with no intrinsic order. For nominal variables there is no defined method to order the values

from highest to lowest. For example, house style has a number of possible values: colonial, ranch,

contemporary, etc. Another example of a nominal variable is a binary variable with two categories

such as yes or no.

Non-Aqueous Phase Liquids (NAPL) — Liquid contaminants often trapped in soil or bedrock.

Non-Cadastral — Spatial data that are typically dependent on and reside upon cadastral

parcel data. Examples of non-cadastral data layers are zoning, future land use, and municipal

boundary layers.

Nonconforming Uses — Legally nonconforming uses are uses that were established in the past and

that complied with the zoning or land use regulations that existed at the time. However, because

of changing codes and ordinances, they no longer conform to the land use regulations currently in

existence. Government actions are often the cause of legal nonconformities, including events such

as partial takings in an eminent domain proceeding.

Non-Investment Property — See Property, Non-Investment.

Nonlinear Model — The relationship between a set of independent variables and one dependent

variable displaying complex effects not explainable using a linear (straight-line) model. Generally,

nonlinear regression is used to estimate the parameters in a nonlinear model with the main

assumption that the underlying data are well represented by the model. The value of the coefficients

can be correctly interpreted only if the correct nonlinear model has been fitted. A good choice of

starting points can lead to a desirable output; a poor choice will make the output misleading.

Non-Liquidity Rate — In building a rate of return by the summation approach, an appraiser must

add in a factor or rate for non-liquidity. This rate compensates the investor for his or her inability

to make immediate use of the investment amount. Generally, the longer the holding period for the

investment, the higher the non-liquidity rate will be.

Nonparametric Statistic — Statistics that make no assumptions regarding the distribution of the

sample data. Specifically, nonparametric statistics do not assume data are drawn from a popu-

lation with a normal distribution. See Parametric Statistic.

Non-Physical Contaminant — Recognized contaminant that does not consist of any tangible,

physical substance.

Non-Sampling Error — The error reflected in ratio study statistics from all sources other than

sampling error. While non-sampling error is unavoidable due to the inefficiencies inherent in real

property markets, the imperfections of the appraisal process, and the imperfections of conducting

ratio studies, all practicable steps must be taken to minimize non-sampling error in ratio studies.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Normal — A line that is 90° (perpendicular) to the line or to a curve is a radial line.

Normal Distribution — A symmetric distribution of data with relatively more values at the center

of the distribution and relatively few in the tails. The density or height of a normal distribution

(the height for a given value on the x-axis) is based on the distribution’s mean and standard devi-

ation. In a normal distribution, 68 percent of the observations are within one standard deviation

of the mean, 95 percent are within two standard deviations of the mean, and 99 percent are three

standard deviations of the mean.

Normative Statement — A statement that involves the use of value judgments and whose merits

cannot be evaluated on facts alone.

North — The word “north,” as used in the descriptive call of a deed, may be controlled, or qualified,

in its meaning by other words of description used with it, but when it is not qualified by other

words, it must be construed as meaning due “north.” Due north means geographical or astro-

nomical north relative to the earth.

Northerly — Where nothing is given to limit the exact direction, northerly means due north.

Directed more toward the north than any of the other cardinal directions, but not exactly north,

as in a northerly direction.

Note — An agreement acknowledging and promising to repay a debt.

NPL — See National Priorities List.

Null Hypothesis — A hypothesis that there is no statistical significance between certain character-

istics of the population. Any difference is based either on chance or sampling error. See Alternative

Hypothesis and Hypothesis Test.

Numerator — In a fractional expression, the number that is divided by some other number (the

denominator). For example, 3 is the numerator of the fraction 3/4 and 4 is the denominator.

OAR — See Overall Rate.

Object of Tax — 1) The objective element on which a tax is imposed; 2) The aims or purposes for

which the tax is designed. Note: This term, as defined in 1) does not seem to be distinguished

adequately from “measure of tax,” “subject of tax,” and “tax base.” Such distinction as can be drawn

is pedantic, and the use of the term in this sense is not recommended. It is also recommended that

the term “purpose of tax” be substituted for the second usage.

Objective — The quality of being definable by specific criteria without the need for judgment.

Quantitative variables are objective.

Objective Data — Data that are collected or obtained by established and verifiable facts and

sources. For example, zoning requirements, corner lot, size of lot, and amount of front feet can all

be objectively verified.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Oblique Imagery — A type of imagery that provides high-resolution, three-dimensional images

from various positions.

Oblique Photograph — A photograph taken with the camera axis directed intentionally between

the horizontal and the vertical. Typically taken from a plane.

Observation — One recording or occurrence of the value of a variable; for example, one sale ratio

among a sample of sales ratios.

Observed Condition Breakdown Method — Generally divides depreciation (loss in market value)

into all its components: 1) Physical Deterioration — Curable; 2) Physical Deterioration — Incurable

Short — Lived Items; 3) Physical Deterioration — Incurable Long-Lived (which includes the basic

structure); 4) Functional Obsolescence — Curable; 5) Functional Obsolescence — Incurable; and 6)

External Obsolescence (economic) for each major building component, amenity, or feature.

Obsolescence — One factor of depreciation characterized by an impairment or limitation in

function or design or by a shift in market preferences. See External Obsolescence, Functional

Obsolescence, and Superadequacy.

Occupancy — The act of taking possession of or residing in or on a property.

Occupancy Ratio — The ratio of the occupied units (for example, square feet of floor space, living

units, or rooms) of a property to the total available units.

OER — See Operating Expense Ratio.

Official Plan — A comprehensive, long-term plan developed by a municipality to determine public

policy such as transportation, utilities, social housing, and land use.

Offsets — Environmental permits allow certain amounts of air pollutants to be released into the

environment. If an industry wishes to expand and increase air pollution emissions, it may first be

required to reduce its current level of emissions, so that the expanded plant will not emit more

air pollution than did the original plant. A company may also trade air pollution allowances with

another company to facilitate expansion of the first company. Both these exchanges (intercompany

and intracompany) are called “offsets.”

Omitted Assessment — An assessment made after the close of a tax year on property that was

legally assessable but was not listed, or was omitted, for taxation. Referred to as Omitted Property.

One-Meter Ground Pixel Resolution — The smallest feature that can be discerned (in one pixel)

is one meter in length or width.

On Record — A document that has been filed in the public records and made a matter of

public record.

Open-End Mortgage — A mortgage that permits the mortgagor to borrow additional money, with

certain conditions, under the same mortgage.

Open Market — A freely competitive market in which any buyer or seller may trade and in which

prices are determined by competition.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Operating Expense Ratio (OER) — The ratio of expenses to effective gross income (EGI). Normally

the percentage that operating expenses make up as a percentage of effective gross income. It can

also be expressed as a percentage of potential gross income. It is the complement to the net income

ratio (NIR) and can be found by the formula 1 – NIR. See Operating Expenses and Net Income

Ratio.

Operating Expenses — Ordinary and typical expenses that are necessary to keep the property

functional. Operating expenses are evaluated to determine which are proper for development of

the income approach to value. Typical operating expenses can be classified as: 1) Fixed expenses —

An expense that does not vary by the rate of occupancy; 2) Variable expenses — An expense that

varies based on the rate of occupancy; and 3) Reserves for replacement — Annual charges for items

that have relatively short lives.

Operating Leased Property — Property under an operating lease not included as an asset on the

books of the lessee company. Operating leased property is similar to a rental agreement, where

the property is rented/leased for a specified period of time and is intended to be returned to the

owner/lessor.

Operating Statement — Summarizes in writing the gross income, annual expenses, and resulting

net operating income of a business during a specified period of time. Also known as an Income

Statement or Profit and Loss Statement. It is a vital financial reporting document prepared period-

ically, generally at the end of the year. It provides the operating results (income and expenses) for a

specific period of time of the earnings or losses of an entity.

Operating Unit — 1) The property, taken as a whole, that is used in a public utility operation; and

2) A term used to define an integrated set of assets whose value is based on the interaction and

contribution of the assets as a whole.

Operational Plan — A broad-scale plan for accomplishing several objectives in the immediate

future (one year or less). It contains detailed information about objectives, workloads, measures of

performance, and resource requirements.

Opportunity Cost — The cost associated with not taking an alternative course of action in

financial opportunities. Evaluation of the opportunity costs requires evaluation of every other

viable option’s strengths and weaknesses.

Orderly Liquidation Value — The amount of gross proceeds that could be expected from the

sale of the appraised assets under orderly conditions, given a period of time in which to find a

purchaser(s). It considers a complete sale of all assets, as is, where is, and all sales made free and

clear of all liens and encumbrances. Represents Value-in-Exchange.

Ordinal Data — Qualitative variables with a natural order, such as condition, building grade, etc.

See Nominal Data.

Ordinance — A statute or law that designates an enactment by a county’s or municipal corpora-

tion’s legislative body.

Organization Chart — A graphic representation of supervisory positions and lines of authority for

all employees in an organization.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Original Cost — The cost of an asset to the current owner. Differs from historical cost, as the cost

to the current owner may reflect a used purchase price. See Historical Cost.

Original Plat — Used to distinguish the first plat from the subsequent addition. Also known as

Original Town or Original Town Site Map.

Origination Fee — A fee charged by a lender (called the loan originator) for making a real

estate loan.

Orthoimage — See Orthophotograph.

Orthophotograph — A photograph having the properties of an orthographic projection, a

corrected or “straightened” image. It is derived from a conventional perspective photograph by

simple or differential rectification so that the image displacements caused by camera tilt and relief

of terrain are removed. Sometimes referred to as an Orthoimage.

Orthophotography — A photograph derived from perspective photographs and equivalent to

a photograph made by orthographic projection. In a perfect orthophotography there are not

displacements of images because of tilt or relief.

Orthorectification — The process of manipulating an image to remove spatial distortion by

considering location, elevation, and sensor information.

Other and Unallocable Property — Includes any property not classified within any of the preceding

groups. Examples are mineral rights, timber rights, and oil rights, if they are separately assessed as

real estate. The actual manner in which the property is utilized. May differ from the legal zoning

permitted by the governing authority. May differ from the highest and best use of the property. See

Highest and Best Use and Zoning.

Outlier Ratios — Very low or high ratios as compared with other ratios in a sample.

Outliers — Observations that have unusual values; that is, they differ markedly from a measure of

central tendency. Some outliers occur naturally; others are due to data errors.

Outlot — A relatively large lot that is included within the boundaries of an original or subdivision

plat but that is excepted from the general platting pattern for building lots and is usually intended

for occupancy (as, for example, a truck farm or country estate).

Outputs — 1) Goods produced by a firm; and 2) The information returned by a computer to its user.

Overall Age/Life Method — A straight-line method of estimating accrued depreciation of an

improvement’s replacement cost new, by applying a ratio equaling an improvement’s effective

age divided by its total economic life. It is the ratio between the effective age of real or personal

property and its total economic life. It is applied to the replacement cost new of the property to

obtain an estimate of accrued depreciation.

Overall Capitalization Rate — See Overall Rate (RO) or (OAR).

Overall Property Tax Rate Limits — A form of tax and expenditure limitation, applicable to all

governments in the state, in which an upper limit is placed on either the property tax rate or the

rate of increase in the property tax rate.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Overall Rate (OR) (OAR) — The relationship between a single year’s annual net operating income

and the property’s sale price or value. See Capitalization Rate, Discount Rate, Effective Gross

Income, Effective Tax Rate, Net Operating Income, and Recapture Rate.

Overhead Cost — A cost that is not directly traceable to the construction of an improvement. For

example, administrative costs, interest on funded debt, and property taxes.

Over-Improvement — An improvement whose cost exceeds the cost of an alternative improvement

by more than the excess of the present worth of the given improvement and the land over the

present worth of the alternative improvement and the land, often because a structure is too large

or too costly for the most profitable use of the site. When compared with highest and best use

in the market, subject property’s excess cost of a property feature is not justified by any possible

increase in its present value. Factors may include excess size, superadequacy, or lack of demand.

Contrast Under-Improvement.

Overlap — The amount by which one photograph duplicates the area covered by another photo-

graph, usually expressed as a percentage. Overlap may be end or forward (along the flight path) or

side taken during two or more parallel flights); both end and side overlap are customary when more

than one line is flown.

Overlay — In mapping, a record on a transparent medium to be superimposed on another record;

for example, maps showing original land grants (or patents) prepared as tracing cloth overlays so

that they can be correlated with maps showing the present ownership. Also, any of the several

overlays that may be prepared in compiling a manuscript map; usually described by name; for

example, lettering overlay.

Oversight Agency — The supervisory agency responsible for the management and oversight of

assessment programs.

Own-Source Revenue — See Revenue.

Owner, Equitable — One who does not have legal title to a property but holds sufficient rights,

benefits, and burdens in the property to be considered its owner. See Beneficiary.

Owner, Legal — One whose claim to ownership is based on a document (i.e., deed) or rule of law

that specifically transfers ownership of the property.

Ownership — The rights to the use of property, to the exclusion of others. See Bundle of Rights.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Package Mortgage — A mortgage that covers both personal and real property.

Paired Sales Analysis — An appraisal technique using two sold parcels that are the same or

comparable in every aspect except one feature or amenity. The price difference between the two

sales reflects the value of the difference in the feature or amenity.

Panchromatic — Photographic emulsion sensitive to all colors of light.

Panel — 1) A target used for ground control or point identification during aerial photography;

and 2) A group of individuals who are engaged for some service because of their expertise.

Paneling — Marking points on the ground with material of suitable contrast, size, and shape to

provide images that can be positively identified on aerial photographs.

Par Value — The face value of an item of intangible property that has both a stated face value and

a fluctuating market value; applied especially to corporate stocks.

Parallel Lines — Two straight lines that are an equal distance apart. Parallel curves are always

concentric curves. East-west latitude lines are parallel. Technically, north-south meridian lines

converge at the poles and cannot be parallel; however, in a legal description or on a map, where two

lines are shown with the same bearing, it is implied that the lines are parallel. The same bearing on

different maps does not imply parallelism. A line is parallel with, not to, another line. By mathe-

matical definition, “parallel lines” are straight lines; but in common speech about boundaries, the

words are often used to represent lines that are not straight lines, but photographs of each other,

and courts, in ruling on questions of boundaries, often use them in the latter sense.

Parallel of Latitude — Any line that runs due east and west and is at every point at right angles

to the meridian. A parallel of latitude is a curved line on the face of the earth; however, within the

limits of a boundary as shown on a map, parallels of latitude are considered straight lines. Only

where large tracts are surveyed is curvature consideration necessary.

Parameter — Numerical descriptive measure of the population; for example, the arithmetic mean

or standard deviation. Parameters are generally unknown and estimated from statistics calculated

from a sample of the population.

Parametric Statistic — A statistic that assumes the sample data come from a population with a

normal distribution.

Parcel — A contiguous area of land described in a single legal description or as one of a number

of lots on a plat; separately owned, either publicly or privately; and capable of being separately

conveyed. In land ownership mapping for assessment purposes, a parcel is usually held to be a

tract of land under one entity ownership. It may be a combination of two or more tracts acquired

by separate deeds.

Parcel Centroid (Point) — A point within the parcel to which related information can be attached.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Parcel Identification Number — A numeric or alphanumeric description of a parcel that iden-

tifies it uniquely. Assessors use various systems, many with common features. A growing number

of these systems include geocoding. In the 30 states where it exists, the public land survey system,

authorized by the United States government in 1785, is often a basis for parcel identification.

In Ontario, Canada, it is a nine-digit number for numerical indexing of legal description-based

property identification.

Parcel Identification System — The scheme by which parcel identifiers are generated. Parcel iden-

tifiers are constructed from elements relating them to surveying systems, map projection systems,

map-page numbers, and geographic areas.

Parcel Identifier — A code, usually numerical, representing a specific land parcel’s legal

description. The purpose of parcel identifiers is to permit reference to legal descriptions by using

a code of uniform and manageable size, thereby facilitating record-keeping and handling. Also

called Parcel Identification Number.

Parcel of Land — A contiguous urban or rural land area that is considered as a unit, is subject to

single ownership, and is legally recorded as a single piece. Compare Lot and Plot.

Parcel Outline — The geographic extent of the parcel; the parcel boundaries forming a closed polygon.

Parcel Polygon — A sequence of vectors forming a closed shape that defines parcel boundaries.

