Course 805 Session 1 Page 1
If you are new to assessment work, you may be a bit bewildered by the many activities
and terms involved in a mass appraisal. This chapter will introduce you to the mass
appraisal process. It will give you an overview of how mass appraisals are planned,
organized, carried out, and evaluated.
Mass appraisal is the process of valuing a universe of properties as of a given date, in a
uniform order, utilizing standard methodology, employing a common reference for data,
and allowing for statistical testing. This is the general definition of mass appraisal. Let
us look at certain parts of the definition in more detail.

A mass appraisal is a process of valuing a universe of properties. This simply
means a large number of selected parcels, sometimes all the property in the
assessing jurisdiction. The number may reach into the tens or even hundreds of
thousands. You can see that an effective and efficient mass appraisal system
must provide accurate value estimates quickly. It is not possible to use all of the
detailed procedures and techniques that would be used by an individual "fee
appraiser."

A mass appraisal uses standard methodology. The use of standard methods
results in a high degree of uniformity and consistency, both among properties in
the same appraisal and from one appraisal to the next. Moreover, if you, as an
assessor, use standard and accepted methods, you will have reasonable
substantiation for your value estimates. The procedures and record can be
discussed with concerned taxpayers if the need arises.

A mass appraisal allows for statistical testing. Certain mathematical and
statistical methods are used widely in mass appraisals. The major benefit is that
these procedures can produce better and more consistent value estimates.
Another benefit is that these value estimates can be statistically verified, and the
quality of the mass appraisal results can be statistically evaluated.
These, therefore, are the three parts of the definition that you must know: A mass
appraisal is the process of valuing a universe of properties,utilizing standard
methodology, and allowing for statistical testing.
A "universe" of properties is
a. all the properties in the milky way
b. a large number of properties; possibly all properties in the jurisdiction
c. all the properties in the the state
What are two advantages of using standard methodology in a mass appraisal?
a. Property owners never complain and the assessor's budget request is always approved
b. Standard methodology results in greater consistency or uniformity in value estimates;
and standard methodology results in a reasonable substantiation of the value estimates
c. Value estimates are guaranteed to equal market value; and the relative dispersion
between similar properties is minimized
d. The time spent in mass appraisal functions is significantly reduced; and the cost savings
incurred in applying standardized methodology will enhance the local market base
The major benefit of using mathematical and statistical methodology in a mass appraisal is that
they produce better and more consistent value estimates
True
False
The assessor is required to value all property uniformly and fairly. This is necessary for the
property tax burden to be distributed equitably among all property owners. Assessed value is
based on a percentage of the estimated market value of a parcel of property as established by
the taxing jurisdiction. The property tax, in turn, is based on the assessed value, which is known
as ad valorem taxation. For example, let us say that, in your jurisdiction, assessed values are
set at 25% of estimated market values, and that property taxes are 8% of assessed values. If
your property has an estimated market value of $50,000, what would be its assessed value?
a. $12,500
b. $4,000
c. $1,000
d. $200,000
What would be the amount of property tax owed under the facts presented in the previous
question?
a. $12,500
b. $4,000
c. $1,000
d. $200,000
If your property's market value was improperly estimated at too high an amount, and your
neighbor's property was improperly estimated at too low an amount you would be paying more
than your fair share of the property tax burden and your neighbor would be paying less than a
fair share of that burden.
True
False
The assessor may use a sales ratio study to evaluate the fairness and uniformity of the
distribution of the tax burden. A sales ratio is computed by dividing the assessed value of a
property that recently sold by its sales price. The result is usually expressed as a percent. For
example, if property with an assessed value of $15,000 is sold for $70,000, the sales ratio is
21.4%. ($15,000/$70,000) x 100% = 21.4%. Other names are often used in place of sales ratio
study. The most common are assessment/sales ratio analysis and assessment/sale price ratio
analysis. If property with an assessed value of $20,000 is sold for $110,000, the sales-ratio is
20%.
True
False
Need for Reappraisal
Unless the property tax statutes dictate otherwise, all property in an assessing
jurisdiction should be treated equally. (Some statutes do provide for different
assessment rates for different types of property. Typically, farm land is given a lower
assessed value percentage to encourage its continued use.) If all property is, in fact,
being assessed equally, the sales ratios for all properties will be exactly the same.
Therefore, to assure an equitable distribution of the tax burden, the goal of the assessor
is to adjust the assessed values and the estimated market values to produce sales
ratios for all properties that are as nearly equal as possible.
The assessor's office should monitor the sales ratios of properties sold within the
jurisdiction. If there is too much variation among the sales ratios, there is a need for a
reappraisal of the properties in the jurisdiction. Proper performance standards have
been established by IAAO in the Sales Ratio Standard to determine the acceptable
variation.
Even if sales ratios are very uniform, with little variation, a reappraisal still may be
necessary. Let us say that the taxable property in your jurisdiction had an estimated
market value of $100 million as of the last appraisal, two years ago. Assume that the
assessed value in the jurisdiction is 25% of the market value, and the tax rate is 10% of
assessed value. This would result in tax revenue for the jurisdiction of $2.5 million.
During the last two years, however, property values may have risen uniformly by 20%.
Sales ratios will stay uniform, with little variation, because all the property values have
increased by the same percentage. The property tax burden will still be equitably
distributed but it will represent a smaller percentage of market value. A reappraisal
would result in a new total estimated market value of all of the property of about $120
million, and tax revenue (which you should verify) of $3 million. In this case, the
assessor's responsibility is to keep the assessed values at 25% of estimated market
values.
To summarize, there are two conditions that indicate a need for a reappraisal. The first
is a large variation among sales ratios calculated from properties recently sold in the
jurisdiction. This indicates that the tax burden is not being distributed equitably among
the property owners. A reappraisal is necessary to correct the imbalance.
The second condition is a uniform underestimate of all property values, usually caused
by a uniform increase in property values since the last appraisal. The tax burden is
equitably distributed, but everyone's tax is too low, and the jurisdiction suffers a loss of
tax revenue. This condition can be corrected by a reappraisal of all the property, or
more simply by uniformly raising all the market-value estimates.
Frequently, both conditions exist within an assessing jurisdiction at the same time. This
eliminates trending, which is the process of a uniform raising of all market-value
estimates and necessitates a reappraisal.
Suppose twenty-five residential properties were sold within your jurisdiction in the past month.
Sales ratios were calculated, and a large amount of variation shows a need for a reappraisal.
True
False
The fact that the tax burden in your jurisdiction is equitably distributed has nothing to do with the
distribution of sales ratios for recently sold properties.
True
False
If the total estimated market value of property in the jurisdiction is $100 million, and the
assessed values are set at 25 percent of market values, what is the total assessed value of
property in the jurisdiction?
a. $2,500
b. $25,000
c. $25,000,000
d. More information is needed to calculate that value.
If market values from the previous problem rise 20 percent to a total of $120 million, but no
change is made in the assessed value, what will happen to the ratio of assessed value to
market value?
a. It will increase from 25% to 30%
b. It will fall to 20.8%
c. It will remain the same
d. It will fall to 10%
How should the problem of the ratio of assessed value to market value falling below the
required rate be corrected when ratios vary significantly?
a. The assessor can reappraise all properties at their new market values
b. This should not be viewed as a problem but a benefit for the property owners in the
jurisdiction.
c. The assessor can simply increase all assessed values by 20%.
d. Divide all assessed values by .208.
When can an assessment deficiency be corrected simply by raising all the market value
estimates by the same percentage?
a. When the assessment to sale ratio is increasing.
b. When the assessment to sale price ratio is decreasing
c. When there is a uniform underestimate of in the market value of all properties
d. When the coefficient of dispersion is above 20
Assume that a high degree of assessment uniformity is currently established in an
assessment jurisdiction. If all properties in the jurisdiction experience identical
percentage changes in market value from now on, the high degree of assessment
uniformity will persist. Unfortunately, it is common that there are substantial differences
in the percentage changes in market value experienced by different parcels of property.
These differences make periodic reappraisals necessary.
You should be aware of four common types of possible assessment bias typically
caused by market forces:

Age bias: Newer properties may change in value at a rate that differs from that
for older properties.

Cost or value bias: Expensive properties may change in value at a rate that is
higher or lower than that for inexpensive properties.

Location bias: Properties in different locations may change in value at different
rates.

Type bias: Properties of different types (residential, commercial, industrial) may
change in value at different rates.
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Age
b. Location
c. Type
1. The market value of a store in the center of town has not changed in the last
three years, while the market value of another store in a popular shopping mall on
the edge of town has been steadily increasing. As a result, the downtown store is
over assessed, while the one in the shopping mall is under assessed.
2. The market values of light manufacturing plants at the edge of town have been
increasing, while the market values of adjacent residential properties have been
declining. Therefore, the manufacturing properties are under assessed, and the
residential properties are over assessed.
3. Established residential properties near the center of town have been increasing in
market value at about 8 percent per year, while residential properties in a new
subdivision nearby have been increasing at about 12 percent per year. Therefore,
the subdivision properties are under assessed, while the established residential
properties are over assessed.
Course 805 Session 1 Page 2
Course 805 Session 1 Page 3
Planning is the management function of determining what must be done, and how,
when and by whom it should be done.
Organizing is the management function of logically grouping activities, identifying and
obtaining the required resources, and establishing the appropriate authority and
responsibility relationships among the people doing the work.
The goal of both planning and organizing is to get the job done as efficiently and
effectively as possible. Mass appraisal activities are numerous and complex. Without
careful planning and organizing, the work is likely to fall behind schedule and is certain
to consume more resources, including taxpayers' money, than necessary.
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Organizing
b. Planning
c. Planning
d. Organizing
1. Data processing facilities have been arranged to be available when needed
2. Smith will prepare the appraisers' field manual, under the supervision of Jones
3. Electronic data processing will be used to analyze certain mass appraisal data
4. Ten thousand parcels of property will be reappraised within the next year
Planning and organizing are important in a mass appraisal project because
a. A mass appraisal represents a set of numerous and complex activities which provide the
opportunity to employee numberous additional bureacrats. This helps the local economy
b. Appraisers are inherently poor at managing their time
c. A mass appraisal represents a set of numerous and complex activities. Without planning
and organizing, the work is likely to fall behind schedule, and will consume more resources than
necessary. The work will be neither effective nor efficient.
d. It gives management a reason to keep their high paying jobs.
The number of individual jobs to be performed in a mass appraisal is very large. In this
overview we will not examine the process in complete detail. However, you should be
familiar with the major activities that appear in the diagram of The Mass Appraisal
Process. In the diagram, locate the following major activities:

Reassessment decision

Planning and organizing

Analysis of available resources

Determination of essential variable property features

Data collection

Approaches to valuation (represented by four boxes with the Cost Approach
being shown as Land Valuation and Improvement Cost.)

