AVM Glossary

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  • v

  • Value, FaceSee face value.
  • Value, FullSynonymous with the preferred term market value.
  • Value, GoingThe 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.
  • Value, ImprovedA loose term generally defined as that portion of the present worth of a property that represents the resale factor. (Term not recommended for use.)
  • Value in Exchange(1) The amount an informed purchaser would offer for property under given market conditions. (2) The concept that states value is based on the ability of property to command another asset, such as money, in trade.
  • Value in UseThe value of property for a specific use. The concept that holds value to be inherent in property itself, that is, the value is based on the ability of the asset to produce revenue through ownership.
  • Value IncrementThe amount by which a property has increased in value. See increment, unearned.
  • Value, Intrinsic(1) The value of an article due to its own physical qualities rather than to the rights, privileges, or immunities with respect to other properties or persons which its possession confers. (2) A term used to designate "value" that is supposed to reside within an article rather than within the minds of its actual or would - Be possessors. Note: This is a term that is much abused and that might well be discarded. Although it is proper to say that the intrinsic value of a stock certificate is the value, if any, of the paper, it is not correct to say that real estate has an intrinsic value(...)
  • Value, MarketSee market value.
  • Value, MoneySynonymous with the preferred term "cash value."
  • Value, NormalA loose term used to denote some sort of mean between high and low market prices obtaining over a period of time or in different markets at any moment of time (a term not recommended for use).
  • Value ShoppingOrdering multiple valuations of the same property and using the one with the highest value estimate to underwrite the loan—an unsafe and unsound practice.
  • VariableAn item of observation that can assume various values, for example, square feet, sales prices, or sales ratios. Variables are commonly described using measures of central tendency and dispersion.
  • Variable CostsThe costs of the variable resources used by a firm in either the short run or the long run.
  • Variable Proportions, Law ofAlso called the "law of decreasing returns," this states that as quantities of one productive factor in crease, the quantities of other productive factors remaining fixed, the resulting additional increments of product or output will de crease after a certain point.
  • VarianceA measure of dispersion equal to the standard deviation squared.
  • Variation(1) A general term meaning dispersion. (2) A reference to a particular statistic called the coefficient of variation.
  • VerifyTo check the accuracy of something. For example, sales data may be verified by interviewing the purchaser of the property, and data entries may be verified by check digits.
  • Vertical InequityThe tendency of an AVM to value high-value properties differently than low-value properties in relation to their selling prices. Can be measured by PRD or PRB.
  • w

  • Weighted Average MethodIn 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 DispersionThe coefficient of dispersion when the absolute differences between individual assessment ratios and the measure of central tendency (for example, the median ratio) are weighted on the basis of the sale price.
  • Weighted Coefficient of VariationThe coefficient of variation when the squared differences between individual assessment ratios and the arithmetic mean ratio are weighted on the basis of the sale price.
  • Weighted MeanAn average in which each value is adjusted by a factor reflecting its relative importance in the whole before the values are summed and divided by their number.
  • Weighted Mean RatioSum 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).
  • Weighted Mean; Weighted AverageAn average in which each value is adjusted by a factor reflecting its relative importance in the whole before the values are summed and divided by their number.
  • Written Estimate of Market ValueFor certain transactions (e.g., those that are below the de minimis), the NCUA allows credit unions under its jurisdiction to obtain a written estimate of market value in lieu of an appraisal. According to the agency’s regulations, individuals who prepare ‘written estimates of market value’ must be sufficiently qualified; however, the agency has also opined, “an AVM can be used to meet the valuation requirement in conjunction with review by a loan officer or an individual with knowledge, training, and experience in the real estate market where the loan is being made.”
  • z

  • z-StatisticThe number calculated in a z-Test, whose significance is evaluated by reference to a z-Table.
  • z-TableA table of critical values associated with the z-Test.
  • z-TestA test of any of a number of hypotheses in inferential statistics that has validity if the sample size is sufficiently large and the underlying data are normally distributed.
  • ZoningThe exercise of the police power to restrict land owners as to the use of their land and/or the type, size, and location of structures to be erected thereon.

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/)