Parcel polygon objects include information about the parcel such as the parcel identification

number and the parcel area.

Part Sales — Transfers of real property in which a portion of an existing tract is separated and

transferred to another owner, thereby creating one or more new parcels. See Land Division.

Partial Equilibrium — Equilibrium of individual economic units or subsections of the economy

in light of constraints imposed from outside the unit. See Equilibrium and Principle of Balance.

Partial Equilibrium Analysis — An analysis of one unit of the economy in light of constraints

imposed by economic forces outside the unit. An example would be a highest and best use analysis

of vacant land where the land use is limited by zoning.

Partial Exemption — The amount of otherwise-taxable assessed value removed from tax liability

by constitutional and/or statutory action. Examples of partial exemptions are those for qualifying

homesteads, veterans, and senior citizens.

Partial Payment Factor — Also known as the Amortization or Periodic Repayment factor. The

equal periodic payment that has a present worth of $1, for a specified number of periods and at a

specified discount rate.

Partial Taking — Taking part rather than all of real property by means of eminent domain.

Compensation will be both for the part taken and for any loss of value affecting the remainder.

Partially Amortized Mortgage — A mortgage that has monthly or quarterly payments of

interest and partial amortization of the loan balance, with a large balloon payment at the end of

the mortgage.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Partnership — An association of two or more persons to carry on as co-owners of a business under

a partnership agreement.

Passing Call — References to cultural or topographic features along a survey line, sometimes used

to locate lines or recover corners.

Passive System — A sensing system that detects or measures radiation emitted by the target.

Patent — 1) The exclusive right granted by a government for a limited period to an inventor, his

or her heirs, legatees, or assigns, to make, use, and vend an article or process invented by him

or her; and 2) The instrument by which government lands are granted to private persons under

the proceedings set forth in the general statutes. See Intangible Personal Property and Land,

Patented.

P/E — See Price-Earnings Ratio.

Per Capita — Divided by the number of people in the population.

Percent Condition — The difference between observed physical depreciation, expressed as a

percentage of original or reproduction cost, and 100 percent.

Percent Good — An estimate of the value of a property, expressed as a percentage of its replacement

cost, after depreciation of all kinds has been deducted.

Percent of Cost — A technique of valuation by establishing the ratio of the sale price to the cost

new of an asset at the time of sale. With sufficient data, similar property can be analyzed statisti-

cally, and relationships developed between age, selling price, and cost; it is logical then to estimate

value by determining the current cost of the subject and applying the appropriate percentage.

Percentile — The values that divide a set of data into specified percentages when the data are

arrayed in ascending order. The tenth percentile includes the lowest 10 percent of the values, the

twentieth percentile includes the lowest 20 percent of the values, and so forth.

Performance Audit — 1) A systematic set of procedures used by an auditor to determine if the

organization meets acceptable standards; 2) Ratio studies are often included as an important

part of a performance audit of assessment organizations; and 3) An analysis of an organization to

determine whether the quantity and quality of work performed meets standards.

Performance Bond — Insurance issued by a third party to guarantee the satisfactory completion

of a contract.

Performance Budgeting — A style of budgeting that attempts to overcome some of the short-

comings of line-item budgeting by using cost efficiency to make spending decisions and evaluate

management. This type of budget links expenditures to desired results.

Performance Evaluation — The process of comparing desired results with actual

employee performance.

Performance Ratio — A ratio of the income of an investment to its cost that reflects historical

performance of the investment.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Perimeter Sketch — A graphic presentation of the boundaries of a property, either the land or the

buildings on the land.

Personal Effects — Items of tangible personal property that an individual normally wears, carries,

or uses in activities that do not involve the production of income.

Personal Property — All property not defined as real property. Generally, includes four categories

(inventories, fixed assets, leasehold improvements, and intangibles). Tangible property includes

most movable items, but can include sales tax, freight, installation costs, and all other costs

required to place the item into service. Intangible property is evidence of ownership. Personal

property is assessable unless specifically exempted by statute for each state.

Personal Property Specialist (PPS) — A professional designation conferred by the International

Association of Assessing Officers (IAAO) recognizing professionalism and competency in the valu-

ation of personal property for tax purposes.

Personalty — A synonym for personal property. See Personal Property.

PGI — See Potential Gross Income.

Phase I and II Reports — Used for properties that may be affected by contamination. Phase I

reports include historical information about the subject property and the neighborhood, and a

review of pertinent government records to determine any prior violation pertaining to hazardous

wastes or substances. This report requires physical inspection of the property. Phase II reports are

required when potential problems are identified in the Phase I study. Phase II is an in-depth study

of groundwater, air, soils, and improvements to determine the existence of any hazardous waste or

substance or other contaminant.

Photo Delineation — The selection and identification of map-worthy features on a photograph or

digital image.

Photogrammetry — 1) The art and science of obtaining reliable measurements by means of

photography; and 2) The making of maps based on aerial photographs taken under rigidly

controlled conditions.

Physical Contaminant — Any substance recognized as hazardous by the Environmental Protection

Agency (EPA) or local or regional authorities.

Physical Deterioration — A cause of depreciation that is a loss in value due to ordinary wear and

tear and the forces of nature. The loss in value begins immediately following the completion or

installation of a building component. Man-made objects begin to suffer from deterioration as soon

as they are created, simply because of the passage of time. Decay may be due to normal chemical

changes in materials’ composition or may result from mechanical cause. The loss in value may be

curable or incurable.

Physical Life — The total period a building lasts or is expected to last. The length of time it could

physically exist if allowed to remain standing.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Pixel — An element of surface resulting from subdividing an image into the smallest identically

shaped figures that give information about the location, intensity, and perhaps color of the source,

but of which no smaller subdivision will provide more information. The concept “pixel” (dimin-

utive of “picture element”) is valid only for images made up of discrete patches. It is not valid for

continuous images. The term is sometimes assumed to be the equivalent of resolution expressed in

terms of area. However, it is not exactly equivalent, because resolution can be defined for pictures

that do not contain pixels. The size of a pixel is set principally by the size of the smallest individual

radiation-sensitive element in the instrument creating the image. For example, in the human eye,

the pixel region is the region occupied on the retina by a cone.

Place of Business, Principal — See Principal Place of Business.

Plaintiff — The party who initiates a lawsuit in a civil matter.

Plane Rectangular Coordinates — A system of coordinates in a horizontal plane used to describe

the positions of points with respect to an arbitrary origin by means of two distances perpendicular

to each other. See Coordinates.

Planimeter — A mechanical device used for measuring the area of a parcel on a map.

Planimetric Map — A map that represents only the horizontal position for the features repre-

sented; distinguished from a topographic map by the omission of relief in measurable form.

Plant, Machinery and Equipment (PME) — Same as Personal Property. PME is often used outside

the United States to reference non-real property items.

Plat — A map intended to show the division of land into lots or parcels. Upon recordation with the

appropriate authorities, land included in the plat can thenceforth be legally described by reference

to the plat, omitting a metes and bounds description. Also, a diagram drawn to scale showing all

essential data pertaining to the boundaries and subdivisions of a tract of land, as determined by

survey or protraction.

Plat, Original — A plat constituting the original plan or layout of a municipality and showing its

location and division into blocks and lots.

Plat, Recorded — A plat that has been accepted by the constituted authority and that may hence-

forth be used as the basis for a legal description of land within its boundaries.

Plat, Subdivision — A plat showing the location of a subdivision and its layout into lots, streets,

alleys, and the like.

Plat, Township — A plat of a survey township prepared by, or under the direction of, the United

States General Land Office.

Plat Book — A book in the registrar’s office or courthouse that contains subdivision plats and

other plats or maps that have been filed for record.

Plot — 1) A relatively small area of land, generally used for a specific purpose; and 2) A measured

area of land; lot.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Plottage — The assembling of adjacent parcels of land into a single unit under single ownership

that results in an increase in value. Compare Assemblage.

Plottage Value — The incremental value increase that results when two or more sites are combined

to form one larger site with greater utility. Compare Assemblage and Assembly Value.

PLSS — See Public Land Survey System.

PME — See Plant, Machinery and Equipment.

POB — See Point of Beginning.

Point — “Point” in a boundary is the extremity of a line. “To the point” in a description is often

meaningless, since the end of a line is a point. If the point is to be referred to later, “to point A” or

“to point = 1” gives an easy reference.

Point Estimate — A single numerical value used to estimate a population parameter from a sample.

Point estimates provide the best unbiased estimate of the population parameter consistent with

the sample data. See Confidence Interval and Reliability.

Point of Beginning (POB) — In a deed description, it is a reference point from which the description

begins.

Point of Commencement — The first point described in a legal description that begins a series of

calls that eventually takes the reader to the point of beginning.

Points — Prepaid interest on a loan; one point is equal to 1 percent of the amount of the loan. It is

common to deduct points in advance of the loan, so that an individual pays interest on 100 percent

of the loan but gets cash on, say, only 99 percent.

Pole — See Rod.

Police Power — The power of the state that curtails individual rights for the health, safety, and

general welfare of all society. See Bundle of Rights.

Policy Statement — A formal expression of the principles and goals of particular aspects of

property tax.

Polygon — A line chart that includes a number of straight-line segments.

Pooled Regression — Combining two or more strata to form one regression model.

Population — All the items of interest, for example, all the properties in a jurisdiction or neigh-

borhood; all the observations in a data set from which a sample may be drawn.

Position — A numerical or other description of the location and orientation (attitude) of a point or

object. In particular, in geodesy and navigation; 1) Data that give the location of a point in a specific

coordinate system; 2) The place occupied by a point on the earth; and 3) The coordinates giving the

location of a point on the geoid or ellipsoid.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Position, Geographic — The location of a point on the surface of the earth, expressed in terms of

either geodetic or astronomic latitude and longitude. Geo-position is a contraction of this term.

Positional Accuracy — The degree to which the coordinates define a point’s true position on the

earth’s surface.

Positioning System — Generally, a system (equipment, procedures, and personnel) used for

locating a vehicle or, less frequently, an instrument. A navigation system can also be used for posi-

tioning, but a system designed specifically for positioning generally gives more accurate locations.

Positioning System, Doppler — A positioning system consisting of a radio receiver at the point

whose coordinates are to be determined.

Positioning System, Inertial — A positioning system consisting of a computer and an assemblage

of three accelerometers and two or three gyroscopes.

Positioning System, Radio — A positioning system in which the travel time or phase shift of radio

waves is measured.

Positioning System, Satellite — A positioning system consisting of a radio receiver, or a receiver

and transmitter, at the point whose location is to be determined, one or more beacons or tran-

sponders in orbit about Earth, and a computing system for determining and predicting the orbits.

Positive Statement — A statement that involves the use of no value judgments and whose merits

can be evaluated on facts alone.

Possession — Physical control of personal or real property.

Possessory Interest — 1) An interest of a person in an article of property arising from a physical

relationship to the article of such nature as to confer on him or her a degree of physical control

over it, coupled with the intent to so exercise such control as to exclude the general public from use

of it; and 2) The right to occupy and use any benefit in a transferred property, granted under lease,

licenses, permit, concession, or other contract.

Posting — The act of transferring to an account in a ledger the data, either detailed or summa-

rized, contained in a book or document of original entry. Occurs when the balances in the general

journal are recorded into the general ledger.

Potential Gross Income (PGI) — The total scheduled annual income for income-producing prop-

erties at 100 percent occupancy, including other income the property generates (e.g., parking,

laundry, pet fees, etc.).

Potential Gross Rent — The total rent a property would produce if 100 percent occupied at market

rent.

Power of Attorney — A written authorization in which one person gives authority to another

person to act on his or her behalf.

PPS — See Personal Property Specialist.

PRB — See Coefficient of Price-Related Bias.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

PRD — See Price-Related Differential.

Pre-Audit — A review of the primary purpose for conducting an audit, a review of the property tax

filings (statements, renditions, personal property filings) if rendered, a review of the development

of the assessment, in order to complete an audit timely and efficiently, and in compliance with all

property tax laws.

Precedence of Calls — The concept that provides the necessary guidance to map a parcel when

a discrepancy exists between two tracts or when conflicting information is found in a single

description.

Preferred Capitalization Rate — 1) The capitalization rate applicable to the band of investment

financed by preferred stock; and 2) A component of the overall direct capitalization rate calculated

by dividing dividends by the market value of preferred stock.

Preferred Stock — See Stock, Preferred.

Preliminary Data AVM [AVM Assisting Appraisers] — This AVM sorts substantial amounts of

electronic data and provides selected raw or basic data for interpretation by the appraiser. The

appraisers use the AVM applications to provide their opinions of value.

Present Value — The current value of a future sum of money given a specified rate of return.

Present Worth — See Present Value.

Present Worth of $1 — The lump sum amount that would have to be set aside to accumulate with

compound interest to $1 at the end of a specified number of years and at a specified rate of interest.

Alternatively, it can be viewed as the present value of $1 receivable at the end of a specified number

of years and discounted at a specified rate. Also called Reversion Factor. 

Present Worth of $1 Per Period — The present worth of a series of payments of $1, receivable at

the end of each year, for a specified number of years and at a specified interest rate. Also called the

Annuity Factor or Inwood Coefficient.

Press Release — An official statement written by the assessment office and given to members of

the media. A press release provides information on a particular subject.

Pre-Tax Cash Flow — See Before-Tax Cash Flow (PTCF).

Price — The amount asked, offered, or paid for a property.

Price, Adjusted Sale — See Adjusted Sale Price.

Price, Market — The value of a unit of goods or services, expressed in terms of money, as established

in a free and open market. Note: This term is sometimes distinguished from “market value” on the

grounds that the latter term assumes that buyers and sellers are informed, but this assumption is

also implied by the phrase “free and open market.” Compare Price, Sale.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Price, Sale — 1) The actual amount of money exchanged for a unit of goods or services, whether

or not established in a free and open market. An indicator of market value; and 2) Loosely used

synonymously with “offering” or “asked” price. Note: The sale price is the “selling price” to the

vendor and the “cost price” to the vendee.

Price-Earnings Ratio (P/E) — The ratio of the market price per share of the common stock of a

specific company to the earnings per share of common stock of that company during a 12-month

period. Typically, the ratio is based on the current market price and the most recent 12-month

period for which earnings are known. This ratio is the reciprocal of the earnings-price ratio (E/P).

Price-Related Bias — See Coefficient of Price-Related Bias (PRB).

Price-Related Differential (PRD) — A statistical measure of vertical property tax equity. The PRD

is calculated by dividing the mean ratio by the weighted mean ratio in a ratio study. If the result

exceeds 1.03, assessments are considered regressive. If the result is less than 0.98, assessments are

considered progressive.

Primary Assessing Jurisdiction — The unit of government having initial responsibility for deter-

mining the assessed value against which general property taxes are levied by local government and,

where applicable, by state government.

Principal Meridian — A true meridian from which range lines are established by the government

survey.

Principal Place of Business — 1) The main location in which a company conducts business; and

2) The place at which the person or persons responsible for the management of a business enter-

prise exercise their managerial powers. Note: Generally, the president, treasurer, and chair of the

board of directors have their headquarters at the principal place of business. The principal place of

business in any given state may be a district or even a branch office.

Principles of Value — (See the Principles entries that follow)

Principle of Anticipation — The principle of value that states that value is the present worth of

all the anticipated future benefits to be derived from a property. The benefits, in the form of an

income stream or amenities, are those benefits anticipated by the market.

Principle of Balance — The principle of value that states that maximum market value is reached

when the four agents of production attain a state of equilibrium. The four agents of production are

1) Land; 2) Labor; 3) Capital; and 4) Management. See Agents of Production.

Principle of Change — The principle of value that states that market value is never constant

because physical, environmental, economic, governmental, and social forces are at work to

change the property and its environment. When these forces are in balance, the market achieves a

temporary state of rest called equilibrium.

Principle of Competition — Created by the potential for profits, which attracts new buyers and

sellers to the marketplace. It is the principle of value that states that when the amount of property

of a certain type offered for sale is large in relation to demand, prices will fall, and conversely, when

a property of a certain type is reduced in relation to demand, prices will increase.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Principle of Conformity — The principle of value that states that the value of a property depends

to some extent on its relation to its surroundings. The principle of conformity states that maximum

market value is achieved when there is reasonable similarity among the improvements, and

reasonably homogenous and surrounding land uses are compatible with the use of the specified

properties.