Performance analysis
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Performance analysis
b. Reassessment decision
c. Analysis of available resources
d. Planning and organizing
e. Determination of essential variables
f. Data collection
g. Approaches to valuation (cost approach)
1. Updating depreciation schedules
2. Computing replacement cost new
3. Determining what data processing facilities are available
4. Designing forms for appraisal data
5. Using a sales ratio study to determine whether a reappraisal is necessary
6. Establishing the relationships of authority and responsibility among the
personnel in the assessor/s office
7. Checking the quality of the mass appraisal results
If a mass appraisal is to be conducted effectively and efficiently, the large number of
tasks to be performed must be carefully planned and organized.
There are several management tools that can be used to assist in the planning and
organizing of a mass appraisal. We will examine the following aids to planning and
organizing:

Detailed work plan

Process chart

Organizational chart

Organizational manual

Written standards of practice and procedure

Phase delineation chart

CPM/PERT

Monthly production goals chart

Personnel level assignments chart
You have learned that planning and organizing involves answering four questions: what,
how, when, and who. Organizing involves three phases: grouping activities logically,
identifying and obtaining the required resources, and establishing authority and
responsibility relationships among the workers. As you study each management tool,
pay careful attention to which of the four planning questions and which of the three
phases of organizing is involved.
Detailed work plan
The first and most important management tool is the detailed work plan. This is a
complete summary of the entire mass appraisal process. In it, all four of the planning
questions are answered, and all three of the organizing phases are represented.
In the detailed work plan, every appraisal activity is listed and described. Relationships
among the various activities are detailed, such as which tasks must be done before
others can begin. Relationships among the workers are also determined.
In the detailed work plan, the beginning and ending dates of each activity are
established. Resource requirements, including personnel and data processing facilities,
are determined. These are compared with the available resources to pinpoint any
resource shortages.
In the detailed work plan, monthly goals are established for each appraisal activity and
for the progress of the mass appraisal as a whole.
As you can see, the detailed work plan is a very comprehensive description of the
entire mass appraisal process. Many of the other management tools may be used within
the detailed work plan to make it more easily understood.
Which of the following are proper questions to ask in planning
[mark all correct answers]
a. What must be done
b. How should it be done
c. When should it be done
d. By whom should it be done
The three phases of organizing are
[mark all correct answers]
a. Logically grouping activities
b. Buying additional computer equipment
c. Identifying and obtaining the required resources
d. Establishing the authority and responsibility relationships among the people doing the
work
e. Delegating as much as the responsibility as possible down the chain of command.
A process chart may be used as part of the detailed work plan. Its purpose is to help
plan and organize the mass appraisal by illustrating the various tasks that must be
performed, and by showing the logical relationships among them.
The Mass Appraisal Process chart displayed on a previous page shows the entire mass
appraisal process in a general way. In addition to such an overall process chart, there
may be a set of several detailed charts, each showing the particulars of a section of the
overall chart.
The "what must be done" question is most closely related to the process chart.
True
False
Which one of the three phases of organizing is most closely related to the process chart?
a. Logically grouping activities.
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
Organizational Chart
An organizational chart may be used as part of the detailed work plan. Its purpose is to
help plan and organize the mass appraisal by showing how the various people working
in the assessor's office relate to one another. The organizational chart provides the
employees and managers with a clear picture of the division of responsibility and the
lines of authority.
Just as with process charts, there may be a general overall organizational chart and a
set of specific and detailed organizational charts.
Which one of the four planning questions is most clearly related to the organizational chart?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
Which one of the three phases of organizing is most closely related to what is shown in the
organizational chart?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work.
Organization Manual
An organization manual may be used as part of the detailed work plan. Its purpose is to
help plan and organize the mass appraisal by providing detailed statements of duties
and responsibilities for everyone working in the assessor's office. The organization
manual fills in the details that cannot be shown directly on the process chart and the
organization chart. The content of the organization manual is, therefore, closely related
to what is shown on the process and organization charts.
Which two of the four planning questions are most closely related to the organization manual?
[mark all correct answers]
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
Which two of the three phases of organizing are most closely related to the organization
manual?
[mark all correct answers]
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
Written Standards of Practice and Procedure
The most important purpose of written standards is to improve the consistency and
uniformity of the appraisal. Some of the areas covered by written standards are:




Personal conduct of employees of the assessor's office. (Especially the field
workers)
Observation and description of property characteristics.
Coding of data for data processing.
Proper completion of various forms.
The three main sources of standards and procedures are:



Laws and regulations of the jurisdiction.
Standard texts on appraisal and taxation.
Procedure manuals prepared by the assessor's office.
Which one of the four planning questions is most closely related to written standards of practice
and procedure?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
Phase Delineation Chart
A phase delineation chart may be used as part of the detailed work plan. The purpose
of this chart is to help visualize when the various appraisal activities are to begin and
end.
In addition to the timing considerations, the phase delineation chart reflects some of the
logical relationships among the tasks. For example, the chart indicates that the
"measure and list-field" activity cannot begin until the planning and organization work is
complete.
Which one of the four planning questions is most closely related to the phase delineation chart?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
Which one of the three phases of organizing is most closely related to the phase delineation
chart?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
Critical Path Method and Program Evaluation and Review Technique
The critical path method and the program evaluation and review technique are two
modern management systems of planning and scheduling. Their purpose is to help
achieve on-schedule completion of the tasks and the most efficient use of resources.
In both CPM and PERT, all the individual tasks and their interdependencies are
represented in a network such as that shown below. The interpretation of the network is
that certain tasks cannot be completed until others are completed. For example, task
number 2 cannot begin until task number 1 is complete. However, task number 10 is
independent of tasks numbered 1, 11, 20 and 30. Task number 10, therefore, may be
worked on at the same time as tasks numbered 1, 11, 20 and 30. Emphasis is placed
on defining events and activities with sufficient precision to permit monitoring the actual
accomplishments as the work progresses.
Two important concepts in these systems are the critical path and the slack time. The
critical path is the sequence of activities and events that will require the greatest
expected time to accomplish. Slack time is the maximum delay in an activity that can be
tolerated without affecting the completion time of any other activity in the program. If a
particular activity lies on the critical path, any delay in completing that activity will result
in delaying the final completion of the project. If a particular activity has slack time,
resources may be diverted from that activity to one on the critical path to improve the
probability of on-time completion of the program.
In addition to the more sophisticated information provided by CPM and PERT, the
network diagrams are a great help in visualizing all the tasks and their interrelationships.
Which one of the four planning questions is most closely related to CPM and PERT?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
Which one of the three phases of organizing is most closely related to CPM and PERT?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
The monthly production goals chart is an extension of the phase delineation chart, showing
more details of each phase of the mass appraisal process.
Personnel level assignments charts are also extensions of the phase delineation chart,
showing how many and what kind of personnel will be needed each month to perform
the required tasks. The two charts below present the same information in different
forms, providing a good visualization of the personnel needs during the mass appraisal.
Activity
Feb
Planning
and
1T,1
Organizatio C
n
Mar
Apr
Ma Ju Ju
Aug Sep
y n l
Oct Nov Dec
Jan
Feb
Data
1T,1 1T,1 1T,1
Analysis
C
C
C
Measure
and List 14T 14T 10T 8T 7T 6T
6T
4T
2T
Field
Review 3T 3T 3T 3T
37
5T
5T
7T
Field
Land Value
2T 2T 2T 2T
2T
2T
2T
2T
Calculation
2C 2C 2C 2C 2C
2C 2C 2C
- Office
Final
Review 2T 2T 2T
2T
2T
2T
4T
Field
Final
Review 1T 1T
1T
1T
1T
1T
1T
Office
Update and
1T,1 1T,1 1T,1 1T,1 1T,1 2T,1
Correct
C
C
C
C
C
C
6T,3
C
Hearings
Technical:
Clerical:
Supervisory
:
TOTAL
Feb
Mar
Apr
2
2
15
1
15
1
Ma
y
15
2
Ju Ju
Aug Sep
n l
15 15 15
15
2 2
3
3
1
2
2
3
3
3
5
18
18
20 20 20
21
3
Oct Nov Dec
Jan
Feb
15
3
15
3
9
3
3
1
6
3
3
3
3
3
2
3
21
21
21
15
6
12
Course 805 Session 1 Page 4
Which one of the four planning questions is most closely related to all of the management tools
discussed thus far?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
Which one of the four planning questions is most closely related to the personnel level
assignments charts?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
Which one of the three phases of organizing is most closely related to the personnel level
assignments charts?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
The primary purpose of these management tools is to help analyze and visualize the
work that must be done. There are many other tools that we have not mentioned here,
and a creative manager will be able to design new tools to meet new problems that may
arise.
You should have noticed that there is one thing that all of these management tools
have in common: they all help answer one or more of the planning questions, or assist
in one or more of the phases of organizing.
Course 805 Session 1 Page 5
Analysis of Available Resources
The examination of available resources provides part of the answer to the planning
questions – "How should the work be done?" For example, a jurisdiction with complete
and accurate computerized files of assessment data will approach a mass appraisal
differently from a jurisdiction with obsolete data and no computer facilities.
The examination of available resources is related also to the organizing phase
"identifying and obtaining the required resources." Only by looking at what you already
have can you decide what you still need in order to do the job.
The identification and analysis of available resources has a major impact upon the
planning and organizing of the mass appraisal. In some cases, resource limitations may
virtually preplan the mass appraisal program.
The analysis of available resources is a part of planning and organizing
True
False
To what planning question is the analysis of available resources most closely related?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
To what phase of organizing is the analysis of available resources most closely related?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
Key Mass Appraisal Resources
The resources available to the assessor may be divided into four major areas:

Financial resources

Personnel resources

Existing data elements

Data processing resources
The availability of resources is of great importance. The most optimistic and
commendable mass appraisal goals become impractical and unattainable if adequate
resources are not available.
Financial Resources
In discussing resources, you cannot overemphasize the importance of adequate
finances. The availability of most of the other essential resources is dependent upon
adequate funding.
You should not think that if adequate funds are not currently available locally, appraisal
programs necessarily must be cut back or eliminated. If the assessor presents the local
government decision makers with data and explanations showing how a good mass
appraisal program can enhance the revenue potential of the local government or the
equity level of assessment, increased funding may be provided.
The assessor also may seek financial assistance from other sources. The most
common sources are:

Governmental interagency cost-sharing programs. (For example, distributing the
cost between city and county, between assessor's office and engineering office,
between assessor's office and planning department, etc.)

State-level grants and loans

Federal grants and loans
Financial resources represent the ultimate constraint under which the mass appraisal
will operate, and will be the limiting factor with respect to the scope of the project. An
evaluation of finances will be necessary to estimate project completion dates because
the financial constraint limits the hiring of personnel and the acquisition of other
resources such as computer facilities.
Of the four types of resources, which is the most important ?
a. Financial resources
b. Personnel resources
c. Existing data elements
d. Data processing resources
Personnel Resources
The availability of adequate personnel is closely related to the financial resources of the
assessor's office. Inadequacies in personnel should be identified very early in the
planning and organizing process. This is because it takes time to obtain and train the
necessary personnel.
If staff size must be increased, there are two objectives:
1. Additional permanent personnel may be recruited and trained.
2. Additional personnel may be temporarily transferred from other offices within the
jurisdiction, from the assessor's offices in other jurisdictions, or from a pool of
available state employees.
The hiring and training of permanent personnel has three primary advantages:
1. The assessor maintains administrative control over personnel.
2. The training is current and is related to the specific needs of the jurisdiction.
3. The assessor's staff is strengthened for long-term needs.
The hiring and training of permanent personnel, however, also has disadvantages:



Salary cost and office space requirements are increased.
The training time involved may delay various activities in the mass appraisal
process.
The additional personnel will have to be retrained after the completion of the
program, when personnel needs to be reduced.
The temporary transfer of personnel has these advantages, especially when the
personnel are experienced in assessment work:



Recruiting and training time and cost are minimized.
Delays in the various mass appraisal activities are minimized.
The additional personnel need not be retrained at the completion of the program.
The temporary transfer of personnel has a major disadvantage:
After the program is completed, the staff is reduced. When another mass appraisal
program is initiated, the assessor again will be confronted with the problem of having an
inadequate staff.
It is important to identify personnel inadequacies early in the planning and organization process
because time will be needed to recruit and train additional personnel if needed.
True
False
What are the two alternative ways in which the size of the assessor's staff may be increased?
[mark all correct answers]
a. Hire and train permanent personnel
b. Feed the current staff a high fat diet
c. Use temporary personnel either from other offices or from an outside agency
If you are an assessor and, through skillful scheduling, have managed to spread the work load
fairly evenly throughout the year, which of the two alternatives for increasing the staff size would
probably be the best?
a. Hire and train permanent personnel
b. Put the staff on a high fat diet
c. Use temporary personnel from another office or from an outside agency
If the work load is very uneven throughout the year, which alternative would probably be the
best for increasing the staff size when necessary?
a. Hire and train permanent personnel
b. Put the staff on a high fat diet
c. Use temporary personnel from another office or from an outside agency
Another alternative solution to the problem of inadequate personnel is to share the
workload with other offices in the jurisdiction. Some common examples of this are:



Updating of maps by the planning department
Updating of ownership files by the engineering or building department
Providing of drafting services by the engineering department
It may also by possible to obtain assistance through federal and state programs that are
available.
Regardless of which solution is chosen, the assessor must not overlook the problem of
training – both the training of new personnel in basic skills, and the updating and
upgrading of skills of the existing staff. Training consumes time and other resources
(including personnel), so it is important to make provisions for it when planning and
organizing the mass appraisal program.
Existing Data Elements
The discovery of taxable property, and factors affecting property value, require the
gathering and processing of vast amounts of information. You should not assume,
however, that all the existing data in the assessor's office is invalid. Much of the data on
file may be accurate and usable. Failure to identify such data will result in a waste of
resources in the gathering of data that is already on file.
The quality of existing property information in the assessor's office is related to three
factors:



Quality of the building permit system
Level of expertise of the assessor's staff in the last mass appraisal program
Time elapsed since the last appraisal.
Another misconception is that the information needed in the mass appraisal program
must be gathered from scratch by the assessor's office. In fact, virtually every type of
information required by the assessor is also being acquired by some other agency.
While this information is not always complete, or in the preferred format, these agencies
may be a significant data source and should be contacted before the collection of data
begins.
What are two common but erroneous assumptions regarding mass appraisal that are mentioned
above?
[mark all correct answers]
a. It is less expensive to hire an outside firm to conduct the reappraisal
b. All existing data in the assessors office invalid
c. The information needed for the mass appraisal is not available any place other than the
assesors office
With respect to data gathering, virtually none of the data required by the assessor is being
collected by other agencies.
True
False
Course 805 Session 1 Page 6
The following is a partial list of possible sources of mass appraisal data:

Planning and zoning commissions

Chamber of commerce

Real estate boards

Labor organizations

Census bureaus

National Association of Home Builders

Public transportation officials and private transportation companies (bus lines,
airlines, railroads, etc.)

Highway commissions

Federal Housing Administration

Department of Commerce

State property assessment agencies

Recorded deeds, leases, mortgages, plans and plats

Title companies

Property buyers and sellers

Real estate brokers and salespersons

Multiple listing services

Newspaper advertisements and articles

Building materials suppliers

Bank, savings and loan associations, credit unions, and other similar financial
institutions

Public utility companies

Property owners and managers

Accountants

Appraisers

Employment agencies

Professional journals

Area maps (topographic, soil, etc.)

Property tax laws and regulations

Aerial photographs
Data Processing Resources
Computer use in mass appraisal ranges from none at all to totally automated systems
comprising valuation chapters, mapping systems, billing and accounting systems, and
various other subsystems.
The role that the computer will play in the mass appraisal program must be clearly and
concisely defined. Just as it takes time to develop good assessment personnel, it takes
time to develop good computerized systems for a mass appraisal. For this reason, the
intended use and the availability of data processing resources must be evaluated early
in the planning and organization process.
Three aspects of computerization should be considered:

Cost replacement

Cost avoidance

Value received
Cost replacement refers to the replacement of one kind of cost by another. In this
instance, computer processing costs replace personnel costs. You should ask the key
questions: "Is the additional cost of computer processing greater or less than the
personnel costs saved?"
Cost avoidance refers to the computer's ability to process a large volume of work with
little significant change in resources. In a growing jurisdiction, this can mean that a
computerized system, once established, will be able to handle a steadily growing
workload with no difficulties and with little added cost.
Value received refers to the intangible benefits of automation, such as improved mass
appraisal quality and assessment equity.
Suppose a computerized mass appraisal system can handle 200,000 parcels of property at a
cost that is only 20 percent more that the cost of handling 100,000 properties. In a manual
system, suppose that 200,000 parcels would cost 80 percent more than 100,000. Which of the
three aspects of computerization is involved here?
a. Cost replacement
b. Cost avoidance
c. Value received
Suppose that the amount of variation among sales ratios in a computerized system is less than
in a manual system. Which of the three aspects of computerization is involved here?
a. Cost replacement
b. Cost avoidance
c. Value received
Suppose that by spending $250,000 per year for computer processing, you can save $300,000
per year in personnel costs. Which of the three aspects of computerization is involved here?
a. Cost replacement
b. Cost avoidance
c. Value received
Course 805 Session 1 Page 7
If you do not have in-house computer resources, the potential for automation still exists.
Service bureaus provide computer resources on an hourly or on a performance contract
basis. Also, several departments within a jurisdiction, or several jurisdictions within a
geographical area, may cooperate in obtaining and efficiently using a common
computer facility.
Programmable calculators are increasingly being used, especially in jurisdictions that
are too small for large-scale computerization. Such calculators cannot handle large files
of data, but they can greatly reduce the time required to perform most of the routine
computations that must be made in a mass appraisal.
The cost of computers and calculators is continually decreasing. At the same time, their
capabilities are increasing. These two facts are making automated data processing a
way of life for everyone, and the assessor is no exception. Computerization is enabling
assessors to employ more and more of the sophisticated mathematical and statistical
methods that can greatly improve the accuracy and the equity of mass appraisals.
Determination of Essential Variables
Your study of the mass appraisal process is now moving from the general planning and
organizing phase to the more specific phase of identifying and gathering important
information. The key question you should ask yourself is: "What information should be
gathered?"
In order to avoid wasting your limited financial, personnel, and data processing
resources, you should not collect more information than required for an accurate and
equitable mass appraisal. Therefore, before you begin to collect data, you must decide
what information is needed. The term variable will often be used for an item of property
information.
Tens or even hundreds of thousands of parcels of property may be involved in mass
appraisal. Every unnecessary data item that is gathered for each property, multiplied by
the number of properties, results in the possibility of collecting tens or hundreds of
thousands of unneeded data items in the mass appraisal program.
The goal is to determine which variables actually influence property value, and collect
only those data items. The result will be a mass appraisal that is efficient as well as
accurate and equitable.
Course 805 Session 1 Page 8
You can think of property data falling into two groups:

Objective

Subjective
Objective data (also known as Quantitative data) are those property characteristics that
are directly measurable and are not subject to the opinion of the observer. The
dimensions of a lot and the number of rooms in a house are examples of objective data.
If several people have examined the same property, there should be no differences
among their reports with respect to the objective property characteristics.
Subjective data (also known as Qualitative data) are those property characteristics that
may not be directly measurable, observable, or verifiable, and are subject to the opinion
and judgment of the observer. The visual appeal of a site and the "livability" of a house
are examples of subjective data. If several people examined the same property, there
would probably be differences among their reports with respect to subjective property
characteristics.
If you are gathering property data, you may tend to ignore the subjective variables,
thinking, "Someone else may have a different opinion." This would be a mistake,
because subjective variables are often among the most important of the variables that
determine property value. In order to reduce the problem of different opinions, appraisal
manuals usually contain guidelines for evaluating subjective property characteristics.
It is true that subjective data elements are not directly verifiable, and depend on the
observer's opinion. But any number of experienced appraisers should reach
approximately the same conclusions about the subjective characteristics of a piece of
property.
The number of square feet of living space in a house is an objective piece of data
True
False
The adequacy of a kitchen in a house is an objective piece of data.
True
False
The desirability of a business location is an objective piece of data.
True
False
The age of a house is an objective piece of data.
True
False
The quality of the view from a homesite is an objective piece of data.
True
False
The distance of a house from the nearest public elementary school is an objective piece of data.
True
False
Course 805 Session 1 Page 9
You are still faced with the question: "What property information should be collected?"
You could gather several hundred bits of data about each parcel in a mass appraisal,
but that would be inefficient. The objective is to get an accurate and equitable estimate
of property value without having to gather unnecessary data.
Fortunately, there is a powerful mathematical technique that can help determine which
variables are the most important in determining property value. This technique is called
multiple regression analysis.
Multiple regression analysis is a statistical procedure involving numerous complex
mathematical equations and many involved computations. That is why the technique
has not been used in assessment work until recently, although the theory has been
known since the early 1800's. But now that computers are generally available, multiple
regression analysis is rapidly becoming one of the most valuable mass appraisal tools.
Briefly, this is how multiple regression analysis works: Suppose that in a given
neighborhood, twenty residential properties have recently been sold. The sales prices
represent the actual market values of these properties. For each of these twenty
properties, let us say that data are gathered on 120 property characteristics – 2,400
data items in all. For each property, the sale price and the 120 data items are submitted
as input to a multiple regression computer program. The program will be able to identify
a much smaller number of property characteristics, say 20 that are statistically the most
important in determining property values in this neighborhood. The program will also
indicate exactly how these 20 variables are to be used in calculating the estimated
market value of each property. Then, in a mass appraisal of the neighborhood, you
need to gather only those 20 data items on each property, instead of the 120 that were
collected for the original twenty properties. Moreover, the estimated values probably will
be more accurate than estimates made using traditional mass appraisal methods.
Course 805 Session 1 Page 10
Importance of Neighborhood Boundaries
You may have noticed that in the multiple regression analysis example, all of the
property sales were in the same neighborhood. In a mass appraisal, the concept of
neighborhooding is very important.
The area to be appraised usually is divided into neighborhoods. The neighborhood then
becomes the major work unit for planning, organizing, and carrying out the mass
appraisal.
Typically, a neighborhood will consist of 200 to 1,000 parcels of property. All of the
properties in the same neighborhood should be similar in the following respects:

Costs and market values

Physical characteristics

Socioeconomic characteristics

Governmental and environmental characteristics
It is the assessor's job to determine neighborhood boundaries. Neighborhoods can
usually be delineated by some distinct natural or constructed feature, such as:

Rivers or streams

Major thoroughfares

Railroads

Changes in land use

Changes in governmental influence
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Similar physical characteristics.
b. Similar government and environmental characteristics
c. Similar costs and market values
d. Similar socieoeconomic characteristics
1. All the homes in the neighborhood are in an unincorporated area near a forest
preserve.
2. All the homes in the neighborhood were built by the same developer at about the
same time, and were originally sold at prices between $80,000 and $86,000
3. Most of the residents in the neighborhood are blue collar workers with incomes
between $34,000 and $40,000.
4. Most of the homes in the neighborhood are set on adequate-sized lots, are
reasonably well maintained and have three or four bedrooms and an attached
garage.
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Changes in land use
b. Rivers or streams
c. Railroads
d. Changes in governmental influence
e. Major thoroughfares
1. Bounded on the north by Mercer Creek
2. Bounded on the west by Main Street
3. Bounded on the south by an unincorporated area
4. Bounded on the southeast by the AB & C railroad tracks
5. Bounded on the east by Manor Park (part of the town's park district)
From your own experience, you know that a piece of property may have a different
market value if it could be moved to a different neighborhood. The neighborhood in
which a parcel is located is in itself one of the variables that determine its value.
For this reason, it is important that multiple regression analyses and other mass
appraisal procedures be carried out on a neighborhood-by-neighborhood basis. A
formula that gives excellent estimates of value of property in one neighborhood may
give poor results when used on property in another neighborhood. In a good mass
appraisal, each neighborhood will have its own unique formula for computing estimated
market value from the property characteristics data.
Course 805 Session 1 Page 11
Importance of Tax Maps and Parcel Identification Systems
In addition to the estimation of market values, the assessor's job involves discovering all
the taxable property in the jurisdiction and identifying the owner of each parcel of
property. These last two responsibilities are known as discovery and listing.
As an assessor, you need accurate tax maps and an accurate system of parcel
identification; both are necessary for the complete discovery and listing of taxable
property.
Tax maps provide a visualization of the size, shape, and location of all the property in
the jurisdiction. Maps usually are drafted by hand, but computerized plotting equipment
developed in recent years is also being used to produce tax maps. Aerial photographs
are often used as the basis for mapping and as a means of spotting new property
improvements.
Varying amounts of information about each parcel can be shown on tax maps,
depending on the scale to which the map is drawn. Such information may include
dimensions, parcel identification number, zoning classification, and a brief description of
improvements. If information that may change is shown on transparent overlays, the
useful life of the underlying map may be extended.
What two devices are essential for the complete discovery and listing of taxable property?
[mark all correct answers]
a. Accurate tax maps
b. A good system of parcel identification
c. A good set of binoculars
d. A fast car
What are two uses of aerial photography in mass appraisal
[mark all correct answers]
a. Spot the closest restaurant
b. As a basis for drawing tax maps
c. Identify possible fenestration problems
d. A means of spotting new improvements
Course 805 Session 1 Page 12
The parcel identification system is the means by which each parcel of property is
connected with its owner and with the tax rolls. Each parcel is assigned a unique, coded
identifying number, which often also becomes the taxpayer's account number for tax
billing purposes. There are many possible parcel identification schemes. The three most
common are:

Sequential numbering systems

Book-page systems

Geocode systems
Sequential numbering systems are among the simplest methods of parcel identification.
Parcels are simply numbered in sequence. When parcels are divided and subdivided,
the use of hyphens and suffixes identifies the portions of the original numbered parcel.
For example, an original parcel may be numbered 16304. If the parcel is divided into
three parts, they may be numbered 16304-1, 16304-2 and 16304-3. If 16304-2 is further
subdivided into two parcels, they may be numbered 16304-2-1 and 16304-2-2. The
major disadvantage of this system is, as you can see, the difficulty in maintaining the
numbers as properties are divided, and confusion resulting from the use of hyphenated
numbers.
Book-page systems identify property by referring to a tax map book number, a page
number within the book, and a sequential number within the page. The number 2-42-12
would indicate property number 12 on page 42 of book number 2. This system has the
same disadvantage as the sequential numbering system described above. In addition, if
the system is not developed with foresight, chaos may result if urbanization takes place,
necessitating extensive re-mapping.
Geocode systems identify the geographic location of property with reference to a fixed
coordinate system, such as state plane coordinates, longitude and latitude, or universal
transverse Mercator coordinates. The system is not widely used in the United States,
although it does have some notable advantages. Geocodes automatically assure
uniqueness of the identification numbers, they are easy to maintain, and they indicate
the geographic relationships among properties.
Data Form Design
Well-designed data forms are a useful tool for the collection of property information in a
mass appraisal.
Good data forms make the information collection process more systematic, and thus
contribute to the accuracy and uniformity of the data. Field appraisers become
accustomed to collecting the same information in the same order, thus higher quality
data is the result.
There are two important considerations to keep in mind when designing data forms.
First, the sequence of data elements on the form should follow closely the sequence in
which the field appraiser will inspect and measure the property. This will make the field
use of the form easier and more efficient, and the omission of data will be minimized.
Second, if computers are to be used, the form should be designed for easy conversion
of the data into machine-readable form.
Course 805 Session 1 Page 13
Data Collection and Organization
Major Data Files
Assume that the decision has been made on what information is to be gathered, and
that the field work data collection has been done. Now, all the information must be
brought together and organized in a meaningful and convenient way in order to facilitate
the actual process of estimating property values. The estimation process can be
performed efficiently only if the collected data is well organized.
We will take a brief look at the following data files usually involved in a mass appraisal:

Legal description files

Property characteristics files

Sales files – land and improved property

Property ownership files

Construction cost files

Depreciation files

Income files
Legal Description Files consist of tax assessments maps, cross-referenced to parcel
identification numbers, and written legal description.
Property Characteristics Files contain records of the facts on hand for each property.
They often also contain documentation of the factors and methods used in past
appraisals of each property.
Property characteristic files that are not computerized should be arranged in parcel
identifier order. It is desirable for records of each kind of property (residential,
commercial, and industrial) to be of the same general format. For single-family
residential properties, the data often can be contained on a single sheet. Such records
are often placed in envelopes or folders so that additional information can be attached.
The following items are usually part of the property record:

Parcel identification number

Street address

Property use classification

Tax rate area code

Legal description

Size and shape of parcel

Site characteristics

Improvement characteristics

Building perimeter sketch

Cost approach data

Building permit history

Sales history

Income and expense records

Record of inspections

Assessment history

Appeals history
The Sales File is a record of sales occurring in the jurisdiction over a specified time. The
file generally contains most known sales, although transactions not involving
consideration, and other non-market transfers, can be excluded.
The sales file is independent of the master property characteristics file. The property
characteristic file contains data on all properties, while the sales file contains data only
on sold properties, as of the date of the sale. Any physical changes to the sale property
are noted on the master file, but not on the sales file which reflects a snapshot of the
property as of the date of sale
The following items are often contained in the sales file:

Parcel identification or account number

Property address

Area or neighborhood

Property use code

Assessed value

Year appraised

Appraiser's name (coded)

Property characteristics

Date of sale

Instrument number

Nominal or unadjusted sale price

Cash equivalent sale price

Time-adjusted sale price

Source of confirmation

Assessment/sale price ratio
The primary difference between the sales file and the property characteristic file is:
a. their size
b. The property characteristics file contains data on all properties, while the sales file
contains data only on sold properties as of the date of the sale.
c. The sales file contains all property characteristics that have been checked for accuracy.
d. The property characteristics file is checked more often for completeness than the sales
file.
The assessment roll is usually the primary property ownership file. Assessment roll
entries usually are arranged in parcel identifier order, and traditionally the pages are
bound in books. Some other means of storage, such as microfilm, consumes less space
and is easier to handle. Below is part of an assessment roll page.
The following items are usually included in the assessment roll, or property ownership
file:

Name and mailing address of the current owner or taxpayer

Legal description or a cross-reference thereto

Assessed value

Property use code

Tax rate area code

Kind and amount of exemptions
The assessment role is the primary property ownership file?
True
False
Course 805 Session 1 Page 14
Three Approaches to the Valuation of Improved Property
In order to use the cost approach to estimate property value, data on construction costs
and depreciation must be available. In order to use the income approach, data on
income, expenses, and capitalization rates must be available. These data are gathered
and organized into files, whose names are self-explanatory.
When the assessor has collected the relevant data and organized them into the
appropriate files, the process of value estimation can begin. There are three commonly
used approaches in estimating the value of improved property:

Comparative Sales Approach (also called Market Data Approach)

Cost Approach

Income Approach
Each of these approaches is discussed in detail in other IAAO self study courses:
An Introduction to the Comparative Sales Approach to Value
An Introduction to the Cost Approach to Value
An Introduction to the Income Approach to Value
Therefore, in this course, your study of these three approaches will be brief.
Comparative Sales Approach
Before you can use the comparative sales approach, two conditions must exist: (1)
There must be comparable properties and you must have sales data on these
properties. (2) The sales should be relatively recent.
In the comparative sales approach, the appraiser compares the characteristics of
properties that have recently sold (the comparables) with the property begin appraised
(the subject property). Since no two properties are exactly alike, adjustments must be
made to account for the differences. These differences may be due to such factors as
time of sale, location of the property, physical characteristics of the property, and the
financial terms of the sale.
The property being appraised is a sale property.
True
False
The fundamental strength of the comparative sales approach is that it directly reflects
the actions of the marketplace. That is, it depends on what buyers and sellers actually
are paying and receiving for property. There is less reliance on the subjective judgment
and opinion of the appraiser, since the data is taken directly from the market and related
directly to the subject property.
Some judgment and opinion are involved in applying the adjustments. Therefore, the
greater the similarities between the subject property and the comparable properties, the
more reliable the comparative sales approach is.
The comparative sales approach is generally recognized as good appraisal practice by
courts and other assessment review authorities.
Cost Approach
In the cost approach, the appraiser first estimates the value of the land. (The estimation
of the land value is discussed later in this section) Then, the cost of replacing the
improvement at current prices is estimated. This cost is often abbreviated RCN, for
"replacement cost new." A reduction in value due to depreciation is subtracted and the
result is referred to as RCNLD, for "replacement cost new, less depreciation. The
RCNLD is added to the estimated land value to produce the final cost estimate.
Assume that a building that has depreciated 40 percent would cost $100,000 to rebuild today. If
the land value is estimated at $30,000, what is the estimated value of the property using the
cost approach?
a. $100,000
b. $130,000
c. $170,000
d. $90,000
Which of the following is the more difficult problem faced by the appraiser when using the cost
approach?
a. Estimating depreciation
b. Estimating replacement cost new
Based on the fact that it is more difficult to determine depreciation, when does the cost
approach give better results?
a. When the improvements are old
b. When the improvements are new
A common use of the cost approach is to obtain a value estimate that can be compared
with value estimates from the other two approaches.
There are times, however, when the cost method is the only method that can be used to
estimate value. There may be no sales of property comparable to the subject property,
and the subject property may not generate any income. In these circumstances, the
cost approach is the only way to estimate value.
To summarize, the cost approach is especially valuable when no other approach can be
used to estimate value. On the other hand, the principle shortcoming of the cost
approach is that it can be inaccurate when the improvements on the subject property
are old, making their depreciation difficult to estimate.
Income Approach
The income approach is based on the assumption that investors in income property
expect a certain return on their investments. It is on the basis of this expected return
that investors decide what to buy and how much they are willing to pay.
There are three fundamental quantities in the income approach:

The property value (V)

The net income from the property (I)

The rate of return on the investment (R)
The relationship of these three quantities is expressed in three formulas, which are
really three different arrangements of the same formula:

VxR=I

I/V=R

I/R=V
V and I are expressed in dollars. R is usually expressed as a percent, but in
computations it should always be converted to decimal form. If the rate of return is 18
percent, it should be expressed as 0.18 for use in computations.
If a property value is $120,000, and the rate of return is 8 percent, what is the net income?
a. $9,600
b. $110,400
c. $1,500,000
If net income is $20,000, and the property value is $100,000, what is the rate of return?
a. 5%
b. 20%
c. 25%
d. 120%
If you know any two of the three quantities V, R, or I you can solve for the third one by
using the appropriate formula. The income approach to value is based on the formula I /
R = V.
Investors require a certain rate of return on their investments. If the net income of an
income property is known, it is divided by the investor's required rate of return. The
result is the price that the investor should be willing to pay – an estimate of the
property's value.
You can see that the amount of income a property can earn is a key factor in
determining the value of the property. The other factor is the required rate of return, also
known as the capitalization rate. The process of dividing the net income by the
capitalization rate, according to the formula I / R = V, is known as "capitalizing the net
income." The resulting property value estimate is known as the "capitalized value of the
net income."
The income approach is sometimes the only approach to value that may be used. This
occurs when there are no sales of comparable properties, and the improvements are so
old that the cost approach is inconclusive or unconvincing.
The income approach is also important because buyers of income properties place
primary emphasis on the relationships among net income, required rate of return, and
property value. For income producing properties, therefore, the income approach is
usually the preferred appraisal method.
In cases where all three approaches to value are usable, the income approach can
serve as a check on the values derived by the comparative sales and cost approaches.
Land Valuation
There are three reasons for developing value estimates for land:

Vacant land is taxable according to its value as dictated by statute.

If land and improvements are valued separately, the trends and factors affecting
each can be separately studied.

