AVM Glossary

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  • AAAVM (Appraiser Assisted AVM)
    An appraisal product where an appraiser guides the AVM program prior to the determination of value. The appraiser makes any selections, corrections, rankings, or adjustments to the data to be submitted to the AVM for valuation.
  • Absolute Percentage Sales Error
    The absolute value of the quantity: (AVM value minus selling price)/selling price, for a target property.
  • Absolute Value
    The value of a number or expression regardless of its sign. For example, 3 and -3 (minus 3) both have an absolute value of 3. The mathematical symbol for absolute value is one vertical bar on each side of the number in question, for example, |3|.
  • Accuracy
    The extent to which an AVM’s valuations approximate actual market values. Analysts usually examine a model’s overall accuracy through two different types of metrics - measures of AVM bias and measures of AVM precision.
  • Actual Age
    The actual number of years that have elapsed since the completed construction of an improvement; also referred to as historical age or chronological age.
  • Ad Valorem
    According to value.
  • Ad Valorem Tax
    A tax levied in proportion to the value of the thing(s) being taxed. Exclusive of exemptions, use-value assess- ment provisions, and the like, the property tax is an ad valorem tax.
  • 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.
  • Additive models
    Models in which the dependent variable is estimated by multiplying each independent variable by its coefficient and adding each product to the constant.
  • Address Normalization System
    A component at the front-end of many AVMs which identifies and repairs a variety of minor errors that commonly occur in user-supplied property addresses including both misspellings and incorrect addresses and zip codes.
  • Adjusted Hit Rate
    The percentage of valuations delivered relative to a modified sample population. To gain a better understanding of an AVM’s performance, analysts may remove outliers from the test results or valuations where the model may have had access to the benchmark value.
  • 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 modifications for differences between comparable and subject properties. Note: Adjustments are applied to the characteristics of the comparable properties in a particular sequence that depends on the method of adjustment selected.
  • Adverse Land 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.
  • Age
    See chronological age; economic life; effective age; and historical age.
  • Age/Life Method
    A method of estimating accrued depreciation founded on the premise that, in the aggregate, a neat mathematical function can be used to infer accrued depreciation from the age of a property and its economic life. Another term is "straight-line depreciation" (see depreciation, accrued; and depreciation method, straight-line).
  • Aggregate Mean
    See weighted mean.
  • Agricultural Property
    Improved or unimproved land that is devoted to or available for the production of crops and/or other agricultural products, livestock, and agricultural support buildings.
  • Algorithms
    Computer-oriented, precisely defined set of steps that, if followed exactly, will produce a prespecified result, for example, the solution to a problem.
  • Allocation
    See land ratio method.
  • Allocation by Abstraction
    A method of separating a whole property value into land and improvement components. The appraiser estimates replacement cost new, subtracts an appropriate amount for depreciation, and subtracts the remainder from the whole property value to estimate the land value.
  • Allocation by 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.
  • Allocation Method
    A method used to value land, in the absence of vacant land sales, by using a typical ratio of land to improvement value. Also called land ratio method.
  • Amenity
    A feature of an improvement that enhances its suitability for its basic use. A fireplace in a single-family residence is an amenity, as is covered parking at an apartment complex. By definition, amenities always increase value.
  • Analog
    (1) The form of data display in which values are shown in graphic form, such as curves. (2) A form of computing in which values are represented by directly measurable quantities, such as voltages or resistances. Note: Analog computing methods contrast with digital methods, in which values are treated numerically.
  • Analyst-Assisted AVM (AAAVM)
    A hybrid valuation product that relies on the experience of a valuation professional, but not necessarily a state-licensed or state-certified appraiser, to validate and supplement an AVM’s value conclusions.
  • 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.
  • Anonymize
    To remove identifying information from something (such as computer data) so that the original source cannot be known; to make (something) anonymous.
  • Anticipated Use Method
    A method used to appraise under-developed land. Expected improvements to the land are specified, and total development costs are estimated and subtracted from the projected selling price to give an estimate of the value of the undeveloped land.
  • Appraisal
    (1) The act of estimating the money value of property. (2) The money value of property as estimated by an appraiser. (3) Of or pertaining to appraising and related functions, for example, appraisal practice, appraisal services. Compare assessment.
  • Appraisal, Acquisition
    An appraisal to determine the market value of a property that is to be taken by eminent domain, so that the owner might be justly compensated.

Sources:

a)       AVMetrics

b)      AVMs 201: A Practical Guide to the Implementation of Automated Valuation Models, Jim Kirchmeyer, 2008.

c)       IAAO 2015, Glossary for Property Appraisal and Assessment, 2015. (2013 online: https://www.iaao.org/media/Pubs/IAAO_GLOSSARY.pdf )

d)      Collateral Assessment & Technologies Committee, Summary of Definitions & Terms, 2006.

e)      Joint Industry Task Force on AVMs, IAAO Standard on AVM Glossary, September 2003. https://www.iaao.org/media/standards/AVM_STANDARD.pdf

f)        Appraisal Institute, Joint Industry Task Force on Automated Valuation Models, Work Group Terminology, 2005.

g) Merriam-Webster (https://www.merriam-webster.com/)