Principle of Consistent Use — The principle of value that states that the property must be valued

with a single use for the entire property. It is improper to value a property on the basis of one use

for land and another use for the improvements.

Principle of Contribution — The principle of value that states that the value of a component of

property depends on its contribution to the whole. In other words, the cost of the component does

not necessarily equal the value the component adds to the property.

Principle of Highest and Best Use — See Highest and Best Use.

Principle of Increasing and Decreasing Returns — The principle of value that states that when

successive increments of one agent of production are added to fixed amounts of the other agents,

future net benefits (income or amenities) increase up to a certain point (the point of decreasing

returns), after which successive increments decrease future net benefits.

Principle of Progression — The principle of value that states that the value of a lower-priced

property is increased by association with superior properties of the same type in the same area.

Principle of Regression — The principle of value that states the value of a better-quality property

is decreased by association with lower-quality properties of the same type in the same area.

Principle of Substitution — The principle of value that states that a property’s market value tends

to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming

that no costly delay is encountered in making the substitution. This principle underlies each of the

three approaches to value: cost, sales comparison, and income.

Principle of Supply and Demand — The principle of value that holds that the price of a property

varies directly with demand and inversely with supply. Supply is a function of the four agents of

production. Demand is a function of consumer desire to purchase the property. See Principle of

Balance.

Principle of Surplus Productivity — The principle of value that is the net income remaining

after the costs of labor, management, and capital (in that order) have been satisfied. The surplus

productivity is the income earned by the land. The agents of production must be satisfied in the

following order: labor, management, capital, and land. As a result, land value tends to be set by the

cost of labor, management, and capital. See Principle of Balance, Principle of Contribution, and

Principle of Increasing and Decreasing Returns.

Private Encumbrances — Private hindrances that affect value and sale price, such as easements,

condominium controls, and deed or subdivision restrictions.

Private Restrictions — Private parties, such as a group of homeowners, may establish private

restrictions on ownership rights. Deed restrictions are a common form of private restriction.

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Private Sale — A sale negotiated and concluded privately between buyer and seller and not offered

on the open market. 

Privilege Tax — A special tax on the right to start, expand, or continue a business. Synonymous

with Franchise Tax.

Procedural Audit — A systematic set of procedures used by an auditor to determine whether an

organization is adhering to established procedures. Also, an examination of an organization to

determine whether established or recommended procedures are being followed.

Productivity Value — Measures the worth of land based on its income-producing ability in its

current use. Owners of farm and ranch property apply for agricultural-use or open-space valu-

ation (both are forms of productivity value) to avoid having their properties assessed at a different

highest and best use that would bring higher assessed values and presumably higher taxes. Compare

Value-in-Use.

Profit and Loss Statement — See Income Statement.

Program Budgeting — A style of budgeting that centralizes budgeting to examine net public

benefits. It shows the allocation of funds and personnel across broad programmatic areas.

Program Evaluation and Review Technique (PERT) Chart — A planning tool that provides for

simultaneous sequencing and scheduling.

Progressive Tax — Assessment progressivity occurs when assessment levels or effective property

tax rates on low-value properties are less than assessment levels or effective property tax rates on

high-value properties.

Progressive Tax System — A method of taxation in which those with more resources pay a greater

percentage of their resources than those with fewer resources. Income progressivity occurs in a

tax system under which a taxpayer’s average tax rate increases with income. This is often the case

with income taxation based on multiple rates. Assessment progressivity occurs when effective

property tax rates on high-value properties are greater than effective property tax rates on low-value

properties.

Progressivity — See Principle of Progression and Principle of Regression.

Prolong — To extend in length along a line; to continue along a curve.

Projection — A systematic drawing of lines on a plane surface to represent the parallels of latitude

and meridians of longitude of the earth or a section of the earth.

Proper Expenses — See Operating Expenses.

100

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Property — The ownership of a thing is the right of one or more persons to possess and use it to

the exclusion of others.An aggregate of things or rights to things. These rights are protected by

law. There are two basic types of property: real and personal. Real property consists of the interests,

benefits, and rights inherent in the ownership of land plus anything permanently attached to the

land or legally defined as immovable; the bundle of rights with which ownership of real estate is

endowed. To the extent that “real estate” commonly includes land and any permanent improve-

ments, the two terms can be understood to have the same meaning. Also called Realty. Personal

property is defined as those items that generally are movable or all items not specifically defined as

real property. Many states include as personal property the costs associated with placing personal

property in service, such as sales tax, freight, and installation. Installation items include, but are

not limited to, wiring, foundations, hookups, and attachments. Two commonly used tests for

distinguishing real and personal property are 1) the intent of the parties; and 2) Whether the item

may be removed from the real estate without damage to either. See Intangible Personal Property,

Personal Property, Real Property, and Tangible Personal Property.

Property, Distributable — 1) Property subject to central assessment that is certified by the central

assessing officer or body to local tax districts, according to the property’s actual or constructive

tax within such districts, for inclusion in the local assessment and/or tax rolls; and 2) The personal

property of an intestate available for distribution by the administrator to the heirs.

Property, Investment — A property that has been developed with the intention and expectation of

renting it, in whole or in part, for profit.

Property, Non-Investment — A property that has not been developed with the intention and

expectation of renting it, in whole or in part, for profit.

Property, Non-Operating — Property not included in the unit being appraised, usually where the

non-operating property is not necessary to the operation of the unit and is readily assessed locally.

Property, Ratable (or Rateable) — Taxable property.

Property, Tangible — Physical items that includes both real and personal property. Specifically,

does not include intangible property.

Property in Transit — Property moving interstate by common carrier or private conveyance. It is

covered by federal Interstate Commerce Commission regulations and cannot be assessed.

Property Line — The boundary line that defines a parcel of land.

Property Record Card — See Appraisal Card.

Property Residual Technique — A valuation method normally used when neither land nor

building value can be estimated reliably. To use this technique, an estimate of the amount of

recapture is required. This technique treats the net income directly, relating the income to the

total property value without considering separation of land or building from the total property

value. The remaining proceeds of sale attributed to the land after all expenses, financing costs

and profit have been deducted. Source: UBC Sauder School of Business.

Property Rights — See Bundle of Rights.

101

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Property Split — A result of the sale of property held by a single owner such that different pieces

of the property are owned by different owners. Splits may or may not occur along plat lines. See

Land Division.

Property Tax — Any tax that is imposed on persons on account of their ownership or possession

of property; it is measured by the number of units, the value, or some presumptive evidence of

number of units or value, of such property. Note: This tax is generally, but not necessarily, intended

to be a direct, proportional ad valorem tax. Compare Classified Property Tax, General Property Tax,

and Special Property Tax.

Property Tax Base — See Assessment Base.

Property Tax Calendar — See Tax Calendar.

Property Tax Credit — An offset against the property tax payment or another tax payment for

taxpayers who meet certain criteria (for example, senior citizens), or whose properties have certain

characteristics or are used for specified purposes (for example, pollution abatement), a direct

reduction in a tax payment rather than in a tax base.

Property Tax Levy — 1) The total amount of money to be raised from the property tax as set forth

in the budget of a taxing jurisdiction; and 2) Loosely, by extension, the millage rate or the property

tax bill sent to an individual property owner.

Property Tax Levy Limits — A form of tax and expenditure limitation, applicable to all local

governments in the state, in which an upper limit is placed on either the proceeds of the property

tax or the rate of growth in the proceeds of the property tax.

Property Tax Policy — Any purposeful course of action by governmental bodies that affects or deter-

mines the way property taxes are created, levied, collected, or spent. Property tax policy issues can

include determining the division of responsibility between local and state/provincial governments,

equalization, appeals, public relations, reappraisal systems, the market value standard, exemptions

and abatements, fractional assessments (ratios), and limits on taxes and assessed values.

Property Taxes — See General Property Tax, Property Tax, and Special Property Tax.

Property Use Category — A United States Census Bureau classification scheme based on actual

utilization of real property, including; 1) Residential (Non-Farm) Single-Family; 2) Residential (Non-

Farm) Multifamily; 3) Acreage (Acreage and Farms); 4) Vacant Platted Lots; 5) Commercial Property;

6) Industrial Property; and 7) Other and Unallocable Property. The actual manner in which the

property is utilized. May differ from the legal zoning permitted by the governing authority. May

differ from the highest and best use of the property. See Acreage, Commercial Property, Highest

and Best Use, Industrial Property, Other and Unallocable Property, Residential (Non-Farm)

Multifamily, Residential (Non-Farm) Single-Family, Vacant Platted Lots, and Zoning.

Proportional Tax — A tax in which the effective tax rate is the same for all taxpayers regardless

of the sizes of the tax bases on which they are subject to taxation. A tax system under which a

taxpayer’s average tax rate is the same at each level of income.

Proprietary Lease — See Lease, Proprietary.

PTCF — See Before-Tax Cash Flow.

THERE IS CROSS REFERENCE TO

PROPERTY, RESIDENTIAL BUT NO

ENTRY FOR IT

102

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Public Access System — An electronic database, accessible to everyone, that provides the public

with a searchable repository of information related to local property assessment.

Public Good — A good/service that is made available to all members of a society.

Public Interest Value — Classes of properties, primarily government-owned or public-oriented, for

which the economic considerations underlying highest and best use analysis are different, because

these properties are built or acquired for reasons other than economic return.

Public Land Survey System (PLSS) — A rectangular survey system established in the United States

by the Land Ordinance of 1785. The basic survey unit is the six-square-mile township. Townships

are located by baselines and meridians parallel to latitude and longitude lines; they are defined

by range lines running parallel (north-south) to meridians and township lines running parallel

(east-west) to baselines.

Public Policy — Any purposeful course of action by governmental bodies, whether successful or

unsuccessful and whether implementable or not.

Public Restrictions — Governmental restrictions that place limitations on the bundle of rights,

including taxation, eminent domain, police power, and escheat.

Purchase Money Mortgage — A mortgage given by the buyer to the seller or other lender to enable

the purchase transaction. With this mortgage, a buyer can finance all or much of a property’s cost

by arranging for the seller to accept a purchase money mortgage as part of the purchase price.

Qualified Sale — A property transfer that satisfies the conditions of a valid sale and meets all other

technical criteria for inclusion in a ratio study sample. If a property has undergone significant

changes in physical characteristics, use, or condition in the period between the assessment date

and sale date, it would not technically qualify for use in ratio study.

Qualitative Data — Non-numerical information that is subjective in nature. For example, view, fire

protection, quality, or site/location.

Qualitative Variable — Non-numeric variable that is subjective in nature. It describes an amenity

such as view, fire protection, quality, or site/location.

Quality Class — A classification of a structure by an appraiser, intended to describe materials

used, workmanship, architectural attractiveness, functional design, and the like. Quality class, or

its synonym “grade,” is the key variable in most cost schedules. See Classification.

Quality Control — The activities involved in ensuring that data accuracy standards are achieved

and maintained.

Quantitative Data — Pertaining to the objective nature of some variable of interest, that is, some-

thing that can be measured or counted with little ambiguity. For example, number of bathrooms

is a quantitative variable.

103

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Quantitative Variable — See Quantitative Data.

Quantity Survey Method — A method of estimating reproduction cost in which a complete item-

ization is made of all labor and material costs by component and subcomponent and all indirect

costs; these are added to obtain an estimate of the cost of a structure or a reasonable bid for a

contractor to submit on a proposed project.

Quarter Section — A subdivision of a section containing 160 acres more or less, described by

referencing the center point in the section, that is, the NE + is north and east of the center point.

Quartiles — The values that divide a set of data into four equal parts when the data are arrayed in

ascending order. The first quartile includes the lowest quarter of the data; the second quartile, the

second lowest quarter, and so forth.

Quiet Title — An action at law to remove an adverse claim or cloud on the title of property.

Quitclaim Deed — A deed in which the grantor conveys or relinquishes all interests that he or

she may have in a property, without warrant as to the extent or validity of such interests. See Deed.

Quotient Transformation — A 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.

Radar, Side-Looking — A form of radar mounted on aircraft in which the beam is pointed, either

by scanning or by shaping, in a direction perpendicular to the longitudinal axis of the aircraft so

that the returned signals come from a long, narrow strip of ground approximately parallel to the

airplane’s line of flight. The ground is mapped as a set of adjacent, overlapping strips.

Radar, Synthetic-Aperture — A radar containing a moving or scanning antenna; the signals

received are combined to produce a signal equivalent to that which would have been received by a

larger, stationary antenna.

Radiation — Process by which electromagnetic energy is propagated through free space by virtue

of joint undulatory variations in the electric and magnetic fields in space.

Radon — Radioactive gas that may enter structures from beneath the ground level and contam-

inate the air within.

Random Sample — A sample for which each item of the population has an equal chance of being

included and, by extension, each possible combination of n items (number of items) has an equal

chance of occurrence.

Range — 1) The maximum value of a data set (sample), minus the minimum value; and 2) The

difference between the maximum and minimum values (that) a variable may assume.

104

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Range Line — One of a series of survey lines running due north and south at six — mile intervals,

used for locating parcels of land under government survey. See Meridian, Principal. Contrast

Township Line.

Rank — 1) The position of an item relative to others in a set ordered according to the value of

each member of the set in relation to the others; and 2) The act of ordering the members of a set

according to the value of each member in relation to the others. For example, the numbers 0.95,

0.87, 1.09, and 0.83 have ranks of 3, 2, 4, 1.

Raster Image — An image represented by a series of lines and samples. A format for storing,

processing, and displaying digital graphic data in which graphic images are stored as values for

uniform grid cells or pixels.

Ratable Property (Rateable) — See Property, Ratable (or Rateable).

Rate, Capitalization — See Capitalization Rate.

Rate, Discount — See Discount Rate.

Rate, Mill — See Millage.

Rate, Tax — See Tax Rate.

Rate Base — Under perfect regulation, the dollar amount on which a return is allowed as estab-

lished by a regulatory agency.

Rate-Driven Levy — The property tax rate to be applied is specified in the budget or tax levy ordi-

nance of a taxing jurisdiction, rather than the situation in which the total revenue to be raised is

specified and the rate is calculated.

Rate of Return — See Discount Rate.

Ratio, Assessment — See Appraisal Ratio.

Ratio, Occupancy — See Occupancy Ratio.

Ratio Study — A statistical study of the relationship between appraised or assessed values and

market values; based on an analysis of the ratio derived by dividing the appraised or assessed values

of property by the market values of such property. Sale prices or independent appraisals are used

as proxies for market values.

Raw Materials — A type of inventory used in a manufacturing process but may include some

synthetics. This type of inventory, which can be converted into a new and more useful product, also

as personal property, is usually located at the manufacturing level of trade.

RCN — See Replacement Cost New and Reproduction Cost New.

RCNLD — Replacement/reproduction cost new less depreciation or reproduction cost new less

depreciation. See Depreciation, Replacement Cost New, and Reproduction Cost New.

105

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Real Estate — The physical parcel of land and all improvements permanently attached. Compare

Real Property.

Real Estate Investment Trust (REIT) — Combines capital from many investors to acquire or

finance real estate through formation of a corporation whose shares are traded in a market.

Real Estate Taxes — A levy imposed on land and buildings. It is collected by a governing body. It

can extend to personal property in some jurisdictions. North America is primarily an ad valorem tax

system, and the levy is imposed on the estimated value of the property. The collected funds help the

government maintain services within the jurisdiction. See Effective Tax Rate and Nominal Tax Rate.

Real Estate Transfer Affidavits — In written or electronic format, these documents are an affirmed

or sworn statement regarding particulars of a sale of real property, such as personal property,

financing, and so on. Typically, these forms are required in states and provinces in which sales

disclosure statutes have been enacted and are filed prior to recording the deed. Comprehensive

affidavits may limit the number of follow-up verifications required during the sales verification

process. These questionnaires are also known as Sales Verification Questionnaires.

Real Estate Transfer Documents — The various kinds of deeds whereby real property is conveyed.

Compare Conveyances.

Real Property — Consists of the interests, benefits, and rights inherent in the ownership of land

plus anything permanently attached to the land or legally defined as immovable; the bundle of

rights with which ownership of real estate is endowed. To the extent that “real estate” commonly

includes land and any permanent improvements, the two terms can be understood to have the

same meaning. Also called Realty. See Property.

Real Time — To make images or data available for inspection simultaneously with their acquisition.

