Real estate professionals, appraisers, and property tax assessors often employ a specialized vocabulary when communicating information. The following glossary of terms is provided to help homeowners understand this industry specific verbiage during the property tax appeal process.
ABOVE GRADE LIVING AREA; AGLA The living area in a house not including the basement.
ACCESSORY IMPROVEMENTS Improvements other than the principal buildings.
ACRE 43,560 Square Feet
AD VALOREM According to value.
ADDITIONAL DWELLING Separate living quarters (other than Main residence).
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.
ACCESSORY IMPROVEMENTS Improvements other than the principal buildings.
AREA A geographic area defined and named by the Department of Assessments. These areas typically encompass properties within a group of neighborhoods that are more or less equally subject to economic forces that largely determine the value of the properties in question.
ASSESSED VALUE A value set on real estate and personal property by a government as a basis for levying taxes.
ASSESSMENT EQUITY The degree to which assessments bear a consistent relationship to market value.
ASSESSMENT LEVEL The common or overall ratio of assessed values to market values.
ASSESSMENT PROGRESSIVITY An appraisal bias such that high-value properties are appraised higher than low-value properties in relation to market values.
ASSESSMENT RATIO (1) The fractional relationship an assessed value bears to the market value of the property in question. (2) By extension, the fractional relationship the total of the assessment roll bears to the total market value of all taxable property in a jurisdiction. See level of assessment.
ASSESSMENT REGRESSIVITY An appraisal bias such that high-value properties are appraised lower than low-value properties in relation to market values.
ASSESSMENT (verb) The official act of discovering, listing, and appraising property. (noun) The value placed on property in the course of such act.
ASSESSMENT-SALE PRICE RATIO The ratio of the assessed value to the sale price (or adjusted sale price) of a property.
AVERAGE DEVIATION The arithmetic mean of the absolute deviations of a set of numbers from a measure of central tendency, such as the median. Taking absolute values is generally understood without being stated. The average 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.
BASEMENT TYPES
FINISHED Basement has finished walls. PARTIALLY FINISHED Basement has part of it finished. UNFINISHED Basement with just concrete walls and no improvements.
BATHROOMS
FULL BATHROOM Shower, Bathtub, Sink and Toilet. 3/4 BATHROOM Shower or Bathtub (not both), Sink and Toilet. 1/2 BATHROOM Sink and Toilet. 1/4 BATHROOM Sink or Toilet or Shower (Only One). MASTER BATHROOM Accessible only from Master Bedroom.
BIAS A statistic is said to be biased if the expected value of that statistic is not equal to the population parameter being estimated. A process is said to be biased if it produces results that vary systematically with some factor that should be irrelevant. In assessment administration, assessment progressivity regressivity) is one kind of possible bias.
BUILDING CONDITION (Relative to Age and Grade)
Poor Worn out. Repair and overhaul needed on painted surfaces, roofing, plumbing, heating and numerous functional inadequacies. Excessive deferred maintenance and abuse, limited value-in-use, approaching abandonment or major reconstruction; reuse or change in occupancy is imminent. Effective age is near the end of the scale regardless of the actual chronological age.
Fair Badly worn. Much repair needed. Many items need refinishing or overhauling, deferred maintenance obvious, inadequate building utility and systems all shortening the life expectancy and increasing the effective age.
Average Some evidence of deferred maintenance and normal obsolescence with age in that a few minor repairs are needed, along with some refinishing. All major components still functional and contributing toward an extended life expectancy. Effective age and utility is standard for like properties of its class and usage.
Good No obvious maintenance required but neither is everything new. Appearance and utility are above the standard and the overall effective age will be lower than the typical property.
Very Good All items well maintained, many having been overhauled and repaired as they have shown signs of wear, increasing the life expectancy and lowering the effective age with little deterioration or obsolescence evident with a high degree of utility.
BUILDING GRADE Represents the construction quality of improvements. Grades run from grade 1 to 13. Generally defined as:
1-3 Falls short of minimum building standards. Normally cabin or inferior structure
4
Generally older, low quality construction. Does not meet code.
5
Low construction costs and workmanship. Small, simple design.
6
Lowest grade currently meeting building code. Low quality materials and simple designs.
7
Average grade of construction and design. Commonly seen in plats and older sub-divisions.
8
Just above average in construction and design. Usually better materials in both the exterior and interior finish work.
9
Better architectural design with extra interior and exterior design and quality.
10
Homes of this quality generally have high quality features. Finish work is better and more design quality is seen in the floor plans. Generally have a larger square footage.
11
Custom design and higher quality finish work with added amenities of solid woods, bathroom fixtures and more luxurious options.
12
Custom design and excellent builders. All materials are of the highest quality and all conveniences are present.
13
Generally custom designed and built. Mansion level. Large amount of highest quality cabinet work, wood trim, marble, entry ways etc.
CERTIFIED RESIDENTIAL SPECIALIST A designation that can be earned by “REALTORS”. This designation is earned through completing a series of academic classes and the demonstration of professional representation in the residential real estate market over a period of years with a specific number of completed transactions. Less than four percent of all REALTORS® hold this designation because of the criteria needed to qualify. This designation is commonly called “CRS”. It is considered by many to be the PHD of Real Estate.