Many tax statutes require separate land and building values.
There are several generally accepted methods of land valuation, most of which are
discussed in detail in the IAAO Self Study Course Site Analysis and Evaluation,
therefore you will find only a brief description of each method in this course.
Direct sales comparison – This method is an application of the comparative sales
approach. The market value of similar land that has been sold recently is compared with
the subject property. Adjustments are made according to the judgment and opinion of
the appraiser.
Allocation – A portion of the total value of land and improvements is assigned to the
land according to some reasonable basis such as land-to-building ratios in similar
neighborhoods.
Abstraction – Land value is equal to the estimated value of the total property, less the
depreciated replacement cost new (RCNLD) of the improvements.
Anticipated use or development – Used primarily to value land in transition from
agricultural to residential or commercial use. Total land development costs are
subtracted from the projected sales prices of developed lots. The result is the estimated
value of the land.
Capitalization of ground rent - An application of the income approach. The rental value
of the land is divided by an appropriate capitalization rate (required rate of return). The
result is the estimated value of the land.
Land residual capitalization – Income attributable to the land is computed by subtracting
the income attributable to the buildings from the income from the total property. The
income attributable to the land is then divided by an appropriate capitalization rate,
yielding an estimated value for the land (another application of the income approach).
Suppose you own a parcel of land that can be developed for commercial use at a cost of
$250,000. The improved parcel can then be sold for $800,000. Which method can be used with
this information?
a. Direct sales comparison
b. Allocation
c. Abstraction
d. Acticipated use or development
e. Capitalization of ground rent
Unused land can be rented out for farming at $1,200 per year. Prospective buyers of such land
require a 10 percent rate of return. Which method can be used with this information?
a. Direct sales comparison
b. Allocation
c. Abstraction
d. Acticipated use or development
e. Capitalization of ground rent
In your neighborhood, for single-family residential properties, the improvements account for an
average of 80 percent of the total property value. Property A has an estimated value of $60,000.
Which method can be used with this information?
a. Direct sales comparison
b. Allocation
c. Abstraction
d. Anticipated use or development
e. Capitalization of ground rent
Course 805 Session 1 Page 15
Deriving a Single Value Estimate (Correlation)
In most situations, more than one approach to value will be usable with a given parcel
of property. However, it is unlikely all three approaches will yield exactly the same value
estimate. For example, when all three approaches were applied to a parcel of income
property, an apartment building, for example, the results were as follows:
Comparative Sales
Approach
Cost Approach
Income Approach
$120,000
$126,000
$116,000
How can these three estimates be combined into a single estimate of the property's
value? The simple arithmetic average of the three amounts is $120,667. But this figure
should not be used unless all three of the approaches are equally valid in this particular
case. They would be equally valid if there were numerous sales of very similar
properties in the same neighborhood, if the building was new, and if the net income and
capitalization rate were well substantiated. This would mean that each approach was
used with sufficient data for good results, and there is no reason to favor one of the
three amounts in preference to the others.
Usually, however, one of the three approaches can be favored, because of the specific
circumstances surrounding the particular parcel being appraised. In the above example,
if there were very few comparable sales and the apartment building was not new, the
results of the comparative sales and the cost approaches would be questionable. And,
since, apartment buildings usually are purchased for their income-producing abilities;
the income approach would be given more weight than the other approaches.
In this case, the $116,000 estimate of the income approach should be taken as the
most reliable, subject to adjustment based on the other results. The appraiser should try
to identify why the other two approaches both indicate a higher value. Perhaps the
rental income used in the income approach computation was too low and did not reflect
the market. This would result in an overly conservative value estimate. The appraiser
might raise the final estimate of value to $119,000, on the basis of the fact that the new
owner would probably raise the rent and the fact that the other two approaches did yield
a higher estimate.
There are no set rules for combining separate estimates of value into one single
amount. It is a matter of evaluating the validity of each approach in the particular
situation. The results of the approach that appears to be the most valid is used as a
starting point, subject to adjustment based on the results of the other approaches and
the experience and judgment of the appraiser.
Which approach would appear to be most valid in estimating the value of an old apartment
building that is the only one of its kind in town?
a. Comparative Sales
b. Cost
c. Income
Which approach would appear to be most valid in estimating the value of an old single-family
residence that was built as part of a large subdivision? Property turnover within the subdivision
is reasonably high.
a. Comparative Sales
b. Cost
c. Income
Which approach would appear to be most valid in estimating the value of a still unfinished retail
store located on the town's main street? The store is being built on the street's best commercial
site, which was made available by the razing of an old building.
a. Comparative Sales
b. Cost
c. Income
Course 805 Session 1 Page 16
Performance Analysis
Testing for Uniformity and Equity
At the conclusion of the mass appraisal activities, a performance analysis is done. The
purpose of the analysis is to determine whether desired results were achieved. The
desired results are good market-value estimates with low variation among property
sales ratios. Recall that a sales-ratio study is used to evaluate the fairness and
uniformity of the distribution of the tax burden. It is computed by dividing the assessed
value of a parcel of property by its sale price. If the study reveals a large variation
among sales ratios, a reappraisal is indicated.
After the mass appraisal has been completed, a sales-ratio study is again used to
answer the question: "How much improvement in assessment equity has resulted from
the reappraisal?"
The assessor hopes that the amount of variation in sales ratios is substantially less after
the reappraisal than before. If the mass appraisal activities were carefully planned,
organized, and performed, this should be the case.
You should note that sales data are used during the mass appraisal to identify the
factors that determine property value. Then, after the mass appraisal, sales data again
are used in testing for variation among sales ratios. It is desirable to use data from
different sales for each purpose. Sales data used during the mass appraisal should not
be used later to test the mass appraisal. If there is enough sales data on hand, some
can be saved during the mass appraisal for later use in the performance analysis. When
there is not enough sales data, this may not by possible.
Course 805 Session 1 Page 17
Value: 1
1. The process of valuing a universe of properties, utilizing standard methodology, and allowing
for statistical testing is termed the:
a. Sales-ratio study
b. Detailed work plan
c. Mass appraisal
d. Performance analysis
Value: 1
2. Which of the following is a way to evaluate whether the property tax burden is distributed
fairly and uniformly?
a. Sales-ratio study
b. Comparative sales approach
c. Mass appraisal
d. Abstraction method
Value: 1
3. Which management function involves determining what must be done, and how, when, and
by whom it should be done?
a. Organizing
b. Controlling
c. Analyzing
d. Planning
Value: 1
4. Which management function involves logically grouping activities, identifying and obtaining
the required resources, and establishing the authority and responsibility relationships among the
people doing the work?
a. Organizing
b. Controlling
c. Analyzing
d. Planning
Value: 1
5. Which of the following is not a major task in the mass appraisal process?
a. Analysis of available resources
b. Planning and organization
c. Income capitalization
d. Data collection
Value: 1
Which of the following is not a commonly used management tool for planning and organizing a
mass appraisal?
a. Process chart
b. Organization manual
c. Multiple linear regression
d. Detailed work plan
Value: 1
7. Data that are not directly verifiable and that depend upon the opinion and judgment of the
observer are called:
a. Analytical
b. Objective
c. Subjective
d. Quantitative
Value: 1
8. The mathematical technique that can help determine which property characteristics are the
most important in determining property value is called:
a. Multiple regression analysis
b. Linear programming
c. Linear algebra
d. CPM/PERT
Value: 1
9. Accurate tax maps and a good system of parcel identification are necessary for the effective
performance of which of the following assessment functions?
a. Listing and evaluation
b. Discovery and listing
c. Analysis and evaluation
d. Listing and appraisal
Value: 1
10. The comparable sales approach to estimating property value uses the following formula:
Value of comparable property +/- ______________ = Estimate of value. What is the missing
term?
a. Depreciation
b. Replacement cost new
c. Land value
d. Adjustments
Value: 1
11. A parcel of income property has generated a net income of $20,000 per year for the past
several years. If investors in this type of property have a 16 percent required rate of return, what
is the property's estimated value according to the income approach?
a. $20,000
b. $32,000
c. $125,000
d. $320,000
Value: 1
12. The cost approach to estimating property value uses the following formula: Land value +
_____________ - Depreciation = Estimate of value. What is the missing term?
a. Replacement cost new of improvements
b. Required rate of return
c. Net income
d. Assessed valuation
Value: 1
13. Which of the following is not a generally accepted method of land valuation?
a. Direct sales comparison method
b. Land residual capitalization method
c. Allocation method
d. Cost method
Value: 1
14. What characteristic of sales ratios in a sales-ratio study indicates that the property tax
burden is distributed fairly and uniformly?
a. Low variation among the ratios
b. High variation among the ratios
c. Low average of the ratios
d. High average of teh ratios
Answers
Course 805 Session 1 Page 1 Question 1
What are two advantages of using standard methodology in a mass appraisal?
a. Property owners never complain and the assessor's budget request is always approved
b. Standard methodology results in greater consistency or uniformity in value estimates;
and standard methodology results in a reasonable substantiation of the value estimates
c. Value estimates are guaranteed to equal market value; and the relative dispersion
between similar properties is minimized
d. The time spent in mass appraisal functions is significantly reduced; and the cost savings
incurred in applying standardized methodology will enhance the local market base
Right! Good job!
A "universe" of properties is
a. all the properties in the milky way
b. a large number of properties; possibly all properties in the jurisdiction
c. all the properties in the the state
b.
Right! Good job!
Course 805 Session 1 Page 1 Question 2
What are two advantages of using standard methodology in a mass appraisal?
a. Property owners never complain and the assessor's budget request is always approved
b. Standard methodology results in greater consistency or uniformity in value estimates;
and standard methodology results in a reasonable substantiation of the value estimates
c. Value estimates are guaranteed to equal market value; and the relative dispersion
between similar properties is minimized
d. The time spent in mass appraisal functions is significantly reduced; and the cost savings
incurred in applying standardized methodology will enhance the local market base
B.
Right! Good job!
Course 805 Session 1 Page 1 Question 3
The major benefit of using mathematical and statistical methodology in a mass appraisal is that
they produce better and more consistent value estimates
True
False
True.
Right! Good job!
Course 805 Session 1 Page 1 Question 4
The assessor is required to value all property uniformly and fairly. This is necessary for the