Realty — See Real Property.

Reappraisal — The mass appraisal of all property within an assessment jurisdiction accom-

plished within or at the beginning of a reappraisal cycle. A subsequent (and possibly periodic)

mass appraisal of all property of a specified class or classes within an assessment jurisdiction.

Factors considered may include changes in physical condition, use, or the market. Also called

Reassessment or Revaluation.

Reappraisal Cycle — Time needed, taken, or permitted for a jurisdiction to reappraise all prop-

erties of a specified class or classes, as may be mandated by law or rule. See Reappraisal.

Rear — A deed reading “thence running to the rear of said land” does not always mean that the

land extends to the rear line but may mean “toward the rear.”

Reassessment — 1) A revaluation of all property of a specified class or classes within an assessment

district directed upon a lawful finding that a prior assessment was too faulty to be corrected

through usual procedures of review and equalization; and 2) Revaluation of all real property by

assessing authorities, as distinguished from assessment on the basis of valuations most or all of

which were established in a prior year. See Reappraisal Cycle and Revaluation.

Recapture, Straight-Line — The recovery of capital invested in a wasting asset in equal periodic

amounts over the remaining economic life of the asset. See Recapture Rate.

106

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Recapture Rate — A portion of the overall rate (Ro) or (OAR) in an income approach representing

the return of the owner’s investment in property. Expressed as the current year’s percentage of the

remaining economic life (REL). See Remaining Economic Life.

Receiver — One who is appointed by a court of equity as its representative to manage property

owned by an insolvent debtor until the claims of creditors have been met or to manage property

that is the subject of a lawsuit pending its outcome.

Reciprocal — The result obtained when 1 is divided by a given number. For example, the reciprocal

of 4 is 0.25. Factors are reciprocals of rates.

Reclamation — The process of physically changing land to increase value.

Reconciliation — The final step in the valuation process wherein consideration is given to

the relative strengths and weaknesses of the three approaches to value: cost, income, and sales

comparison. Consideration is given to the nature of the property appraised and the quantity and

quality of available data in formation of an overall opinion of value, as either a specific value or a

range of value. Referred to as Correlation.

Recordation/Recording — The filing of documents affecting real property for public record, which

usually requires the witnessing and notarizing of the document.

Recorded — A deed that has been filed for record in the courthouse and made a matter of

public record.

Rectangular Coordinates — A land description system where boundaries are described as lines

running from points on an x and y grid.

Rectangular Land Surveys — Land description systems based on permanent, uniformly sized rect-

angular grids that can be subdivided into smaller units of land.

Rectangular Survey System — A surveying method that uses a rectangular grid system, the basic

elements of which are townships approximately six miles on each side. Each township is divided

into 36 sections, nominally one mile square and containing 640 acres. Sections are further subdi-

vided into quarter sections, and so on.

Rectification — 1) The process by which the geometry of an image area is made planimetric; and 2)

The process of converting a tilted or oblique photograph to the plane of the vertical by projecting

it onto a horizontal reference plane, with the angular relationship determined by the use of control

points recognizable on the photograph and an accurate map.

Rectified — An aerial photograph printed by a process to remove distortion or displacement due

to the tilt of the aircraft when originally exposed. See Orthophotograph and Orthorectification.

Redemption — The process by which the owner of real property sold at a tax sale buys back the

property from the purchaser at an enhanced price within a specified redemption period.

Regression Analysis — A statistical learning technique useful to infer the relationship between

a dependent variable and independent variables. There are numerous types of regression analysis,

from simple linear regression to more complex multiple linear and nonlinear regression. See

Multiple Regression Analysis.

107

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Regression Coefficient — The coefficient calculated by the regression algorithm for the data

supplied that, when multiplied by the value of the variable with which it is associated, will predict

(for simple regression) or help to predict (for multiple regression) the value of the dependent

variable. For example, in the equation, Value = $10,000 + $5,000 × number of rooms, $5,000 is a

regression coefficient. A regression coefficient is the number by which a variable in an equation is

multiplied. For example, in the equation MV = 10,000+ 50(X1) the variable X1 is multiplied by 50,

so the regression coefficient is 50.

Regression Line — The line on a graph that represents the relationship defined by the regression

coefficients. For example, the line from the relationship given in the definition of regression coef-

ficient would cross the y-axis at the value $10,000 and would go up $5,000 for each movement of

1 to the right. This example illustrates one of the subtleties required in understanding regression

analysis: In fact, there is no line, because the independent variable is not a continuous variable,

but it is easier to talk about the relationship by pretending that the variable is continuous and to

represent the relationship by a line rather than the more nearly correct series of vertical bars on

a bar chart. Linear regression finds the straight line, specifically the least squares regression line

that best represents the relationship between the independent variable and the dependent variable.

Regressive Tax System — Assessment regressivity occurs when assessment levels or effective

property tax rates on low-value properties are greater than assessment levels or effective property

tax rates on high-value properties.

Regressivity — See Principle of Regression.

Regressivity Index — See Price-Related Differential (PRD).

Regular Section — A one-square -mile subdivision of a township containing 640 acres.

REIT — See Real Estate Investment Trust.

Reject Code — A flag applied to a record indicating that it should not be used for certain purposes.

REL — See Remaining Economic Life.

Relationship — The phenomenon whereby knowledge of the value of one variable tells you some-

thing about the probable value of another. Relationships may be positive (an increase in the value

of one variable implies an increase in the value of the other variable) or negative (a change in the

value of one variable implies a change in the other direction for the value of the other variable).

Independence of two variables means that there is no relationship between them.

Relative Location — Location as described by the relationship between objects.

Reliability — In a sampling process, the extent to which the process yields consistent population

estimates. Ratio studies typically are based on samples. Statistics derived from these samples may

be more or less likely to reflect the true condition in the population depending on the reliability

of the sample. Representativeness, sample size, and sample uniformity all contribute to reliability.

Formally, reliability is measured by sampling error or the width of the confidence interval at a

specific confidence level relative to the central tendency measure.

108

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Remainder — An interest in real property that does not give the right of possession until the

rights of the person in possession have been terminated either by death or by lapse of time. An

example is when A conveys property to B, reserving in the deed a life estate to A. A (life tenant)

has the right of possession and enjoyment of the property for their lifetime, and at their death, B

(remainderman) acquires this right of possession, thereby giving them the entire interest in the

property. During A’s lifetime, B’s interest is a remainder. In cases of eminent domain, the portion

of a property remaining for the property owner.

Remainderman — The person who receives property after the death of a person or persons

in a life estate.

Remaining Economic Life (REL) — The estimated number of years remaining during which the

improvements and personal property continue to contribute to the total property value. Often

expressed as a percentage of the total economic life (REL %). See Age, Economic Life, Effective Age,

and Useful Life.

Remediation — The act or process of curing or reducing contamination on real property.

Remodel — To improve a structure by changing its floor plan, functions, or characteristics.

Remote Sensing — The process of obtaining information about an object while physically sepa-

rated from it. Practically, this term is used to describe the process of using sensors mounted on

satellites to capture images and to observe the earth’s geology, surface, and atmosphere.

Rendition — A term occasionally used synonymously with Declaration.

Rent, Economic — 1) In appraisal, the annual rent that is justified for the property on the basis of a

careful study of comparable properties in the area; market rent; and 2) In economics, the payment

received by an owner of something being bought or rented in excess of the minimum amount for

which he or she would have sold or rented it.

Rent, Escalation Clause — A clause in an agreement that allows for an increase in rent.

Rent, Gross — The total amount received by a lessor from a lessee, without deduction for taxes,

maintenance, or any other payments made by the lessor on account of the leased property. Contrast

Rent, Net.

Rent, Ground — See Ground Rent.

Rent, Net — The amount remaining to the lessor out of gross rents after deducting taxes on the

property, insurance, repairs, expenses of management, and any other operating and maintenance

expenses payable by him or her on account of the leased property. Note: Net rent is arrived at

before deduction of depreciation expenses, interest on the lessor’s investment in the property, and

income taxes payable by the lessor.

Rentable Area — A specified unit area of leasable space. 1) The pro rata portion of a building’s

space usable by tenants. It may include common areas, such as hallways, lobbies, public restrooms,

and fitness facilities; and 2) Amount of space on which rent is based, calculated according to

local practice.

Rental Value — The value of a property that is devoted to or available for supplying space for rent.

109

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Repeat Sales Analysis Model — Aggregates changes in value and statistical means for properties

sold more than once during a specified period in a given geographic area. For example, in a ZIP or

postal code area, estimates market-level housing price changes. If an individual property has not

been substantially changed since its last sale, this analysis matches each pair of sales transactions

(thus the name “repeat sales”). The amount of appreciation (or depreciation) is calculated from the

time of the first sale to the second and so on, providing an estimate of the overall appreciation of

that local housing market during that time period. The larger the number of available sales pairs,

the more statistically reliable the estimate of overall housing price trends will be. Because this

analysis is based on identifying properties where more than one sale has occurred, the challenge is

to identify enough observations to provide a meaningful index of housing values, while keeping to

as small a geographic area as possible. A repeat sales index may also overestimate market appreci-

ation if the data contain pairs of sales in which the second sales price reflects substantial improve-

ments (or other alterations) made to the property after the first sale. Repeat sales indices can

provide very useful valuation estimates in jurisdictions where the data are insufficient to support

hedonic models. In addition, they may prove to be more accurate in tracking housing values for

the houses that a hedonic model may struggle with (especially those subject to extreme positive or

negative influences) when a prior sale is known on the property. See Paired Sales Analysis.

Repetitive Automated Valuation Model (Continuous Application AVM) — This AVM appli-

cation is intended to be used repeatedly to project values for future dates without recalibration but

through the addition of new sale prices and economic information.

Replacement Cost New (RCN) — The current cost of producing a building or improvement, or

item of personal property with the same utility with modern materials, design, and workmanship.

This cost is less than the amount indicated by the reproduction cost new method. It implies that

the cost is based on a modern improvement that affords utility equivalent to that provided by the

subject property.

Replacement/Reproduction Cost New Less Depreciation (RCNLD) — See Depreciation,

Replacement Cost New (RCN), and Reproduction Cost New (RCN).

Replacement Reserve — An allowance in an annual operating statement for replacement of short-

lived items that will not last for the remaining economic life of a property.

Report — Any communication, written or oral, of an appraisal, review, or consulting service that is

transmitted to the client upon completion of an assignment.

Representative Sample — A sample of observations from a larger population of observations, such

that statistics calculated from the sample can be expected to represent the characteristics of the

population being studied.

Reproduction Cost New (RCN) — The cost of producing an exact replica of a building, improvement,

or item of personal property using the same or similar materials, design, and workmanship. This

cost involves rebuilding the subject property with an inherent faculty design, superadequacies,

and inefficiencies. It is an unrealistic method for older, obsolete property due to the cost of repro-

duction. See Cost Approach.

Repurchase Agreement — A short-term financing arrangement whereby those needing funds sell

securities but agree to repurchase them at a fixed price at a specified time.

110

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Request for Proposal (RFP) — A document outlining the specifications of a project that is sent to

potential vendors.

Required Rate of Return on Equity — A component of the discount rate, as it is understood from

the point of view of band-of-investment analysis, and a component of the overall rate developed

according to mortgage-equity analysis. See Discount Rate.

RES — See Residential Evaluation Specialist.

Resale Factor — A property’s cost components pertaining to carrying charges expected to be

incurred during construction and preparation for occupancy.

Resales — A parcel or item of personal property that sold in the past and has been sold again. The

difference in selling price can be used to calculate a market condition adjustment. See Market

Condition Adjustment.

Research Automated Valuation Model — General valuation tools that resemble production AVMs

in design but have limited functionality. Research AVMs are used for initial testing of concepts.

Reserve — Creates some right or privilege for the grantor in the land described as granted.

Reserve, Valuation — An account to which is credited the amount of depreciation expenses, antic-

ipated losses on bad debts, and other charges representing a downward revaluation of assets that

are carried on the books at a figure making no allowance for such revaluation. Note: Valuation

reserves are sometimes carried on the liabilities side of the balance sheet. Good accounting

procedure, however, requires that they be carried on the assets side of the balance sheet directly

after the assets to which they pertain, and that their amounts be deducted from gross book values

in arriving at total sales.

Reserve Requirement — The amount, expressed as a percentage of deposits, a commercial bank

that is a member of the Federal Reserve System must keep on deposit in the Federal Reserve Bank

of its region.

Reserves for Replacement — Expenses that include annual charges for items that have relatively

short lives (short — lived items), such as roof covering, carpets, paint, water heaters, and HVAC

systems. See Sinking Fund.

Reserving — See Reserve, Valuation.

Residence — 1) A domicile; 2) A domicile at which a person is actually dwelling; and 3) A dwelling

place, whether or not it constitutes a domicile (preferred). Note: Ordinarily, in the law of taxation,

“residence” means “domicile” unless a contrary meaning is specified or is indicated by the context.

See Residential Property.

Residential Evaluation Specialist (RES) — A professional designation conferred by the

International Association of Assessing Officers (IAAO) recognizing professionalism and compe-

tency in the valuation of residential property for tax purposes.

111

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Residential (Non-Farm) Multifamily — Includes each residential property that contains two or

more living units, including duplexes, apartment houses, and cooperatives that are assessed as

a single entity. The category encompasses street-level stores and doctors’ offices in apartment

buildings but excludes motels or hotels.

Residential (Non-Farm) Single-Family — Includes each detached, semi-detached, or attached

house, if separately assessed and not on a farm, that is a residence for one family only. For detached

houses, this would include one-family rural properties or suburban estates not used primarily for

farming, and mobile homes assessed as real property. This category includes each condominium

unit in a multi-unit dwelling structure, plus each condominium’s share of the common area,

unless the common area is separately assessed.

Residential Property — Generally includes any property that is used or designed for use by a one -

to four- family dwelling in which one or more persons reside. Includes Single-Family residences, up

to four multifamily units. This category includes each condominium unit in a multi-unit dwelling

structure, plus each condominium owner’s share of the common area. See Property, Residential.

Residual — The difference between an observed value and a predicted value for a dependent

variable.

Residual Technique — See Abstraction Method.

Residual Value — The value of the property after cleanup of environmental contamination. This

may be more or less than the original value, depending on counterbalancing effects of stigma and

improvements to property efficiency.

Residual Value of Improvements — See Building Residual Technique.

Residual Value of Land — See Land Residual Technique.

Resolution — Fineness of detail that can be distinguished in an image, as on a video display

terminal. Display resolution is the density of the pixels that compose an image. Spatial resolution

is the smallest possible map feature that can be accurately displayed at a specified map scale.

Response Surface Analysis — A mass appraisal technique that involves creating value influence

centers, computing variables to represent distances (or transformations thereof) from such points,

and using the variables in a multiple regression or other model to capture location influences.

Implementation of the technique is enhanced using a geographic information system. Some

geographic information systems permit the value influence centers to be displayed and measured

as a three-dimensional grid surface, the results of which can be likewise used in calibration tech-

niques to arrive at the contribution of location based on the model specification.

Restricted-Use Value — See Value-in-Use.

Restriction — Any limitations on the uses or right of real property.

Revaluation — Sometimes used interchangeably with a reappraisal of property, a complete reap-

praisal of real property as of a specified date. See Reappraisal and Reappraisal Cycle.

112

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Revenue — All government revenue except from government-operated public utilities, govern-

ment-operated liquor stores, and for unemployment compensation, employee retirement, workers’

compensation, or other government trust funds. Miscellaneous revenue is a non-tax, non-charge

revenue derived from interest earnings, special assessments, sale of property, or other sources.

Own-source revenue is government funding that comes only from within the jurisdiction under

consideration. For local governments, this means that it excludes revenue received from federal and

state intergovernmental grants; it may include taxes, current charges, and miscellaneous revenue

collected by the jurisdiction. Alternatively, general revenue minus intergovernmental revenue.

Reverse Mortgage — A low-interest loan, usually for senior homeowners, that uses a home’s equity

as collateral. The loan amount is a percentage of the home’s value determined by the age of the

youngest homeowner. The loan does not have to be repaid until the last surviving homeowner

permanently moves out of the property or passes away. At that time, the estate has approximately

12 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All

remaining equity is inherited by the estate. The estate is not liable if the home sells for less than

the balance of the reverse mortgage.