COMPARABLES SALES; COMPARABLES (1) Recently sold properties that are similar in important respects to a property being valued. The sale price and the physical, functional, and location characteristics of each of the properties are compared to those of the property being valued in order to arrive at an estimate of value. (2) By extension, the term "comparables" is sometimes used to refer to properties with rent or income patterns comparable to those of a property being appraised.
COST APPROACH 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 utility. The cost approach seeks to determine the replacement cost new of an improvement less depreciation plus land value.
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.
DEMAND The amount of a good or service that would be purchased at various prices during a given period.
FACTOR (1) An underlying characteristic of something (such as a house) that may contribute to the value of a variable (such as its sale price), but is observable only indirectly. For example, construction quality is a factor defined by workmanship, spacing of joists, and materials used. Factor definition and measurement may be done subjectively or by a computer-assisted statistical algorithm known as factor analysis. (2) Loosely, any characteristic used in adjusting the sales prices of comparables.
GENERAL CONDITION (SEE BUILDING CONDITION)
GRADE Classification by construction quality which refers to the types of materials used and the quality of workmanship. Buildings of better quality (higher grade) cost more to build per unit of measure and command higher value.
GREENBELT Property that can not be built on or have it’s vegetation disturbed without permission from local authorities. It has been deemed a greenbelt by the local or state planning department.
HOME SQUARE FOOTAGE Total square feet of living space. Garage is not included.
HOUSE STYLES
SINGLE LEVEL One level home all above ground level. SINGLE LEVEL WITH BASEMENT One level home with basement. 1 1/2 STORY One level home with a second story that only covers part of the first level. 1 1/2 STORY WITH BASEMENT Same as 1 1/2 story, but with a basement. TWO STORY Two stories all above ground level. TWO STORY WITH BASEMENT Two stories above ground level with basement. TRI-LEVEL Three levels of living space; entrance on the main level with other living areas, a short flight of stairs up and a short flight of stairs down to more living areas. SPLIT LEVEL or MID ENTRY Two levels of living space with entrance in between levels; upon entry you must either go up or down to get to living areas. MULTI LEVEL Multiple levels that do not fit any of the above.
IMPROVEMENT Anything done to raw land with the intention of increasing its value. A structure erected on the property constitutes one very common type of improvement, although other actions, such as those taken to improve drainage, are also improvements.
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.
LEGAL OWNER OF PROPERTY Owner of record. Name on Title.
LEVEL OF ASSESSMENT; ASSESSMENT RATIO The common or overall ratio of assessed values to market values.
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. The term is usually synonymous with appraisal date but is not necessarily so.
LOT SIZE: Total square footage or total acreage of lot.
MARKET 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.
MARKET VALUE The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgably, prudently, and without compulsion.
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.
MASTER BEDROOM Dominate bedroom in the house usually used by the owner of the property.
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 six. Also called arithmetic mean.
MEDIAN A measure of central tendency. The value of the middle term in an uneven number of items arranged or arrayed according to size; the arithmetic average of the two central items in an even number of items similarly arranged; a positional average that is not affected by the size of extreme values. The median of 3,5, and 10 is 5. The middle number.
MODEL CALIBRATION The development of adjustments, or coefficients based on market analysis, that identifies specific factors with an actual effect on market value.
MODEL SPECIFICATION The formal development of a model in a statement or equation, based on data analysis and appraisal theory.
MODEL (1) A representation of how something works. (2) For purposes of real estate value, 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.
NORMAL DISTRIBUTION A theoretical distribution often approximated in real-world situations. It is symmetrical and bell-shaped; 68 percent of the observations occur within one standard deviation of the mean, and 95 percent within two standard deviations.
OBSERVATIONS One recording or occurrence of the value of a variable, for example, one sale ratio among a sample of sales ratios.
OPEN SPACE Property not buildable and must be left in its natural state. Local or state planning departments make this determination.
OUTBUILDING Separate building from the primary residence (i.e., barn, extra garage, storage or garden shed, artist studio, etc.)
PARKING TYPES
ATTACHED GARAGE Garage attached to main dwelling by a common wall or ceiling. DETACHED GARAGE Garage not attached to main dwelling by a common wall or ceiling. CARPORT Covered parking that is not enclosed by walls on all sides. UNCOVERED PARKING Uncovered parking. ASSIGNED PARKING SPACE Parking space dedicated for only use by tenant. Usually found in Condominium complexes.
PRESENT USE Usually represents the current use of the property.
PROPERTY TAX ID NUMBER Tax number assigned to your property by local or state authorities. Can be called parcel number.
PHYSICAL INSPECTION At a minimum, an exterior observation of the property to determine whether there have been any changes in the physical characteristics that affect value.
POPULATION All the items of interest, for example, all the properties in a jurisdiction or neighborhood; all the observations in a data set from which a sample may be drawn.