property tax burden to be distributed equitably among all property owners. Assessed value is
based on a percentage of the estimated market value of a parcel of property as established by
the taxing jurisdiction. The property tax, in turn, is based on the assessed value, which is known
as ad valorem taxation. For example, let us say that, in your jurisdiction, assessed values are
set at 25% of estimated market values, and that property taxes are 8% of assessed values. If
your property has an estimated market value of $50,000, what would be its assessed value?
a. $12,500
b. $4,000
c. $1,000
d. $200,000
A.
Right! Good job!
Course 805 Session 1 Page 1 Question 5
What would be the amount of property tax owed under the facts presented in the previous
question?
a. $12,500
b. $4,000
c. $1,000
d. $200,000
c.
Right! Good job!
Course 805 Session 1 Page 1 Question 6
If your property's market value was improperly estimated at too high an amount, and your
neighbor's property was improperly estimated at too low an amount you would be paying more
than your fair share of the property tax burden and your neighbor would be paying less than a
fair share of that burden.
True
False
True.
Right! Good job!
Course 805 Session 1 Page 1 Question 7
The assessor may use a sales ratio study to evaluate the fairness and uniformity of the
distribution of the tax burden. A sales ratio is computed by dividing the assessed value of a
property that recently sold by its sales price. The result is usually expressed as a percent. For
example, if property with an assessed value of $15,000 is sold for $70,000, the sales ratio is
21.4%. ($15,000/$70,000) x 100% = 21.4%. Other names are often used in place of sales ratio
study. The most common are assessment/sales ratio analysis and assessment/sale price ratio
analysis. If property with an assessed value of $20,000 is sold for $110,000, the sales-ratio is
20%.
True
False
Right! Good job!
Course 805 Session 1 Page 1 Question 8
Suppose twenty-five residential properties were sold within your jurisdiction in the past month.
Sales ratios were calculated, and a large amount of variation shows a need for a reappraisal.
True
False
True.
Right! Good job!
Course 805 Session 1 Page 1 Question 9
The fact that the tax burden in your jurisdiction is equitably distributed has nothing to do with the
distribution of sales ratios for recently sold properties.
True
False
False
Right! Good job!
Course 805 Session 1 Page 1 Question 10
If the total estimated market value of property in the jurisdiction is $100 million, and the
assessed values are set at 25 percent of market values, what is the total assessed value of
property in the jurisdiction?
a. $2,500
b. $25,000
c. $25,000,000
d. More information is needed to calculate that value.
c.
Right! Good job!
Course 805 Session 1 Page 1 Question 11
If market values from the previous problem rise 20 percent to a total of $120 million, but no
change is made in the assessed value, what will happen to the ratio of assessed value to
market value?
a. It will increase from 25% to 30%
b. It will fall to 20.8%
c. It will remain the same
d. It will fall to 10%
b.
Right! Good job!
$25,000/$120,000 = .208 x 100 = 20.8%
Course 805 Session 1 Page 1 Question 12
How should the problem of the ratio of assessed value to market value falling below the
required rate be corrected when ratios vary significantly?
a. The assessor can reappraise all properties at their new market values
b. This should not be viewed as a problem but a benefit for the property owners in the
jurisdiction.
c. The assessor can simply increase all assessed values by 20%.
d. Divide all assessed values by .208.
a.
Right! Good job!
Course 805 Session 1 Page 1 Question 13
When can an assessment deficiency be corrected simply by raising all the market value
estimates by the same percentage?
a. When the assessment to sale ratio is increasing.
b. When the assessment to sale price ratio is decreasing
c. When there is a uniform underestimate of in the market value of all properties
d. When the coefficient of dispersion is above 20
c.
Right! Good job!
Course 805 Session 1 Page 1 Question 14
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Age
b. Location
c. Type
1. The market value of a store in the center of town has not changed in the last
three years, while the market value of another store in a popular shopping mall on
the edge of town has been steadily increasing. As a result, the downtown store is
over assessed, while the one in the shopping mall is under assessed.
2. The market values of light manufacturing plants at the edge of town have been
increasing, while the market values of adjacent residential properties have been
declining. Therefore, the manufacturing properties are under assessed, and the
residential properties are over assessed.
3. Established residential properties near the center of town have been increasing in
market value at about 8 percent per year, while residential properties in a new
subdivision nearby have been increasing at about 12 percent per year. Therefore,
the subdivision properties are under assessed, while the established residential
properties are over assessed.
B, c, a
Right! Good job!
Course 805 Session 1 Page 3 Question 1
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Organizing
b. Planning
c. Planning
d. Organizing
1. Data processing facilities have been arranged to be available when needed
2. Smith will prepare the appraisers' field manual, under the supervision of Jones
3. Electronic data processing will be used to analyze certain mass appraisal data
4. Ten thousand parcels of property will be reappraised within the next year
D, a, c, b
Right! Good job!
Course 805 Session 1 Page 3 Question 2
Planning and organizing are important in a mass appraisal project because
a. A mass appraisal represents a set of numerous and complex activities which provide the
opportunity to employee numberous additional bureacrats. This helps the local economy
b. Appraisers are inherently poor at managing their time
c. A mass appraisal represents a set of numerous and complex activities. Without planning
and organizing, the work is likely to fall behind schedule, and will consume more resources than
necessary. The work will be neither effective nor efficient.
d. It gives management a reason to keep their high paying jobs.
c.
Right! Good job!
Course 805 Session 1 Page 3 Question 3
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Performance analysis
b. Reassessment decision
c. Analysis of available resources
d. Planning and organizing
e. Determination of essential variables
f. Data collection
g. Approaches to valuation (cost approach)
1. Updating depreciation schedules
2. Computing replacement cost new
3. Determining what data processing facilities are available
4. Designing forms for appraisal data
5. Using a sales ratio study to determine whether a reappraisal is necessary
6. Establishing the relationships of authority and responsibility among the
personnel in the assessor/s office
7. Checking the quality of the mass appraisal results
F, g, c, e, b, d, a
Right! Good job!
Course 805 Session 1 Page 3 Question 4
Which of the following are proper questions to ask in planning
[mark all correct answers]
a. What must be done
b. How should it be done
c. When should it be done
d. By whom should it be done
A, b, c, d
Right! Good job!
Course 805 Session 1 Page 3 Question 5
The three phases of organizing are
[mark all correct answers]
a. Logically grouping activities
b. Buying additional computer equipment
c. Identifying and obtaining the required resources
d. Establishing the authority and responsibility relationships among the people doing the
work
e. Delegating as much as the responsibility as possible down the chain of command.
A, c, d.
Right! Good job!
Course 805 Session 1 Page 3 Question 6
The "what must be done" question is most closely related to the process chart.
True
False
True.
Right! Good job!
Course 805 Session 1 Page 3 Question 7
Which one of the three phases of organizing is most closely related to the process chart?
a. Logically grouping activities.
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
a.
Right! Good job!
Course 805 Session 1 Page 3 Question 8
Which one of the four planning questions is most clearly related to the organizational chart?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
d.
Right! Good job!
Course 805 Session 1 Page 3 Question 9
Which one of the three phases of organizing is most closely related to what is shown in the
organizational chart?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work.
c.
Right! Good job!
Course 805 Session 1 Page 3 Question 10
Which two of the four planning questions are most closely related to the organization manual?
[mark all correct answers]
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
A and d.
Right! Good job!
Course 805 Session 1 Page 3 Question 11
Which one of the four planning questions is most closely related to written standards of practice
and procedure?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
b.
Right! Good job!
Course 805 Session 1 Page 3 Question 12
Which one of the four planning questions is most closely related to the phase delineation chart?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
c.
Right! Good job!
Course 805 Session 1 Page 3 Question 13
Which one of the three phases of organizing is most closely related to the phase delineation
chart?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
a.
Right! Good job!
Course 805 Session 1 Page 3 Question 14
Which one of the four planning questions is most closely related to CPM and PERT?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
c.
Right! Good job!
Course 805 Session 1 Page 3 Question 15
Which one of the three phases of organizing is most closely related to CPM and PERT?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
a.
Right! Good job!
Course 805 Session 1 Page 4 Question 1
Which one of the four planning questions is most closely related to all of the management tools
discussed thus far?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
c.
Right! Good job!
Course 805 Session 1 Page 4 Question 2
Which one of the four planning questions is most closely related to the personnel level
assignments charts?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
d.
Right! Good job!
Course 805 Session 1 Page 4 Question 3
Which one of the three phases of organizing is most closely related to the personnel level
assignments charts?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
c.
Right! Good job!
Course 805 Session 1 Page 5 Question 1
The analysis of available resources is a part of planning and organizing
True
False
True.
Right! Good job!
Course 805 Session 1 Page 5 Question 2
To what planning question is the analysis of available resources most closely related?
a. What must be done
b. How should it be done
c. When should it be done
d. By Whom should it be done
b.
Right! Good job!
Course 805 Session 1 Page 5 Question 3
To what phase of organizing is the analysis of available resources most closely related?
a. Logically grouping activities
b. Identifying and obtaining the required resources
c. Establishing the authority and responsibility relationships among the people doing the
work
b.
Right! Good job!
Course 805 Session 1 Page 5 Question 4
Of the four types of resources, which is the most important ?
a. Financial resources
b. Personnel resources
c. Existing data elements
d. Data processing resources
a.
Right! Good job!
Course 805 Session 1 Page 5 Question 5
It is important to identify personnel inadequacies early in the planning and organization process
because time will be needed to recruit and train additional personnel if needed.
True
False
True.
Right! Good job!
Course 805 Session 1 Page 5 Question 6
What are the two alternative ways in which the size of the assessor's staff may be increased?
[mark all correct answers]
a. Hire and train permanent personnel
b. Feed the current staff a high fat diet
c. Use temporary personnel either from other offices or from an outside agency
A and c.
Right! Good job!
Course 805 Session 1 Page 5 Question 7
If you are an assessor and, through skillful scheduling, have managed to spread the work load
fairly evenly throughout the year, which of the two alternatives for increasing the staff size would
probably be the best?
a. Hire and train permanent personnel
b. Put the staff on a high fat diet
c. Use temporary personnel from another office or from an outside agency
a.
Right! Good job!
Course 805 Session 1 Page 5 Question 8
If the work load is very uneven throughout the year, which alternative would probably be the
best for increasing the staff size when necessary?
a. Hire and train permanent personnel
b. Put the staff on a high fat diet
c. Use temporary personnel from another office or from an outside agency
c.
Right! Good job!
Course 805 Session 1 Page 5 Question 9
What are two common but erroneous assumptions regarding mass appraisal that are mentioned
above?