Reversion — The right of possession commencing on the termination of a particular estate. The

estate or interest that will revert to, or be returned to, the grantor in a deed should restrictions be

violated or the term of the conveyance end.

Reversion Factor — See Present Worth of $1.

Review — 1) Consideration by a board of appeals, a board of equalization, a board of review, or

a court of individual, property class, or district assessments, whether for the purpose of adding

omitted taxable property, removing exempt property, or equalizing the valuations placed on listed

property; and 2) The act or process of critically studying a report, such as an appraisal, prepared

by another.

Review, Administrative — See Administrative Review.

Review, Judicial — See Judicial Review.

Revocable Trust — A trust in which the grantor of the property held in trust retains the right to

repossess the legal and equitable titles. See Trust Deed.

RFP — See Request for Proposal.

RI — See Land Capitalization Rate.

Right-of-Way — 1) An easement consisting of a rite of passage through the servient estate

(preferred); and 2) By extension, the strip of land traversed by a railroad or public utility, whether

owned by the railroad or utility company or used under easement agreement.

Rights, Property — See Bundle of Rights.

Rights of Survivorship — The process of descent of ownership or title to property when so stipu-

lated in an instrument of conveyance, such as a deed.

Riparian Rights — Rights held by owners and users of land adjacent to or abutting streams, rivers,

and creeks. See Littoral Rights.

113

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Risk Rate — The return commensurate with the risk assumed by the investor. Risk rate is a

component of the discount rate because the return on real estate is a desired return and might or

might not be realized by the investor.

RMS — See Root Mean Square.

Rod — A land measure of 16+ feet or 25 links. Also called a “pole.” A land measure, a surveyor’s

linear measure of 16.5 feet for 1/4 of a chain.

Roll, Assessment — See Assessment Roll.

Roll, Tax — See Tax Roll.

Root Mean Square (RMS) — The square root of the average value of the sum of the squares of

the differences between values in a set and the corresponding values that have been accepted as

correct or standard. Used to measure map accuracy.

Royalty — 1) A payment made periodically or at irregular intervals to the owner of a patent or

payment made periodically or at irregular intervals to the owner of an interest in mineral land for

the privilege of exploring for, and/or mining and disposing of, mineral deposits.

Safe Rate — The rate obtainable with the most safety and the least risk.

Said — Refers to one previously mentioned with the same name.

Sale, Arm’s-Length — See Arm’s-Length Transaction.

Sale, Conditional — See Conditional Sale.

Sale, Distressed — See Distressed Sale.

Sale, Forced — See Forced Sale.

Sale, Judicial — See Judicial Sale.

Sale, Leaseback — See Leaseback Sale.

Sale, Private — See Private Sale.

Sale Price — See Adjusted Sale Price.

Sale Price-Assessment Ratio — The reciprocal of the assessment-sale price ratio. See Assessment

and Sale Price Ratio.

114

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Sale Terms — The amount of down payment, the interest on the mortgage, and information

on points and other fees involved in a real estate sale. Also called Terms of Financing or F

inancing Terms.

Sales Chasing — 1) The practice of using the sale of a property to trigger a reappraisal of that

property at or near the selling price. Use of the Mann-Whitney test can determine whether sales

chasing occurs. If sales with such appraisal adjustments are used in a ratio study, the practice causes

invalid uniformity results and causes invalid appraisal level results, unless similar unsold parcels

are reappraised by a method that produces an appraisal level for unsold properties equal to the

appraisal level of sold properties; and 2) By extension, any practice that causes the analyzed sample

to misrepresent the assessment performance for the entire population as a result of acts by the

assessor’s office. A subtle, possibly inadvertent, variety of sales chasing occurs when the recorded

property characteristics of sold properties are differentially changed relative to unsold properties.

Then the application of a uniform valuation model to all properties results in the recently sold

properties being more accurately appraised than the unsold ones. See Mann-Whitney Test.

Sales Comparison Approach — One of three approaches to value, the sales comparison approach

estimates a property’s value (or some other characteristic, such as depreciation) by reference to

comparable sales. The sales comparison approach compares recently sold properties to the subject

property. Adjustments are made to comparable properties to reflect the characteristics of the

subject property.

Sales Data — 1) Information about the nature of the transaction, the sale price, and the charac-

teristics of a property as of the date of sale; and 2) The elements of information needed from each

property for some purpose, such as appraising properties by the direct sales comparison approach.

Sales File — A file of sales data. See Sales Data.

Sales Ratio/Assessment Ratio — The ratio of an appraised (or assessed) value to the sale price or

adjusted sale price of a property.

Sales Ratio Study — A ratio study that uses sale prices as benchmarks for market values. A rela-

tionship between sales prices and value (market value, assessed value, equalized value), that is used

to measure the level of appraisal. Used to evaluate the effectiveness of assessment practices, reap-

praisals, or revaluations.

Sales Tax — A tax levied as a fixed percentage on the dollar value of a broad category of

retail purchases.

Sales Verification Questionnaire — In written or electronic format, these documents are an

affirmed or sworn statement regarding particulars of a sale of real property, such as the inclusion

of personal property, favorable financing, etc. These forms assist the assessing officer in sales vali-

dation for property valuation.

Salience — In the economics of taxation, salience refers to the visibility of the tax in question and

how this visibility affects behavior.

Salvage Value — The value that badly depreciated improvements, machines, or equipment would

have if dismantled and sold in separate parts or pieces; the value of an asset at the end of its

economic life.

115

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Sample — A subset containing the characteristics of a larger population. A sample should represent

the population as a whole and not reflect any bias toward a specific attribute. In order to achieve

an unbiased sample, the selection must be random so each item from the population has an equal

chance of inclusion in the sample group.

Sampling Error — A statistical error from a sample that does not represent the population.

Sandwich Lease — See Lease, Sandwich.

Saturation — Vividness or intensity of hue in color theory.

Scale — The reduction ratio that characterizes a particular map. A ratio of 1:100, for example, is

said to be a larger scale than 1:1,000.

Scanner — 1) An optical-mechanical imaging system in which a rotating or oscillating mirror

sweeps the instantaneous field of view of the detector across the terrain; and 2) A device for

capturing and digitally encoding images in computer files.

Scanning — Capturing an image using an optical or video input device that uses light-sensing

technology. The process of converting paper documents (maps) to digital or computer readable

raster images by placing a map original on a drum, which is rotated beneath an optical input

device.

Scatter Diagram or Scatterplot — A graphic means of depicting the relationship or correlation

between two variables by plotting one variable on the horizontal axis and one variable on the vertical

axis. Often in ratio studies it is informative to determine how ratios are related to other variables.

A variable of interest is plotted on the horizontal axis, and ratios are plotted on the vertical axis.

Screening Codes — Used to identify the source of the sales information or how the sale was

verified; they are separate from the validity code.

Scene — The area on the ground that is covered by an image or photograph.

Schedules — Tables, equations, or some other means of presenting the relationship between the

values of two or more variables that are functionally related. For example, cost schedules present

the relationship between cost per square foot and living area for a number of quality classes,

building heights, and other characteristics.

School Aid Equalization — A system of state revenue sharing to local schools based on guaran-

teeing that each school district has the same property tax base per student on which to levy local

property taxes to fund per — student expenditure on public education.

Scrap Value — See Salvage Value.

Sealed Bid — Method of marketing property in which each bidder (buyer) is given just one chance

to submit a bid in a sealed envelope, without knowing other bid amounts. All such bids are opened

at one time. The seller may set a minimum bid.

Searcher — Known as an Abstractor. See Abstractor.

Second — One sixtieth of a minute of the circumference of a circle.

116

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Secondary Mortgage Market — A market in which the originator of a mortgage, such as a local

savings bank, may sell it to another investor, such as a pension fund.

Section — A unit of land approximately one mile square and normally containing 640 acres, as

laid out by the government survey.

SEE — See Standard Error of the Estimate.

Seisin — The acquiring of the right of possession of real property via a transfer of title to a

freehold estate.

Selection Bias — Occurs when the procedures used to select observations included in a sample

produce a result that is different from what would have been obtained if all members of the popu-

lation were included in the study. For example, using all available sales as a sample in a valuation

study may not represent accurately the larger population from which the sample is selected.

Self-Assessment — The assessment process or portion of the assessment process that requires

the property owner to file a return, statement, rendition, or some authorized disclosure on which

to compute the tax liability, which is accepted as filed to the assessing officer, as a matter of

law or practice.

Seller — A vendor, or person who sells or contracts to sell goods. In real property sales the seller

is the grantor who transfers property by deed or grants property rights through a trust instrument

or other document.

Seller Financing — A sale in which the seller provides financing to the buyer, typically with a

higher rate of interest than market and a lower sale price or a lower rate of interest than market

with a higher sale price. Sales should be adjusted to determine market value.

Sensor — Any device that gathers energy (electromagnetic radiation or other), converts it into a

signal, and presents it in a form suitable for obtaining information about the environment.

Service-Hours Method — A valuation method to estimate depreciation of fixed assets that assumes

that the useful life of a machine or piece of equipment can be estimated in terms of the number

of service hours it can work for.

Service Life — The period (or service) for an asset from the date of its installation to the date of its

retirement from service.

Settlement — The official resolution of a conflict through agreed-upon terms.

Settlor — One who transfers to a trustee title to property that constitutes the trust estate.

Severance — The division of one parcel into two separately conveyable parcels of land.

Severance Tax — A tax imposed on the privilege or act of removing or severing specified natural

resources, such as minerals or timber, from a state of nature. Note: Such a tax may be measured by

gross or net proceeds or by units of production, and may be in lieu of, or in addition to, a property

tax on the severed or remaining natural resources.

117

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Shore — The land lying between the high-water and low-water marks.

Short-Lived Items — Items of a structure that have a shorter life than the basic structure. For

example, roofing, water heaters, floor covering, and interior finish.

Short Sale — A sale in which the lien holder agrees to accept a payoff for less than the outstanding

balance of the mortgage or loan.

Significance Level — A measure of the probability that an event is attributable to a relationship

rather than merely the result of chance.

Single Property Appraisal — Systematic appraisal of properties one at a time. Commonly referred

to as a fee appraisal or bank appraisal, which normally determines a value of a particular property

as of a given date. Differs from mass appraisal, which systematically appraises groups of properties

as of a given date using standardized procedures and statistical testing.

Sinking Fund — A real or accounting fund or pool of money into which deposits are periodically

made; these deposits, together with the compound interest they earn, are projected to accumulate

to a given amount on a given date. Some sinking funds are dedicated to a particular purpose, such

as replacing a heating system; others are simply convenient ways of thinking about flows of money.

Sinking-Fund Capitalization — A way of calculating the recapture rate in the income approach.

It assumes that an investor will deposit recapture income in an interest-bearing account and will

thus, in effect, accelerate recapture. To use it, an appraiser goes to a compound interest table to

locate the interest rate the investor would probably get and looks down the column of sinking-fund

factors to the number of years equal to remaining economic life of the improvements. Adding the

sinking-fund factor to the discount rate gives the recapture rate.

Sinking-Fund Factor — The amount that must be periodically set aside to accumulate with

compound interest to $1 at the end of a specified number of years and at a specified interest rate.

The Sinking-Fund factor is sometimes known (in connection with annuity capitalization) as the

Capital Recovery Rate.

Sinking-Fund Method — See Sinking Fund.

Sinking-Fund Method Annuity Premise — Assumes that the interest rate on a sinking fund is

equal to the investor’s discount rate.

Site — The location of a person, thing, or event.

Site Amenities — The specific location-related positive attributes of a property: topography,

utilities, street traffic, view, and so on.

Site Analysis — A study that determines the suitability of a specific parcel of land for a

specific purpose.

Site Characteristics — 1) Characteristics of data that describe a particular property, especially land

size, shape, topography, and drainage, as opposed to location and external economic forces; and 2)

By extension, any characteristics of the site or the improvement.

118

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Site Development — Improvements made to a land site (for example, grading, utility installation,

roadways, and curbs) before a building is constructed.

Situs — The actual or assumed location of a property for purposes of taxation. In personal property,

situs may be the physical location of the property or, in the instance of highly mobile property, the

more or less permanent location of the property owner.

Situs, Constructive — The tax situs established by reasonable rules of law or practice for intangible

property or for tangibles when they are not continuously within a given tax district for the full

assessment year. For example, a constructive situs is established for freight cars by allocating to a

tax district a fraction of the total number of cars owned equal to the ratio of car miles operated

within the district to the total number of car miles operated within and without the district.

Situs, Tax — The place at which property is legally taxable; that is, the jurisdiction within which

property actually lies or is said to lie for tax purposes.

Skewed — The quality of a frequency distribution that makes it asymmetrical. Distributions with

longer tails on the right than on the left are said to be skewed to the right or to be positively skewed;

distributions with longer tails to the left are said to be skewed to the left or to be negatively skewed.

Slope — A measure of the steepness of a line. A positive slope is indicated by a line going up

moving from left to right along the x-axis. A negative slope is indicated by a line going down

moving from left to right. When the line is horizontal, the slope is zero. A line with zero slope is

parallel to the x-axis.

Slope Rights — Adjacent to highways, the right to extend fills or cuts beyond the sidelines of the

road easement as dedicated.

Soft Cost — See Indirect Costs.

Software — 1) Computer programs; and 2) Those parts of a computer system that are not machinery

or circuits; thus, procedures and possibly documentation are included along with programs. Often

considered an intangible for personal property valuation. See Intangible Personal Property.

119

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Solar Panels — Devices containing solar cells that are used to absorb the sun’s rays and convert

them into electricity or heat.

Sole Proprietorship — A business enterprise net worth that belongs entirely to one individual.

Sonar — An apparatus that detects the presence of, or determines the distance or direction of, an

object underwater by receiving and interpreting sound from the object.

Span of Control — The number of employees supervised by each manager.

Spatial — The location of, proximity to, or orientation of objects with respect to one another in

N-dimensional space. Generally, refers to phenomena that can be mapped in two or three dimen-

sions on or near the earth’s surface.

Spatial Data Analysis — The study of the relationship between location-related data and property

data, including property characteristics, market data, estimated values, and sales ratios.

Spatial Resolution — 1) The ability of an entire remote sensor system, including lens, antennas,

display, exposure, processing, and other factors, to render a sharply defined image; and 2) A measure

of the smallest angular or linear separation between two objects that can be resolved by the sensor.

Spearman Rank Test — Tests the association between two ranked variables. Specifically, as the

value of one variable increases, does the other variable tend to increase or decrease? This is a

standard nonparametric test useful in examining assessment bias.

Special Assessment Area — A geographic area where additional funds are collected to provide

services in a municipality. Also known as Special Rate Area.

Special Property Tax — A tax that applies to a single class of property (for example, oil and gas

properties, motor vehicles) and differs substantially in one or more respects from the general

property tax. Note: Such difference may be in the base of the tax (for example, it may consist of

gross earnings instead of property values), in the rate, or in important administrative aspects.

Compare General Property Tax.

Special Tax — 1) In general, an unusual, extraordinary, or unique tax; and 2) Specifically, as applied

to property taxes, a) a property tax that is levied in addition to the levying of the regular annual

property tax; and b) a property tax levied for a single purpose rather than for the general purposes

of government.

Special-Use Properties — Properties that have a very specific use and might be appropriate for

only one or a very limited number of uses.

Special Warranty Deed — A deed in which the grantor only covenants to warrant and defend the

title against claims and demands of the grantor and all persons claiming by, through, and under

him or her.

Specific Data — A category of data that consists principally of site and improvement data.

Specific Tax — A tax in which the base is a physical, rather than a value unit; for example, a head

tax, gallon tax, or age tax.

120

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Specifications — A written, detailed, drawing that shows a contractor how to proceed

with construction.

Spectral Band — An interval in the electromagnetic spectrum defined by two wavelengths

or frequencies.

Spectral Reflectance — The reflectance of electromagnetic energy at specified wavelength intervals.

Spectral Resolution — The dimension and number of specific wavelength intervals in the electro-

magnetic spectrum to which a sensor is sensitive.

Spheroid — 1) Any surface differing only slightly from a sphere; and 2) By extension, a surface close

to the geoid or approximating the geoid.

Spiral — A variable radius curve that gradually changes into a straight line.

Split — See Land Division.

Square Foot — A unit of area equal to 12 inches (a square one foot) in length on each side.