PRICE-RELATED DIFFERENTIAL (PRD) The mean divided by the weighted mean. The statistic has a slight bias upward. Price-related differentials above 1.03 tend to indicate assessment-regressivity; price-related differentials below 0.98 tend to indicate assessment progressivity. It is a measure of assessment equity.
PURCHASE DATE Date owner of record purchased property.
PURCHASE PRICE Amount owner of record paid for property.
RANGE (1) The maximum value of a sample, minus the minimum value. (2) The difference between the maximum and minimum values that a variable may assume.
RATIO STUDY A study of the relationship between appraised or assessed values and market values. Indicators of market values may be either sales or independent "expert" appraisals. Of common interest in ratio studies are the level and uniformity of the appraisals or assessments. See also level of appraisal and level of assessment.
REAL PROPERTY "The term "real property" for the purposes of taxation shall be held and construed to mean and include the land itself, whether laid out in town lots or otherwise, and all buildings, structures or improvements or other fixtures of whatsoever kind thereon, except improvements upon lands the fee of which is still vested in the United States, and all rights and privileges thereto belonging or in any wise appertaining, except leases of real property and leasehold interests therein for a term less than the life of the holder; and all substances in and under the same; all standing timber growing thereon, except standing timber owned separately from the ownership of the land upon which the same may stand or be growing; and all property which the law defines or the courts may interpret, declare and hold to be real property under the letter, spirit, intent and meaning of the law for the purposes of taxation. The term real property shall also include a mobile home which has substantially lost its identity as a mobile unit by virtue of its being permanently fixed in location upon land owned or leased by the owner of the mobile home and placed on a permanent foundation (posts or blocks) with fixed pipe connections with sewer, water, or other utilities: PROVIDED, That a mobile home located on land leased by the owner of the mobile home shall be subject to the personal property provisions of your state and local statutes.
REALTOR A licensed real estate agent who is an active member of a state and local real estate board that is affiliated with the National Association of REALTORS. They must abide by the standard of practice and ethics set forth by the National Association of REALTORS. Not all real estate agents are REALTORS.
REAPPRAISAL CYCLE (1) The period of time necessary for a jurisdiction to have a complete reappraisal. For example, a cycle of five years occurs when one-fifth of a jurisdiction is reappraised each year and also when a jurisdiction is reappraised all at once every five years. (2) The maximum interval between reappraisals as stated in laws.
REMODELED Significant upgrades to the home.
RENOVATED Home has been restored to its original look. Term is usually used for older homes being restored to a former better state.
RELATIONSHIP The phenomenon whereby knowledge of the value of one variable tells you something about the probable value of another. (See correlation). 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.
REPLACEMENT COST NEW LESS DEPRECATION (RCNLD) In the cost approach, replacement cost new less physical incurable depreciation.
REPLACEMENT COST; REPLACEMENT COST NEW The cost, including material, labor, and overhead, that would be incurred in constructing an improvement having the same utility to its owner as a subject improvement, without necessarily reproducing exactly any particular characteristics of the subject. The replacement cost concept implicitly eliminates all functional obsolescence from the value given; thus only physical depreciation and economic obsolescence need to be subtracted to obtain replacement cost new less depreciation (RCNLD).
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.
RESIDENT Person currently occupying the home. Person can be the owner or a tenant.
SAMPLE A set of observations selected from a population.
SALES WARNINGS Sales verification information that identifies something out of the ordinary on a sale.
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 from normal probability tables. When the data are not normally distributed, the standard deviation is less meaningful, and one should proceed cautiously.
STYLE OF HOMES (SEE HOUSE STYLES)
SUB AREA A smaller appraisal market in a geographical area. To limit your search to a sub area, you will need to know a parcel number that is in the geographical area of interest.
SUPPLY The amount of a good or service that would be offered for sale at various prices during a given period.
TAX YEAR Properties are assessed as of January 1 of any given year for taxes paid the following year. For example, properties assessed in 2009 will pay taxes in 2010.
TENANT A person or group that rents and occupies land or a house from another for a period of time; lessee.
TOTAL LIVING AREA Total finished living space. This would include finished space in a basement.
TRUE AND FAIR VALUE In most states, all property must be valued and assessed at one hundred percent of true and fair value unless otherwise provided by law. "True and fair value" means market value and is the amount of money a buyer of property willing but not obligated to buy would pay a seller of property willing but not obligated to sell, taking into consideration all uses to which the property is adapted and might in reason be applied.
UNIFORMITY The equality of the burden of taxation in the method of assessment.
VARIABLE An 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.
WATERFRONT
HIGH BANK Not easily accessible to water (usually a cliff). MEDIUM BANK Can be accessible via stairs or another man made structure (approximately 5' to 10' above water). LOW BANK Easily accessible (approximately 5’ or less above water). NO BANK Direct access to water.
WEIGHTED MEAN RATIO Sum of the appraised values divided by the sum of the sales prices, which weights each value in proportion to its sale price. It is a better reflection of the sample than the arithmetic mean.
WEIGHTED MEAN; WEIGHTED AVERAGE An 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.