CAE Industry Best Practices 5 — Questions and Answers
Question 1: What is the IAAO-recommended PRD range?
- 0.90 to 1.10
- 0.98 to 1.03 (Correct answer)
- 0.95 to 1.05
- 1.00 to 1.10
Correct answer: 0.98 to 1.03
IAAO considers a PRD between 0.98 and 1.03 acceptable for vertical equity.
Question 2: A PRD of 0.95 most likely indicates which condition?
- Regressivity
- Progressivity, where high-value properties are over-assessed relative to low-value properties (Correct answer)
- Perfect vertical equity
- A low overall appraisal level
Correct answer: Progressivity, where high-value properties are over-assessed relative to low-value properties
A PRD below 0.98 suggests progressivity, with higher-value properties assessed at relatively higher ratios.
Question 3: Which professional standard governs the ethics and conduct of appraisers, including mass appraisal reporting under Standard 6?
- GAAP
- USPAP (Correct answer)
- FASB 157
- Sarbanes-Oxley
Correct answer: USPAP
The Uniform Standards of Professional Appraisal Practice include Standards 5 and 6 for mass appraisal.
Question 4: Which IAAO best practice applies to the use of automated valuation models (AVMs) in assessment?
- AVMs may replace all field inspections permanently
- AVMs should be calibrated, tested with ratio statistics, and documented (Correct answer)
- AVMs need no review if vendor-supplied
- AVMs are prohibited for residential property
Correct answer: AVMs should be calibrated, tested with ratio statistics, and documented
The IAAO Standard on Automated Valuation Models requires calibration, testing, and documentation of model performance.
Question 5: Which best practice helps an assessment office maintain public trust?
- Limiting public access to valuation methods
- Clear communication of assessment procedures, values, and appeal rights (Correct answer)
- Mailing notices only after the appeal deadline
- Handling all inquiries through legal counsel
Correct answer: Clear communication of assessment procedures, values, and appeal rights
IAAO's Standard on Public Relations stresses transparency and clear explanation of the assessment process.
Question 6: Under IAAO guidance, when should a sale with a personal property component be used in a ratio study?
- Never
- Only after the value of the significant non-realty items is removed from the price (Correct answer)
- Only if the buyer is a business
- Always at the full recorded price
Correct answer: Only after the value of the significant non-realty items is removed from the price
Sale prices should be adjusted to remove non-real-property items so that the ratio compares like with like.
Question 7: What is a primary purpose of IAAO's Standard on Digital Cadastral Maps and Parcel Identifiers?
- To set tax rates
- To make sure each parcel is accurately mapped and uniquely identified for complete, accurate assessment rolls (Correct answer)
- To determine exemption eligibility
- To set appraiser certification requirements
Correct answer: To make sure each parcel is accurately mapped and uniquely identified for complete, accurate assessment rolls
Accurate parcel maps and unique identifiers make sure every property is found, listed, and valued.
CAE Industry Best Practices 5
What is the IAAO-recommended PRD range?