Standard Depth — The depth of a standard lot either arbitrarily or because it is representative of

the majority of lots within a given area.

Standard Deviation — The statistic calculated from a set of numbers by subtracting the mean from

each value and squaring the remainders, adding together all the squares, dividing by the size of the

sample less one, and taking the square root of the result. When the data are normally distributed,

one can calculate the percentage of observations within any number of standard deviations of the

mean from normal probability tables. When the data are not normally distributed, the standard

deviation is less meaningful, and one should proceed cautiously.

Standard Error — A common measure of sampling error. The difference between a population

parameter and a sample statistic. The standard error of the mean is an estimate of the precision of

the sample mean. While the standard error of the mean is the most common type of standard error,

standard errors are calculated for other statistics as well. The standard deviation is a descriptive

statistic that can be calculated from sample data. In contrast, the standard error is an inferential

statistic that can only be estimated, unless the real population parameter is known.

121

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Standard Error of the Estimate (SEE) — A measure of the accuracy of predictions made in a

regression model. For a regression model with a small standard error of the estimate, the data

points (predictions) are close to, if not on, the estimated regression line.

Standard Lot — See Lot, Standard.

Standard Parallels — The east-west axes on a map that are counted north and south of the baseline.

Standardize — 1) To transform a variable to standard form; that is, to make the mean of the

frequency distribution equal to zero and the standard deviation equal to one; and 2) To adjust, for

appraisal purposes, reported data such as income and expenses to remove the effects of non-real

estate factors, such as abnormally good or bad management, weather, and the like. The more

common term for this adjustment process is Normalization.

State Assessed Property — That property for which the assessed value is set by a state agency,

either for taxation by the local jurisdiction affected or for state taxation. Most often, this term

applies to utility property or property with special characteristics where the state preempts local

authority to achieve uniformity in assessments.

State Plane Coordinate System — 1) One of the plane rectangular coordinate systems for each

state in the United States, established by the United States Coast and Geodetic Survey in 1933 for

use in defining locations of geodetic stations in terms of plane — rectangular Cartesian coordi-

nates. State plane coordinate systems have been established for all 50 states, and within each state

there are one or more separate projections of areas known as zones. The boundaries of state plane

coordinate zones are coterminous with county and state boundaries, an administrative advantage

in that counties are never required to use more than one state plane coordinate zone; and 2) A

mathematical projection of the curved surface of the earth on a flat surface over which a coor-

dinate grid expressed in feet is laid.

State Plane Coordinates — 1) Geographic coordinates based on the state plane coordinate system;

and 2) A series of grid coordinate systems prepared by the U.S. Coast and Geodetic Survey for the

entire United States, with a separate system for each state. Each state system consists of one or

more zones. See State Plane Coordinate System.

State Property Tax Tribunal — A quasi-judicial administrative review agency organized to separate

the state’s review and appeal responsibilities from its administrative and equalization functions.

Stationary Property — Property that is more or less permanently located at a business premise.

Statistical Accuracy — The closeness between the statistical estimate and the true (but unknown)

population parameter value it was designed to measure. It is usually characterized in terms of error

or the potential significance of error and can be decomposed into sampling error and non-sam-

pling error components. Accuracy can be specified by the level of confidence selected for a statis-

tical test.

Statistical Precision — How close estimates from different samples are to each other. For example,

the standard error is a measure of precision. When the standard error is small, estimates from

different samples will be close in value. Precision is inversely related to standard error. When the

standard error is small, sample estimates are more precise; when the standard error is large, sample

estimates are less precise.

122

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Statistics — Numerical descriptions calculated from a sample; for example, the median, mean, or

coefficient of dispersion. Statistics are used to estimate corresponding measures, termed param-

eters, for the population.

Statute — A law enacted by a legislative body (Congress or a statehouse in the US); can also be

referred to as an act.

Step-Up/Step-Down Lease — A lease that calls for set increases or decreases in rent at

specified intervals.

Stepwise Regression Analysis — A technique for selecting the most appropriate independent vari-

ables for building a regression model. Stepwise regression is a combination of two other variable

selection techniques: forward and backward selection. Stepwise regression is a modification of the

forward selection so that after each step in which a variable is added, all candidate variables in the

model are checked to see if their significance has been reduced below the specified tolerance level.

If a nonsignificant variable is found, it is removed from the model. Stepwise regression requires two

significance levels: one for adding variables, and one for removing variables.

Stereoscope — An instrument that uses a stereoscopic pair of images to produce a visual effect of

depth or solidity, numerical data, or topographic maps showing depth (height).

Stereoscopic Coverage — Aerial photography taken with sufficient overlap to permit complete

stereoscopic observation. Sixty percent forward overlap between frames is usually recommended

for adequate stereoscopic coverage.

Stereoscopic Pair — Two photographs of the same area taken from different camera stations in

order to afford stereoscopic study of the overlap area. Also called Stereo Pair.

Stigma — A perception that a property continues to be contaminated even though it has been

cleaned up. Stigma may affect property value.

Stock — Share of a company.

Stock, Capital — The book value of the outstanding shares of a corporation; the capital stock

represents the permanently invested capital of the corporation that cannot legally be impaired by

payment of ordinary dividends.

Stock, Common — Corporation stock that has a residual claim on net profits and assets, on disso-

lution of the corporation, after satisfaction of the claims of all creditors and of the preferred stock-

holders, if any, or stock that is subordinate in any other respect to a second issue of stock by the

same corporation.

123

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Stock, Preferred — 1) In general, corporation stock that has preference in any request over the

common stock; and 2) Specifically, corporation stock on which a dividend must be declared at

a specified rate per share before any is declared on common stock, and on which liquidation

dividends must be paid to the full-face value of the stock before any such dividends are paid on

common stock. Note: If the preferred stock is cumulative, dividends that are passed or paid in

an amount less than the specified rate per share must be paid in full before a dividend may be

declared on common stock in any subsequent year; if it is noncumulative, dividends passed in

whole or in part in one year need not be paid in a subsequent year before declaration of dividend

on common stock. Participating preferred stock shares in any additional dividends after payment

at specified rates on both preferred and common stocks.

Stock and Debt Technique — A method of appraisal in which the liabilities and equity on a

company’s balance sheet are valued to yield a value for the operating assets (after non-operating

properties are deducted). A substitute for the sales comparison approach when sales are insuffi-

cient, as the total value of the various interest positions (taken from stock and bond sale prices

in the daily newspaper or elsewhere) when summed provides a relatively objective indication of

market value.

Stock in Trade — Refers to merchandise items; 1) On display; 2) In easy-access storage; 3) Being

received; or 4) Being prepared for shipment.

Straight Mortgage — A mortgage that has a short term, usually about three years. It has no

requirement for amortization (the process of extinguishing debt or recovering a capital investment

through periodic repayments of principal); requires level interest payments, usually monthly or

quarterly; and requires that the entire unpaid principal and interest balance be paid at maturity.

This last requirement is known as a balloon payment, which is the balance due on a note at the end

of the loan term in excess of the regular payment amounts.

Straight-Line Annuity — An income stream that increases or decreases by a fixed amount per period.

Straight-Line Capitalization — A means of estimating value whereby net operating income is

divided by a capitalization rate composed of the discount rate, the reciprocal of remaining

economic life as the recapture rate, and sometimes the effective tax rate. The method implicitly

assumes that net operating income will decline by an equal dollar amount each year.

Straight-Line Depreciation — Fixed rate of depreciation that occurs through the economic life

range of a property. A method of writing off the cost of a property over the period of its expected

economic life by means of equal annual charges, the sum of which is equal to the original cost of

the property less any anticipated scrap value at the end of its expected economic life.

Straight-Line Method — A method of amortizing investments and other sources of cash flow so

that equal amounts are attributed to each of several equal intervals of time.

Strata Plan — Strata housing includes properties that are vertical housing similar to apartments,

but can be duplexes, townhouses, and fractional vacation properties. The strata corporation is

self-governing and has its own by-laws and rules.

Strategic Plan — A broad-scale plan for accomplishing multiple objectives affecting events several

years in the future. These plans typically cover a period of five years or more.

124

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Stratification — The division of a sample of observations into two or more subsets according to

some criterion or set of criteria. Such a division may be made to analyze disparate property types,

locations, or characteristics, for example.

Stratify — To divide, for purposes of analysis, a sample of observations into two or more subsets

according to some criterion or set of criteria

Stratum, Strata — Class or subset that results from stratification.

Stream Mode — A method of converting manual data to digital data that consists of an automatic

vertex input at set intervals.

Structure — A man-made improvement, inherently permanent and affixed in place on a specific

geographical area. Structures can take various forms, such as buildings, bridges, dams, transmission

towers, in — ground pools, drilling platforms, and stationary wharves and docks.

Stumpage — The amount of timber “on the stump.”

Stumpage Value — The value of uncut timber.

Subclass — See Subset.

Subdivision — A tract of land divided, by means of a map, into lots or lots and blocks for the

purpose of resale, generally for residential or agricultural purpose. To be valid, in most jurisdic-

tions a subdivision plat usually must be approved by the local municipality and then recorded

(registered) in a county recorder (registrars) office.

Subject Property — The property being appraised.

Subject To — A phrase that identifies rights and/or obligations affecting property, i.e. “subject to

an easement.”

Subjective — Having the quality of requiring judgment in arriving at an appropriate answer or

value for a variable (such as the quality class of a structure). Collected or obtained through personal

interactions or observation.

Subjective Data — Items for which the proper value is a matter of informed judgment and more

difficult to verify. Examples include construction class, condition, effective year built, neighborhood

desirability, and view. The information collected that is dependent on judgment in arriving at an

appropriate value for a variable. See Subjective.

Sublease — A scenario in which a tenant transfers its rights under a lease to another party known

as the subtenant.

Subpoena Duces Tecum — A subpoena requiring the person served therewith to appear at the

appointed place or before the designated tribunal with those documents or other things called for

in the subpoena.

Subset — A group of properties within a sample, smaller than the sample, usually although not

necessarily defined by stratification rather than by sampling.

125

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Subsidiarity — A principle of government organization that holds that decisions should be made

at the level of government closest to where they will have their effect, such as by a local government

instead of a state or central government. The aim is to make government more responsive to

citizens’ needs and to make it easier for citizens to hold government accountable.

Substitute Goods — A product or good that can be used in place of another with equally suitable

use and quality. Increase in consumption of one product or good decreases the consumption of

the other product or good.

Substitution — See Principle of Substitution.

Succession — The conveyance of real property by inheritance or will. 

Sum of Squared Errors — The sum of the squared deviations from the predicted values (rather

than the mean value).

Sum of Squares — The result obtained by adding all the squares of the individual deviations from

some given value. Usually, it is the sum of the squares of the deviations of the individual values of

a variable from the mean value.

Sum of the Years’ Digits — The method of accounting for depreciation in which a percentage

of depreciable cost is allocated to each year, which percentage is equal to the number of years of

remaining economic life divided by the sum of the digits for each year in the total economic life.

Summation Approach — See Cost Approach.

Sunset Provision — A provision within a statute creating a law or agency providing for the auto-

matic termination of that law or agency at a fixed date in the future.

Superadequacy — A feature of a property exceeding in quality or amount the corresponding

feature in a typical property of the same use. Superinsulation is one example. Superadequacies fall

into the larger category of functional obsolescence. See Functional Obsolescence.

Superpositioning — The capability of overlaying, normally an aerial image and a line map, for the

purpose of data collection or data maintenance.

Supplies — A type of inventory of goods intend to be consumed during business operations. May

be part of a manufacturing process but is not part of the raw materials inventory. Includes items

such as paper, chemicals, pallets, and other consumable items that are not held for resale.

Supply — The amount of a good or service that would be offered for sale at various prices during

a given period.

Supply and Demand — See Principle of Supply and Demand.

Surplus, Corporate — 1) Broadly, the equity of the stockholders in the assets of a corporation in

excess of that represented by the capital stock; 2) More narrowly, the equity of the stockholders in

the assets of a corporation in excess of that represented by the capital stock, undivided profits, and

reserves; and 3) Sometimes erroneously used to refer to the assets that are assumed to represent

such equity.

126

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Surplus Productivity — See Principle of Surplus Productivity.

Surplus Value — The value of a commodity over and above the quantity of labor required to

produce it.

Survey, Control — A survey that provides coordinates (horizontal or vertical) of points to which

supplementary surveys are adjusted.

Survey, First-Order — A geodetic survey of the highest prescribed order of precision and accuracy.

Survey, Geodetic — A survey that considers the size and shape of the earth (as distinguished from

a plane survey, in which the surface of the earth is considered a plane).

Survey, Government — See Government Rectangular Survey System.

Surveying — The science and art of making measurements of distance and direction necessary

to determine the relative position of points on, above, or beneath the surface of the earth or to

establish such points. The act or operation of making measurements for determining the relative

positions of points on, above, or beneath the earth’s surface; also, the results of such operations;

also, an organization for making surveys. Examples include: 1) Photogrammetric survey — A method

that uses either ground photographs or aerial photographs; 2) Aerial survey — A survey using aerial

photographs; 3) Ground survey — A survey made by ground methods, as distinguished from an

aerial survey. A ground survey may or may not include the use of photographs.

Surveying, Plane — Surveying done under the assumption that the surface of the earth is flat.

Survivor Curve — In depreciation analysis, a method of estimating the probable service life of unit

properties and the probable average service life of group properties based on experience; indicates

the percentage of the property or asset (in physical units or dollars) that survives at ages (usually in

years) from zero to maximum life. See Iowa Type Curve.

Sweat Equity — Anything done to a property that doesn’t necessarily have a cash value attached to it.

Synoptic View — The ability to see or measure large areas at the same time and under the same

conditions (that is, the overall view of a large portion of the earth’s surface that can be obtained

from satellite altitudes).

System — 1) Structured organization of people, theory, methods, and equipment to carry out an

assigned set of tasks; 2) The property operated as an integral unit under one control, management,

or operating supervision; and 3) An integrated group of assets that may be related entities or may

be property elements such as machinery, buildings, land, and other property used in the perfor-

mance of services or manufacture of products.

Systematic Maintenance — Maintenance activity that results from real estate transactions, deeds,

wills, and subdivision plats.

Systems Approach — An approach to management theory that views the principal function of

the manager to be to create an open organizational system with appropriate informal and formal

feedback mechanisms, such that the major subsystems work well together, and the organization

can exhibit growth, stability, and equilibrium in the face of environmental changes.

127

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Table, Depth — A table used in appraisal showing percentages of the variation of land value based

on the depth of the specific parcel.

Tangent — A tangent to a curve is a line that touches the curve at one point and is also at right

angles to the radial line at the point of contact with the curve.

Tangible Personal Property — Includes most movable items, but can include sales tax, freight,

installation costs, and all other costs required to place the item into service. See Personal Property.

Task Force — A kind of organizational unit, usually temporary, composed of employees from

different functional areas whose assignment is usually some kind of non-routine task, such as

assisting in a system development effort.

Tax — A compulsory charge levied by a government unit against the income or property of a

person, natural or corporate, for the common benefit of all citizens. The term does not include

specific charges made against particular persons or property for current or permanent benefits

and privileges accruing only to those paying such charges, such as licenses, permits, and specific

assessments.

Tax, Ad Valorem — See Ad Valorem Tax.

Tax, Classified Property System — See Classified Property Tax System.

Tax, Degressive — See Degressive Tax.

Tax, General Property — See General Property Tax.

Tax, Graduated — See Graduated Tax.

Tax, Indirect — See Indirect Tax.

Tax, Land Value — See Land Value Tax.

Tax, Net Worth — See Net Worth Tax.

Tax, Progressive — See Progressive Tax.

Tax, Property — See Property Tax.

Tax, Proportional — See Proportional Tax.

Tax, Recordation/Recording — See Recordation/Recording.

Tax, Regressive — See Regressive Tax System.

Tax, Severance — See Severance Tax.

Tax, Special — See Special Tax.

Tax, Special Property — See Special Property Tax.

128

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Tax, Specific — See Specific Tax.

Tax, Transfer — See Transfer Tax.

Tax, Value Increment — See Value Increment Tax.

Tax, Windfall — See Windfall Tax.

