Assessment and Evaluation Flashcards

In an assessment ratio study, how is the individual assessment ratio for a sold property calculated?

Answer: Assessed value divided by sale price

The assessment ratio is the appraised or assessed value divided by the adjusted sale price.

Under IAAO ratio study standards, what range is acceptable for the overall median assessment ratio when the legal standard is market value?

Answer: 0.90 to 1.10

IAAO recommends that the overall level of appraisal, measured by the median, fall between 0.90 and 1.10.

What does the coefficient of dispersion (COD) measure in a ratio study?

Answer: The average percentage deviation of ratios from the median ratio

COD expresses the average absolute deviation from the median as a percentage of the median, which measures uniformity.

A jurisdiction's price-related differential (PRD) is 1.08. What does this most likely show?

Answer: Assessment regressivity, where low-value properties are over-assessed relative to high-value ones

A PRD above about 1.03 suggests regressivity, meaning lower-value properties carry higher ratios.

For which property type is the cost approach usually the most reliable valuation method?

Answer: New construction or special-purpose properties with few sales

The cost approach works best when depreciation is small or when comparable sales and income data are scarce.

A five-bedroom house with only one bathroom is an example of which type of depreciation?

Answer: Functional obsolescence

Functional obsolescence is lost value from a design or layout flaw inside the property.

A new landfill opens next to a residential neighborhood, and nearby home values drop. What type of depreciation is this?

Answer: External (economic) obsolescence

External obsolescence comes from factors outside the property lines and is generally incurable by the owner.