SAEE Mass Appraisal Techniques 2 — Questions and Answers
Question 1: What does PRD stand for in the context of mass appraisal ratio studies?
- Property Rate Differential
- Price-Related Differential (Correct answer)
- Post-Revaluation Deviation
- Parcel Ratio Dispersion
Correct answer: Price-Related Differential
PRD stands for Price-Related Differential, a measure used to detect assessment regressivity or progressivity relative to property value.
Question 2: According to IAAO standards, an acceptable PRD range indicating assessment equity is:
- 0.80 to 0.95
- 0.98 to 1.03 (Correct answer)
- 1.05 to 1.15
- 1.20 to 1.30
Correct answer: 0.98 to 1.03
IAAO standards indicate a PRD between 0.98 and 1.03 reflects acceptable equity, with values above 1.03 indicating regressivity and below 0.98 indicating progressivity.
Question 3: What is 'stratification' in mass appraisal ratio studies?
- Ranking appraisers by their performance metrics
- Dividing the sample into subgroups to detect differential appraisal levels (Correct answer)
- Sorting properties by square footage only
- Removing outlier sales from the dataset
Correct answer: Dividing the sample into subgroups to detect differential appraisal levels
Stratification involves dividing properties into meaningful subgroups (by value range, neighborhood, or type) to identify if certain segments are assessed differently.
Question 4: In mass appraisal, which model type assumes that property value equals the sum of the values of its individual components?
- Multiplicative model
- Hybrid model
- Additive model (Correct answer)
- Hedonic log-linear model
Correct answer: Additive model
An additive model estimates total property value by summing the contribution of each characteristic (e.g., lot size value + living area value + garage value).
Question 5: What is the purpose of 'time adjustment' in a mass appraisal sales ratio study?
- To adjust for the time it takes to complete an appraisal
- To account for market price changes between sale date and assessment date (Correct answer)
- To adjust for seasonal tax billing cycles
- To normalize data entry time across assessors
Correct answer: To account for market price changes between sale date and assessment date
Time adjustment corrects sale prices to reflect market conditions as of the assessment date, ensuring accurate ratio study results when sales span different market periods.
Question 6: Which IAAO standard specifically governs mass appraisal for ad valorem taxation?
- IAAO Standard on Ratio Studies
- IAAO Standard on Mass Appraisal of Real Property (Correct answer)
- IAAO Standard on Automated Valuation Models
- IAAO Standard on Assessment Administration
Correct answer: IAAO Standard on Mass Appraisal of Real Property
The IAAO Standard on Mass Appraisal of Real Property provides guidelines for developing, testing, and maintaining mass appraisal systems used in ad valorem taxation.
Question 7: What does a high COD (e.g., 30%) in a residential ratio study indicate?
- Assessments are too high relative to market value
- There is significant non-uniformity in assessments across properties (Correct answer)
- The jurisdiction uses an additive model exclusively
- Assessment levels are progressively applied
Correct answer: There is significant non-uniformity in assessments across properties
A high COD indicates that individual assessment ratios vary widely around the median, meaning some properties are relatively over-assessed while others are under-assessed — a lack of uniformity.
SAEE Mass Appraisal Techniques 2
What does PRD stand for in the context of mass appraisal ratio studies?