Tax and Expenditure Limitations (TELs) — Statutory and constitutional limitations imposed by

states on local fiscal autonomy. TELs are designed ostensibly to: 1) Control and reduce property

taxes; 2) Control the growth of government and public spending; and 3) Improve fiscal account-

ability. The six basic types of TELs are overall property tax rate limits, specific property tax rate

limits, property tax levy limits, limits on general revenue or expenditure increases, limits on

assessment increases, and truth-in-taxation (full disclosure) requirements.

Tax Base — The aggregate of the values or units to which the tax rate or rates are applied to

determine the tax liability of a person or a group of persons. Compare Object of Tax.

Tax Burden — Economic costs or losses resulting from the imposition of a tax. Burden can be

determined only by detailed analysis of all economic changes resulting from the tax. In popular

usage, the term often refers to the initial incidence rather than to ultimate economic costs.

Tax Calendar — Reflects the process and dates for the completion of an assessment roll and

property tax levy for one year in chronological order.

Tax Capacity — The amount of tax that would be collected using an overall average tax rate. For

example, for the tax capacity of a particular state, the overall amount raised nationally by the tax

would be divided by total personal income (or population). The resulting national average tax rate

would then be multiplied by the total personal income (or population) of the state to determine

the tax capacity of that state.

Tax Deed — A deed by which title to real property sold to discharge delinquent taxes is transferred

by a tax collector or other authorized officer of the law to the purchaser at a tax sale.

Tax District — 1) In general, a state or any political subdivision thereof having or exercising the

power to levy taxes; and 2) As applied to property taxes, any area, whether coterminous with or

within a state or a political subdivision thereof, within which the tax rate levied by such state or

political subdivision is required by law to be uniform on properties of the same class.

Tax Incidence — The distribution of a tax on natural persons who bear the tax after the completion

of the process of tax shifting, to be distinguished from the distribution of the tax on the persons,

natural or legal, who pay it in the first instance.

Tax Incidence Analysis — Economic analysis that compares the way different taxes affect the

distribution of income; requires analysis of the impact of taxes on the market for the taxed item

and the market for all factors (land, labor, and capital) used in producing the taxed item.

Tax Increment Bonds — Debt instruments that governments may issue to allow them to pay for

projects in a reinvestment zone. Tax revenues pay off the bonds.

129

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Tax Increment Financing (TIF) — The idea that property taxes or other revenue resulting from

the increase in a tax base (for example, property values or retail sales) in a specific area can be used

to repay the costs of investment in that area. Funds may be invested in various programs such as

public infrastructure improvements or land write-down subsidies to private investors.

Tax Levy — 1) The act by which a legislative body fixes either the amount of taxes to be placed in

collection or the rate to be applied to a predefined tax base; or 2) The amount of taxes authorized

to be placed in collection by a competent legislative body.

Tax Policy — Any purposeful course of action by governmental bodies that affects or determines

the way taxes are created, levied, collected, or spent.

Tax Policy Analysis — The process of gathering and interpreting economic data to provide infor-

mation that can be used by policymakers to formulate tax policy.

Tax Rate — 1) The amount of tax stated in terms of a unit of the tax base; for example, 30 mills

per dollar, 2 percent, 2 cents per gallon; and 2) For property tax, the percentage of assessed value

at which each property is taxed in a given district. Distinguish between Effective Tax Rate and

Nominal Tax Rate.

Tax Roll — An official list showing the amount of taxes charged against each taxpayer and/or each

property within the jurisdiction of a tax district. Note: In property taxation, the tax roll is some-

times combined with the assessment roll into a single document.

Tax Rollback — A tax rollback results in assessment of back taxes on land that was previously

taxed according to Special-Use value. When land no longer qualifies for use valuation, the taxing

unit assesses taxes for a number of years as specified by statute. The additional tax is the difference

between the amount of tax imposed and the amount that would have been imposed if the land had

been appraised at (and taxed based on) full market value.

Tax Sale — Sale of a taxpayer’s property by a public authority so that delinquent taxes may be

collected from the proceeds; usually preceded by a period during which the taxpayer can pay delin-

quent taxes and followed by a period during which the taxpayer can redeem the property from the

purchaser. See Certificate of Redemption and Redemption.

Tax Shifting — The act of a taxpayer in transferring a tax to another person by means of price

changes. Note: A tax is said to be fully shifted when it results in price changes that maintain the

taxpayer’s net income at the level that would have been obtained in the absence of the tax. As long

as price changes occur that forestall the reduction of net income by the full amount of the tax

payment, some shifting has occurred. Shifting may be forward, as in the case of a tax on a retail

concern that is shifted by increasing the retail price, or backward, as when such a tax is shifted by

a reduction in the wages of employees or in wholesale prices.

Tax Warrant — A document directing a peace officer and tax collector to take as much of a person’s

personal property as is necessary to pay all taxes, penalties, and interest the person owes.

Taxable Value — The appraised value of property less all applicable partial exemptions or limita-

tions on valuation increases. Property taxes are levied on taxable value.

Taxation, Double — See Double Taxation.

130

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Tax-Exempt Property — Property entirely excluded from taxation because of its type or use. The

most common examples are religious, charitable, educational, or governmental properties. This

definition omits property for which the application of a partial exemption reduces net taxable

value to zero.

Taxing Unit — Any political unit of a state that imposes property taxes. Counties, school districts,

incorporated municipalities (cities), and special districts may be taxing units. See Tax District.

Taxpayer — A person who makes payment of property taxes for real or personal property. Generally,

includes all persons liable for the payment of property tax, by law or contract.

TELs — Often used to reference Total Economic Life. See Tax and Expenditure Limitations.

Tenancy — The act of using or occupying property, especially real property whose fee title is vested

in someone other than the occupant.

Tenancy, Joint — A state of tenancy involving two or more persons owning undivided possessory

interests that have arisen out of a single conveyance, no one of the tenants being free to create

interests in the estate without the consent of the others, and the surviving tenants acquiring the

interest of any tenant who may die. Compare Tenancy in Common and Tenancy by the Entirety.

Tenancy by the Entirety — A state of tenancy, recognized by some states, in which the husband and

wife are considered as a single person, neither one being free to create interests in the estate without

the consent of the other and the survivor acquiring the whole interest upon the death of either.

Tenancy in Common — Ownership of a parcel of property by two or more persons, that each

person having the right to transfer the property by will or inheritance.

Tenancy in Severalty — A state of tenancy involving one person who owns a divided

possessory interest.

Tenant — One 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; and 2) A building intended for rental residence.

Termination for Cause — A type of contract termination that occurs when a party has failed to

deliver services on time or according to specifications.

Termination for Convenience — A type of contract termination that occurs when one or both

parties decide that continuation of the contract is not in their best interests.

Test Sample — The sample of sales used to develop the model.

Testate — The state of having died after executing a valid last will and testament.

The Appraisal Foundation — An organization authorized by Congress as the source of appraisal

standards and appraiser qualifications.

Thematic Maps — Digital maps that allow various performance standards to be displayed spatially.

131

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Thence — “Thence” in a legal description means “from that place.”

Theodolite — A precision surveying instrument for measuring horizontal and vertical angles. The

graduated circles are usually read by means of optical microscopes and are more precisely grad-

uated than are the circles on a transit.

Theory Z — A management theory that assumes workers can be trusted to do their jobs to their

utmost ability as long as management can be trusted to support them and look out for their

well-being.

Thermal Infrared — Electromagnetic radiation emitted by any substance as a consequence of

the thermal excitation of its molecules. Thermal radiation ranges in wavelength from the longest

infrared radiation to the shortest ultraviolet radiation.

Thread — A line midway between the sides of a road or Right-of-Way. “Thread of a stream” is the

line midway between the banks.

Three Approaches to Value — The cost approach, income approach, and sales comparison approach.

Tidelands — Lands covered and uncovered by the ordinary tides.

Tied — As used in surveying, monuments are tied together by measurements. A property corner is

tied to offset monuments or to other property corners.

Tier — The area included between two township lines.

TIF — See Tax Increment Financing.

Time-Adjusted Sale Price — A property’s sale price adjusted for changes in market conditions

between the date of sale and the date of valuation. See Market Condition Adjustment.

Time Series Analysis — A family of techniques that can be used to measure the cyclical move-

ments, random variations, seasonal variations, and secular trends observed over a period of time.

Time Value of Money — The principle that an amount of money anticipated as income in the

future is always worth less than an equal amount in hand at the present time.

Timeshare Unit — A residence, usually a condominium at a vacation or resort site, whose ownership

is divided among the owners by weeks or months, giving each owner the right to occupancy for a

specified time each year.

Title — The union of all elements constituting proof of property ownership or the instrument that

is evidence of ownership. Evidence of ownership and lawful possession of property.

Title, Equitable — See Equitable Ownership.

Title Examiner — A person who analyzes a chain of title to land and passes on validity of instru-

ments and then renders his opinion.

132

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Title Registration System — A system under which a government agency examines evidence of

ownership and determines who owns a property or possesses a property right and compensates

injured parties should its determination prove incorrect.

Title Search — An examination of public records to ensure the quality of the seller’s title to a

property. Preparation of an abstract of title requires a complete title search.

To — In legal descriptions, “to,” “on,” “by,” “at,” and “along” a road carry title to the center line

unless otherwise qualified. “To” implies contrast. “To” does not always include an object, as “to

certain property” does not include property. But “to a stone” usually means “to the center of the

stone.” “To” is directional, as “90° to” (not with) or “at right angles.” “To” is a word of exclusion

rather than inclusion. If you go to an object, you exclude other objects.

Tolerance — An acceptable margin of error or inaccuracy.

Top Managers — Managers responsible for controlling the organization by setting its goals, overall

strategy, and operating policies.

Topographic Map — A map that presents the horizontal and vertical position of the features

represented; distinguished from the planimetric map by the addition of relief in measurable form.

See Contour Map.

Topography — The contour of land surface; for example, gently rolling, mountainous, or flat.

Topological Rules — An instruction to a spatial database defining the permissible relationships

of features.

Topology — A set of defined relationships between links, nodes, and centroids. Topology describes

how lines and polygons connect and relate to each other. Among the topological properties of

concern in a geographic information system (GIS) are connectivity, order, and neighborhood.

Torrens System — A land registration system in which ownership interests in real property are

established and transferred pursuant to a governmental registration and certification process

rather than by, for example, deed or will.

Total Economic Life — See Economic Life.

Total Quality Management (TQM) — Management theory that provides a strategy for continu-

ously improving an organization’s performance at every level and in all areas of responsibility.

Increasing user satisfaction is the overriding objective.

Total Station — A fully automated surveying device that measures 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; and 3) A small urban area.

Townhouse — Single-Family dwelling sharing a common wall with another dwelling.

133

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Township — An approximately 36 square mile division of land used in the federal rectangular

survey system. Townships are bounded by two successive range lines on the east and west and two

successive township lines on the north and south.

Township, Civil — An unincorporated political subdivision of the state, usually coterminous with

a survey township or with that portion thereof that remains after the incorporation of cities and

villages situated therein.

Township, Survey — The area included between two township lines and two range lines, normally

containing 36 sections of approximately 640 acres each. Synonymous with Congressional Township

and Geographical Township.

Township Line — One of a series of survey lines running due east and west at six — mile intervals on

either side of a baseline, used for locating parcels of land under government survey. See Baseline.

Toxics — Recognized hazardous substances in the environment.

TQM — See Total Quality Management.

Trade, Level of — See Level of Trade.

Trade Fixture — Property attached to a commercial rented space or building by a tenant, used

in conducting a business and owned by the tenant. Examples include decorative lighting, signs,

shelving, built-ins. Trade fixtures can be either real property or personal property depending on

the type of improvement, intent of the parties to make the improvement real property or personal

property, legislative mandates, office policies and procedures, and whether the removal of the

property would cause permanent damage to the real property.

Trademark — A name, symbol, or other sign that identifies a product or service; officially regis-

tered and legally restricted to use by the owner alone. Generally considered as intangible property.

Transfer Tax — The tax payable to a state (and sometimes to a locality) upon the sale of real property

and the recordation of the transfer. The payment is usually proportional to the sale price and is

commonly used by appraisers in the absence of more accurate information to deduce the price for

which the property sold.

Transformation — The process of changing the values and definitions of one or more variables to

make them more useful for further analyses. If market value changes with living area, for example,

a useful (valuable) transformation is (would be) to change length and width to area, and if market

value does not change proportionally with area, a useful (valuable) transformation (might be) is to

use the logarithm of area.

Transit — A repeating surveying instrument for measuring horizontal and vertical angles. The

graduated circles are usually not graduated as precisely as are those on a theodolite.

Transitional/Interim Use — A transitional or interim use refers to an improved property with an

existing use that might not be the ultimate highest and best use. However, it is a use that is appro-

priate until it is ready for its future highest and best use. An interim use is a current highest and

best use that is likely to change in a short to moderate time period.

134

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Transverse Mercator Coordinates — Geographic coordinates based on a transverse Mercator

projection and usually expressed in meters.

Treasury Bills — Short-term debt obligations of the United States Treasury.

Treatment, Storage, and Disposal Facility (TSDF) — Business that treats, stores, and disposes of

hazardous waste. Regulated by the Resource Conservation and Recovery Act (RCRA).

Trended Cost — The historical cost adjusted to current price levels by price indexes or composite

multipliers. The trended cost should closely approximate the reproduction cost if price indexes are

appropriately selected and properly constructed.

Trended Historical Cost — 1) The cost of constructing an improvement at a particular time,

adjusted to reflect inflation and deflation, as well as changes in construction costs, between that

time and the appraisal date; and 2) Method of cost estimating that obtains an estimate of the

reproduction cost of a structure by adjusting its original, or historical, cost with a factor from an

appropriate construction cost index.

Trending — Adjusting the values of a variable for the effects of time. Usually used to refer to adjust-

ments of assessments intended to reflect the effects of inflation and deflation and sometimes also,

but not necessarily, the effects of changes in the demand for micro-locational goods and services.

Trending Factor — A figure representing the increase in cost or selling price over a period of time.

Trending accounts for the relative difference in the value of a dollar between two periods.

Triangular-Lot Table — A schedule of adjustments used to appraise a lot having a triangular

shape, in whole or in part, by comparison with a base lot or a given unit of comparison factor, such

as a front-foot rate.

Trier of Fact — Any person(s) with the authority to determine the outcome of a legal contest, i.e.

a judge, jury, or magistrate.

Trimmed Mean — The mean of a data set calculated after removing a specific percentage of the

smallest and largest values from the data set.

Trust — An agreement whereby the owner of property (the settlor) transfers legal title to a second

party (the trustee), such property to be held, managed, or disposed of for the benefit of a third party

(the beneficiary) or the settlor, or both, as set forth in the trust agreement.

Trust, Investment — See Investment Trust.

Trust, Revocable — See Revocable Trust.

Trust Deed — 1) Broadly, a deed by which title to property is transferred to a trustee to be held

in trust; 2) Specifically, a deed by which title to property is transferred, conditionally or uncondi-

tionally, to a trustee to be held for the benefit of creditors or obligors of the grantor; and 3) An

agreement made between an issuer of bonds and the holders of such bonds that is deposited with

the trustee, whether or not such agreement involves the transfer of property to the trustee. Also

called Deed of Trust.

135

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Trust Estate — The aggregate interests of a trustee in property held under a trust agreement.

Trustee — One who holds legal title to property under a trust agreement. Compare Settlor

and Beneficiary.

Truth-in-taxation (Full Disclosure) Requirements — Legal obligations for local government offi-

cials to make taxpayers aware of assessment increases, levy increase proposals, and the like and to

give taxpayers an opportunity to participate in public hearings on the changes.

TSDF — See Treatment, Storage, and Disposal Facility.

t-Statistic — A particular statistic important in inferential statistics for certain kinds of hypothesis

testing of certain kinds of data. Also known as Test Statistic, it is used to test the null and alter-

native hypotheses. It compares the means of two groups and quantifies the observed data in order

to reject or accept the null hypothesis.

t-est — A statistical test used to compare the means of two groups. It is often used in hypothesis

testing to determine whether two groups are different from each other.

Turnkey — A project in which the manufacturer, builder, or contractor delivers a completed

product or facility; the tenant, user, or owner has only to “turn the key” to begin operations.

Turnover Ratio — A figure signifying a relationship between sales over a stated period (usually a

year) and average inventories during such period, arrived at by dividing either (a) total cost of sales

by total cost of the average inventory or (b) total sales receipts by total sale price of the average

inventory. A valuation guideline based on sales activity, the number of times per period (usually a

year) a business sells the average sale value of its inventory during the same period.