[mark all correct answers]
a. It is less expensive to hire an outside firm to conduct the reappraisal
b. All existing data in the assessors office invalid
c. The information needed for the mass appraisal is not available any place other than the
assesors office
B and c.
Right! Good job!
Course 805 Session 1 Page 5 Question 10
With respect to data gathering, virtually none of the data required by the assessor is being
collected by other agencies.
True
False
False.
Right! Good job!
Course 805 Session 1 Page 6 Question 1
Suppose a computerized mass appraisal system can handle 200,000 parcels of property at a
cost that is only 20 percent more that the cost of handling 100,000 properties. In a manual
system, suppose that 200,000 parcels would cost 80 percent more than 100,000. Which of the
three aspects of computerization is involved here?
a. Cost replacement
b. Cost avoidance
c. Value received
b.
Right! Good job!
Course 805 Session 1 Page 6 Question 2
Suppose that the amount of variation among sales ratios in a computerized system is less than
in a manual system. Which of the three aspects of computerization is involved here?
a. Cost replacement
b. Cost avoidance
c. Value received
Right! Good job!
Course 805 Session 1 Page 6 Question 3
Suppose that by spending $250,000 per year for computer processing, you can save $300,000
per year in personnel costs. Which of the three aspects of computerization is involved here?
a. Cost replacement
b. Cost avoidance
c. Value received
a.
Right! Good job!
Course 805 Session 1 Page 8 Question 1
The number of square feet of living space in a house is an objective piece of data
True
False
True.
Right! Good job!
Course 805 Session 1 Page 8 Question 2
The adequacy of a kitchen in a house is an objective piece of data.
True
False
False.
Right! Good job!
Course 805 Session 1 Page 8 Question 3
The desirability of a business location is an objective piece of data.
True
False
False.
Right! Good job!
Course 805 Session 1 Page 8 Question 4
The age of a house is an objective piece of data.
True
False
Right! Good job!
Course 805 Session 1 Page 8 Question 5
The quality of the view from a homesite is an objective piece of data.
True
False
False.
Right! Good job!
Course 805 Session 1 Page 8 Question 6
The distance of a house from the nearest public elementary school is an objective piece of data.
True
False
True.
Right! Good job!
Course 805 Session 1 Page 10 Question 1
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Similar physical characteristics.
b. Similar government and environmental characteristics
c. Similar costs and market values
d. Similar socieoeconomic characteristics
1. All the homes in the neighborhood are in an unincorporated area near a forest
preserve.
2. All the homes in the neighborhood were built by the same developer at about the
same time, and were originally sold at prices between $80,000 and $86,000
3. Most of the residents in the neighborhood are blue collar workers with incomes
between $34,000 and $40,000.
4. Most of the homes in the neighborhood are set on adequate-sized lots, are
reasonably well maintained and have three or four bedrooms and an attached
garage.
B, c, d, a.
Right! Good job!
Course 805 Session 1 Page 10 Question 2
Match the items.
The task is to match the lettered items with the correct numbered items. Appearing below is a
list of lettered items. Following that is a list of numbered items. Each numbered item is followed
by a drop-down. Select the letter in the drop down that best matches the numbered item with
the lettered alternatives.
a. Changes in land use
b. Rivers or streams
c. Railroads
d. Changes in governmental influence
e. Major thoroughfares
1. Bounded on the north by Mercer Creek
2. Bounded on the west by Main Street
3. Bounded on the south by an unincorporated area
4. Bounded on the southeast by the AB & C railroad tracks
5. Bounded on the east by Manor Park (part of the town's park district)
Right! Good job!
Course 805 Session 1 Page 11 Question 1
What two devices are essential for the complete discovery and listing of taxable property?
[mark all correct answers]
a. Accurate tax maps
b. A good system of parcel identification
c. A good set of binoculars
d. A fast car
A, b.
Right! Good job!
Course 805 Session 1 Page 11 Question 2
What are two uses of aerial photography in mass appraisal
[mark all correct answers]
a. Spot the closest restaurant
b. As a basis for drawing tax maps
c. Identify possible fenestration problems
d. A means of spotting new improvements
Right! Good job!
Course 805 Session 1 Page 13 Question 1
The primary difference between the sales file and the property characteristic file is:
a. their size
b. The property characteristics file contains data on all properties, while the sales file
contains data only on sold properties as of the date of the sale.
c. The sales file contains all property characteristics that have been checked for accuracy.
d. The property characteristics file is checked more often for completeness than the sales
file.
b.
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Course 805 Session 1 Page 14 Question 1
The property being appraised is a sale property.
True
False
False.
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Course 805 Session 1 Page 14 Question 2
Assume that a building that has depreciated 40 percent would cost $100,000 to rebuild today. If
the land value is estimated at $30,000, what is the estimated value of the property using the
cost approach?
a. $100,000
b. $130,000
c. $170,000
d. $90,000
d.
Right! Good job!
Course 805 Session 1 Page 14 Question 3
Which of the following is the more difficult problem faced by the appraiser when using the cost
approach?
a. Estimating depreciation
b. Estimating replacement cost new
a.
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Course 805 Session 1 Page 14 Question 4
Based on the fact that it is more difficult to determine depreciation, when does the cost
approach give better results?
a. When the improvements are old
b. When the improvements are new
b.
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Course 805 Session 1 Page 14 Question 5
If a property value is $120,000, and the rate of return is 8 percent, what is the net income?
a. $9,600
b. $110,400
c. $1,500,000
a.
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Course 805 Session 1 Page 14 Question 6
If net income is $20,000, and the property value is $100,000, what is the rate of return?
a. 5%
b. 20%
c. 25%
d. 120%
B.
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Course 805 Session 1 Page 14 Question 7
Suppose you own a parcel of land that can be developed for commercial use at a cost of
$250,000. The improved parcel can then be sold for $800,000. Which method can be used with
this information?
a. Direct sales comparison
b. Allocation
c. Abstraction
d. Acticipated use or development
e. Capitalization of ground rent
d.
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Course 805 Session 1 Page 14 Question 8
Unused land can be rented out for farming at $1,200 per year. Prospective buyers of such land
require a 10 percent rate of return. Which method can be used with this information?
a. Direct sales comparison
b. Allocation
c. Abstraction
d. Acticipated use or development
e. Capitalization of ground rent
e.
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Course 805 Session 1 Page 14 Question 9
In your neighborhood, for single-family residential properties, the improvements account for an
average of 80 percent of the total property value. Property A has an estimated value of $60,000.
Which method can be used with this information?
a. Direct sales comparison
b. Allocation
c. Abstraction
d. Anticipated use or development
e. Capitalization of ground rent
b.
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Course 805 Session 1 Page 15 Question 1
Which approach would appear to be most valid in estimating the value of an old apartment
building that is the only one of its kind in town?
a. Comparative Sales
b. Cost
c. Income
c.
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Course 805 Session 1 Page 15 Question 2
Which approach would appear to be most valid in estimating the value of an old single-family
residence that was built as part of a large subdivision? Property turnover within the subdivision
is reasonably high.
a. Comparative Sales
b. Cost
c. Income
a.
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Course 805 Session 1 Page 15 Question 3
Which approach would appear to be most valid in estimating the value of a still unfinished retail
store located on the town's main street? The store is being built on the street's best commercial
site, which was made available by the razing of an old building.
a. Comparative Sales
b. Cost
c. Income
b.
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Course 805 Session 1 Page 17 Question 1
1. The process of valuing a universe of properties, utilizing standard methodology, and allowing
for statistical testing is termed the:
a. Sales-ratio study
b. Detailed work plan
c. Mass appraisal
d. Performance analysis
c.
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Course 805 Session 1 Page 17 Question 2
2. Which of the following is a way to evaluate whether the property tax burden is distributed
fairly and uniformly?
a. Sales-ratio study
b. Comparative sales approach
c. Mass appraisal
d. Abstraction method
a.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 3
3. Which management function involves determining what must be done, and how, when, and
by whom it should be done?
a. Organizing
b. Controlling
c. Analyzing
d. Planning
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d.
Points scored this item: 1
Course 805 Session 1 Page 17 Question 4
4. Which management function involves logically grouping activities, identifying and obtaining
the required resources, and establishing the authority and responsibility relationships among the
people doing the work?
a. Organizing
b. Controlling
c. Analyzing
d. Planning
a.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 5
5. Which of the following is not a major task in the mass appraisal process?
a. Analysis of available resources
b. Planning and organization
c. Income capitalization
d. Data collection
c.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 6
Which of the following is not a commonly used management tool for planning and organizing a
mass appraisal?
a. Process chart
b. Organization manual
c. Multiple linear regression
d. Detailed work plan
c.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 7
7. Data that are not directly verifiable and that depend upon the opinion and judgment of the
observer are called:
a. Analytical
b. Objective
c. Subjective
d. Quantitative
c.
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Points scored this item: 1
Course 805 Session 1 Page 17 Question 8
8. The mathematical technique that can help determine which property characteristics are the
most important in determining property value is called:
a. Multiple regression analysis
b. Linear programming
c. Linear algebra
d. CPM/PERT
a.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 9
9. Accurate tax maps and a good system of parcel identification are necessary for the effective
performance of which of the following assessment functions?
a. Listing and evaluation
b. Discovery and listing
c. Analysis and evaluation
d. Listing and appraisal
b.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 10
10. The comparable sales approach to estimating property value uses the following formula:
Value of comparable property +/- ______________ = Estimate of value. What is the missing
term?
a. Depreciation
b. Replacement cost new
c. Land value
d. Adjustments
d.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 11
11. A parcel of income property has generated a net income of $20,000 per year for the past
several years. If investors in this type of property have a 16 percent required rate of return, what
is the property's estimated value according to the income approach?
a. $20,000
b. $32,000
c. $125,000
d. $320,000
c.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 12
12. The cost approach to estimating property value uses the following formula: Land value +
_____________ - Depreciation = Estimate of value. What is the missing term?
a. Replacement cost new of improvements
b. Required rate of return
c. Net income
d. Assessed valuation
a.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 13
13. Which of the following is not a generally accepted method of land valuation?
a. Direct sales comparison method
b. Land residual capitalization method
c. Allocation method
d. Cost method
d.
Right! Good job!
Points scored this item: 1
Course 805 Session 1 Page 17 Question 14
14. What characteristic of sales ratios in a sales-ratio study indicates that the property tax
burden is distributed fairly and uniformly?
a. Low variation among the ratios
b. High variation among the ratios
c. Low average of the ratios
d. High average of teh ratios
a.
Right! Good job!
Points scored this item: 1