Two-Tailed Test — A test in which the alternative hypothesis does not specify the direction of the

relationship, as opposed to a one-tailed test, in which the direction of the relationship is specified.

For example, the alternative hypothesis that “A does not equal B” implies a two-tailed test, whereas

“A is greater than B” implies a one-tailed test. See Null Hypothesis.

136

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

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.

Under-Improvement — An improvement that does not develop a site to its highest and best use,

usually a violation of the principle of conformity.

Undivided Interest — An interest in a property that is not distinct from the interest or interests

of one or more other persons; for example, the interest of a joint tenant or a tenant in common.

Unencumbered Fund Balances — Funds or appropriations left over at the end of the budget year

that are not committed to any fiscal purpose. An encumbrance is a reservation of funds in the form

of purchase orders, signed contracts, salary commitments, chargeable to an appropriation.

Uniform Standards of Professional Appraisal Practice (USPAP) — The generally recognized

ethical and performance standards for the appraisal profession in the United States. USPAP was

adopted by Congress in 1989 and contains standards for all types of appraisal services, including

real estate, personal property, business, and mass appraisal.

Unimproved Land — Raw land in its natural state, prior to grading, construction,

and/or subdividing.

Unit — The property being appraised. Everything used or useful to the ongoing economic oper-

ation of the business (property). Includes tangible and intangible property.

Unit Assessment — An assessment involving a composite appraisal of a property, as distinguished

from an assessment involving a summation appraisal or a fractional appraisal.

Unit Cost — A valuation guideline expressing the relationship between cost or value of property

and some unit of measure; for example, cost per square foot or per employee.

Unit Foot — A 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 Method — A method of cost estimating in which all the direct and some of the

indirect costs of individual construction components (such as the foundation walls) are specified

in appropriate units (such as cost per unit of area, volume, or length), multiplied by an estimate of

the quantity required by the particular structure, and added to obtain an estimate of the cost of

the structure.

Unit Tax — A tax levied on the quantity purchased as opposed to the dollar amount purchased.

Examples are cigarette taxes per pack and gasoline taxes per gallon.

Unit Value — The value of one of a number of similar items or units contained in or making up a

property. The cost of production of an item divided by the quantity of items = unit value. The sum

of the units divided by the total number of units that make up the property provides the unit value.

137

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Units of Comparison — Property characteristics expressed as value per unit of measure most

often used by market participants to estimate a property’s total value. A relevant measure of simi-

larity used to calculate the value of a property or establish similarity with another property. Units

of comparisons can include land value per square foot, per acre of land area, per front foot, per

buildable unit. For commercial property, the unit of comparison may be the square foot of gross

building area, usable building area, or rentable building area. For personal property, the unit of

comparison may be units of production. The optimal unit of comparison for analysis is typically

the one with the lowest coefficient of variation.

Units-of-Output Method — A method used to estimate depreciation of fixed assets that assumes

that the useful life of a machine or piece of equipment can be estimated in terms of number of

units that can be produced.

Unitary Government — A hierarchical system of government in which state and local govern-

ments are de facto departments of the national government.

Unitary Method of Valuation — The unit rule is a method that values the property within a

particular jurisdiction based on the fair share of the value of an operating enterprise, of which

the property is an integral part. The unit value concept values all the property as a going concern

without geographical or functional division of the whole and includes tangible and intangible

assets. The unit rule concept is typically associated with the valuation of public utilities, telecom-

munications networks, railroads, and other transportation properties. However, the concept of

unit valuation is similarly applicable to the appraisal of a single-family residence when comparable

sales are used to value the entire property without segregation of land values. Similarly, when rents

are capitalized into a value estimate for commercial properties, the unit rule is used.

United States Federal Reserve System — A United States banking system charged with responsi-

bility for maintaining the health of the economy through its regulation of the money supply and

the rate of interest.

United States Public Land Survey — The land survey authorized by the United States Congress in

1785 upon which the federal rectangular survey system is based.

United States Public Land Survey System — A rectangular land survey employed in most of the

United States, based on township lines and baselines.

Universal Transverse Mercator (UTM) — The transverse Mercator projection used in the United

States. Universal transverse Mercator projection zones are six degrees of longitude wide and cross

civil boundaries.

Unrecorded Deed — A deed, etc., is said to be unrecorded when it has not been filed for record in

the courthouse and made a matter of public record.

Uplift Factor — The factor used to bring manufacturing or wholesale cost to a retail level of trade.

See Level of Trade.

Usable Area — The area of land that serves an economic purpose or contributes to the value of

the property.

Use Class — See Classification.

138

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Use Code — A code (used on a property record form) to indicate a property’s use class or, less often,

potential use.

Use Tax — A companion to the general sales tax designed to cover out-of-state purchases.

See Sales Tax.

Useful Life — The estimated normal operating life in terms of utility to the owner of a fixed asset

or group of assets. See Economic Life.

Use Value — See Value-in-Use.

Use-Value (Farmland) Assessment Laws — Laws that require or permit assessors to appraise and

assess property as though the property were subject to an enforceable restriction that forbade

putting the land (or the entire property) to any use but the present one. Typically, there is no such

permanent enforceable restriction, but assessors may nevertheless be required to assess certain

property types, especially agricultural land, and to a lesser extent historic property, as though the

restriction were real. In such instances, the sales comparison approach may be inapplicable, and a

version of the income approach may be required. See Value-in-Use.

USGS Quad Maps — A series of general-use maps at medium scales that present elevation (contour

lines), hydrography, geographic place names, and a variety of cultural features; maps produced

by the United States Geological Survey showing one quadrangle. A typical quadrangle in the US

is a 7.5 Minute (1:24,000), while international quadrangles will be at smaller scales (1:100,000 or

1:250,000).

USPAP — See Uniform Standards of Professional Appraisal Practice.

UST — See Underground Storage Tank.

Utility — The quality of a property or service that enables it to satisfy human wants; and 2) The

satisfaction obtained from the goods and services that a consumer consumes.

UTM — See Universal Transverse Mercator.

139

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Vacancy — Unoccupied space.

Vacancy and Collection Loss — Vacancy is the amount of money deducted from potential

annual gross income to reflect the effect of probable vacancy and turnover. Collection loss is the

nonpayment of rent by tenants. Vacancy and collection loss is commonly expressed as a percentage

of potential annual gross income, and it should be based on market research, not actual rental

history of a property.

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.

Validity — The quality of a data element or procedure being what it should be in terms of some

ultimate purpose or use.

Valuation — 1) The process of estimating the value (market, investment, insured, or other properly

defined value) of a specific parcel or parcels of real estate or of an item or items of personal property

as of a given date; and 2) The process or business of appraising, of making estimates of the value of

something. The value usually required to be estimated is market value.

Valuation, Assessed — See Assessed Value.

Valuation Date — See Appraisal Date.

Value — The relationship between an object desired and a potential owner; the characteristics of

scarcity, utility, desirability, and transferability must be present for value to exist; 2) Value may also

be described as the present worth of future benefits arising from the ownership of real or personal

property; 3) The estimate sought in a valuation; and 4) Any number between positive infinity and

negative infinity. See Market Value.

Value, Assembly — See Assembly Value.

Value, Full — Synonymous with the preferred term Market Value. See Market Value.

Value, Going Concern — See Going Concern Value.

Value, Intrinsic — See Intrinsic Value.

Value, Junk — Synonymous with the preferred term Scrap Value. See Scrap Value.

Value, Liquidation — See Liquidation Value.

Value, Residual — See Residual Value.

Value, Salvage — See Salvage Value.

Value, Scrap — See Salvage Value.

Value Increment — The amount by which a property has increased in value.

140

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Value Increment Tax — A tax on increases in value of property between two specific dates, accruing

either periodically or at the time property is transferred. Note: This tax is currently found in the

capital gains features of many income tax laws but is generally thought of as a land tax on the

unearned increment.

Value in Exchange — 1) The amount an informed purchaser would offer for property under given

market conditions; and 2) The concept that states value is based on the ability of property to

command another asset, such as money, in trade.

Value-in-Use — The value of a property as measured by its current use, regardless of whether that

use is the highest and best use of the property. See Highest and Best Use.

Variable — An item of observation that can assume various values; for example, square feet, sale

prices, or sales ratios. Variables are commonly described using measures of central tendency and

dispersion.

Variable Costs — Costs that change as the quantity of the goods, services, or use of supplies and

utilities changes, either increasing or decreasing.

Variable Expense — Expenditures that vary from month to month, such as utilities, maintenance,

supplies, and management fees.

Variance — A measure of dispersion equal to the standard deviation squared. The expectation of

the squared deviation of a random variable from the mean. It measures the distance for a set of

random numbers from the mean.

Variation — 1) A general term meaning dispersion; and 2) A reference to a particular statistic called

the coefficient of variation. The expectation of the squared deviation of a random variable from the

mean. It measures the distance from the average value. Variance is a descriptive statistic measuring

dispersion. See Coefficient of Variation.

Vector — A format for processing and displaying graphic data. Vector data are represented by

strings of coordinates representing the true positions of features represented by points, areas, and

their boundaries.

Vendee — A purchaser. Synonymous with Buyer.

Vendor — One who transfers property by sale. Synonymous with Seller.

Verify — To check the accuracy of something. For example, sales data may be verified by inter-

viewing the purchaser of the property, and data entries may be verified by check digits.

Vertical Coordination — Coordination between the various positions in an organization that lie

along a single chain- of-command.

Vertical Equity — Distributing tax burdens fairly across differing property values. Equity is achieved

when the price-related differential (PRD) falls between 0.98 and 1.03. See Horizontal Equity.

141

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Vertical Inequity — Difference in the level of assessment of properties related to the value ranges

of the properties. Evaluated by calculating the price-related differential (PRD). Equity is achieved

when the price-related differential falls between 0.98 and 1.03. See Horizontal Equity, Horizontal

Inequity, and Vertical Equity.

Vertical Parcel — Parcels contained in the structure of two or more stories, such as a condominium

tower. For purposes of cadastral mapping, these may be represented by stacking or pancaking the

parcel polygons on top of one another.

Vertical Photograph — An aerial photograph taken with the axis of the camera being maintained

as closely as possible to a truly vertical position, with the resulting photograph lying approximately

in a horizontal plane.

Vest — To give title to or to pass ownership of property.

Warranty Deed — A deed containing a covenant of warranty whereby the grantor of an estate of

freehold guarantees that the title that he or she undertakes to transfer is free from defects and that

the property is unencumbered except as stated, and whereby the grantor, and the grantors heirs,

undertakes to defend and protect the grantee against any loss that may be suffered by reason of the

existence of any other title or interest in the property existing at the time the deed was executed

and not excepted therein.

Wasting Asset — An asset that declines in value over its expected economic life. Generally, the asset

depreciates, eventually having little or no residual value at the end of its life. Generally includes

assets such as buildings, improvements, and tangible personal property. Does not include items

such as land, or non-assets, such as investments or inventory.

Wavelength — Equals velocity/frequency. In general, the mean distance between maxima (or

minima) of a roughly periodic pattern. Specifically, the least distance between particles moving in

the same phase of oscillation in a wave disturbance. Optical and infrared wavelengths are measured

in nanometers, micrometers, and angstroms.

Weighted Average Method — In personal property appraisal, a method of inventory cost

accounting whereby inventory is valued according to the unit price of all units owned throughout

the year, calculated by dividing total acquisition cost of all inventory by the number of units owned.

Weighted Coefficient of Dispersion (CODw) — The coefficient of dispersion when the absolute

differences between individual assessment ratios and the measure of central tendency (for example,

median ratio) are weighted based on sale price.

Weighted Coefficient of Variation (COVw) — The coefficient of variation when the squared differ-

ences between individual assessment ratios and the arithmetic mean ratio are weighted based on

sale price.

142

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Weighted Mean (Weighted Average) — The weighted mean is a measure of central tendency. The

weighted mean of a set of values is computed according to the following formula:

Where: are non-negative coefficients, called “weights,” that are ascribed to the corre-

sponding values . Only the relative values of the weights matter in determining the

value of the weighted mean. In other words, if you multiply each weight by a positive value and

recalculate the weighted mean with new weights , then the value remains the

same. The greater the weight in respect to other weights, the greater the contribution of the corre-

sponding datum into the resultant value of the weighted mean.

Weighted Mean Ratio — Sum of the appraised values divided by the sum of the sale prices (or

independent estimates of market value), which weights each ratio in proportion to the sale price

(or independent estimate of market value).

Welcome Stranger Assessment — The practice of systematically assessing recently sold properties

based on their sale prices, while failing to reassess similar properties that have not recently sold.

Will Book — A record book in the clerk of courts office that contains all last will and testaments

that have been probated.

Windfall Tax — An unexpected, unbudgeted increase in the proceeds of a tax.

Words of Exclusion — “To,” “from,” “by,” “between,” and “on” are words of exclusion unless there is

something in the phrase that makes it apparent that the words were used in a different sense. “To

a stone mound,” “on Brown’s land,” and “by the river” exclude other terms.

143

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

Yield Capitalization — The method of converting a series of future net benefits into present value

where the future net benefits are discounted at a proper yield rate or discount rate (Yo). Yield capi-

talization can also be accomplished by developing an overall rate (Ro) that specifically reflects the

investment’s pattern of income, change in value, and yield rate. See Direct Capitalization, Income

Approach, and Income Capitalization.

Yield Rate (Discount) — The rate of return on a real estate investment. The yield rate reflects the

compensation necessary to attract investors to give up liquidity, defer consumption, and assume

the results of investing. It is the rate of return required on total property investment to meet

investment requirements. Conceptually, the yield rate is the weighted average of the mortgage

interest rate or mortgage yield rate and the equity yield rate, weighted by the proportions of total

investment represented by rate and considers all the properties’ expected benefits, including the

proceeds from resale at the end of the investment hold period. Referred to as the property’s internal

rate of return. See Discount Rate, Equity Yield Rate, and Mortgage Interest Rate.

Yield to Maturity (YTM) — The average rate of return on outstanding debt issues taking into

consideration current price, interest payments, and capital gains or losses at maturity of the issue.

YTM — See Yield to Maturity.

Zero-Based Budgeting — A style of budgeting that addresses the fact that a government’s fiscal

resources are limited and might even be declining in the face of inflation, population growth, and

increasing service demands. This budgeting concept forces the manager to start from scratch each year.

Zoning — The exercise of the police power to restrict landowners as to the use of their land and/

or the type, size, and location of structures to be erected thereon.

Zoning Bylaw — Implements the objectives and policies of a municipal official plan. Is a legal tool

to control land use.

z-Statistic — A statistic used in inferential statistics, specifically in a t-test to either support or

reject the null hypothesis, i.e., is the sample mean significantly different from the population

mean. It is used in hypothesis testing together with a p-value. The p-value indicates the odds the

results could have happened by chance. See z-Test.

z-Table — Table of critical values associated with the z-Test. See z-Test.

z-Test — A statistical test used to compare the means of two groups. It is often used in hypothesis

testing to determine whether two groups are different from each other or if any difference is due to

a meaningless random chance. More specifically, a t-test allows for the comparison of the average

value of two data sets and to make a determination if they came from the same population. See

z-Statistic.

144

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

145

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

146

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION

ASSESSMENT STANDARDS OF THE

INTERNATIONAL ASSOCIATION OF

ASSESSING OFFICERS

Guide to Assessment Standards

Standard on Assessment Appeal

Standard on Automated Valuation Models

Standard on Contracting for Assessment Services

Standard on Digital Cadastral Maps and Parcel Identiﬁers

Standard on Manual Cadastral Maps and Parcel Identiﬁers

Standard on Mass Appraisal of Real Property

Standard on Oversight Agency Responsibilities

Standard on Professional Development

Standard on Property Tax Policy

Standard on Public Relations

Standard on Ratio Studies

Standard on Valuation of Personal Property

Standard on Valuation of Property Aected

by Environmental Contamination

Standard on Veriﬁcation and Adjustment of Sales

TO DOWNLOAD THE CURRENT APPROVED VERSION OF ANY OF THE

STANDARDS LISTED ABOVE, GO TO: IAAO TECHNICAL STANDARDS

147

IAAO GLOSSARY FOR PROPERTY APPRAISAL AND ASSESSMENT, THIRD EDITION