CFE Statistical Analysis & Mass Appraisal 2 — Questions and Answers
Question 1: In Florida's mass appraisal system, which entity publishes guidelines and reviews the accuracy of county property assessments?
- Florida Department of Revenue (Correct answer)
- Florida Board of Accountancy
- Florida Real Estate Commission
- Florida Department of Business and Professional Regulation
Correct answer: Florida Department of Revenue
The Florida Department of Revenue publishes assessment guidelines and conducts ratio studies to review whether county property assessors meet statutory requirements.
Question 2: A stratified ratio study divides sales into groups based on:
- Property age only
- Characteristics such as property type, value range, or location (Correct answer)
- The date of sale
- The appraiser who conducted the assessment
Correct answer: Characteristics such as property type, value range, or location
Stratification divides properties into subgroups by characteristics such as property type, value range, or neighborhood to identify assessment inequities within each stratum.
Question 3: Which of the following is a key requirement for a sale to be included in a valid ratio study?
- The sale must be recorded within the same calendar year as the assessment
- The sale must be an arms-length transaction between unrelated parties (Correct answer)
- The seller must be a financial institution
- The buyer must occupy the property as a primary residence
Correct answer: The sale must be an arms-length transaction between unrelated parties
Valid ratio studies require arms-length sales — transactions between unrelated, willing buyers and sellers with no undue influence — to accurately reflect market value.
Question 4: In mass appraisal, 'model calibration' refers to:
- Adjusting the appraisal date to match the sale date
- Estimating the coefficients or adjustments that produce the most accurate value predictions (Correct answer)
- Calibrating physical measurement instruments used on inspections
- Setting the depreciation schedule for all improvement types
Correct answer: Estimating the coefficients or adjustments that produce the most accurate value predictions
Model calibration is the process of statistically estimating or adjusting model coefficients so the model's predicted values closely match actual market sale prices.
Question 5: The 'Price-Related Bias' (PRB) statistic is used to:
- Measure the geographic bias in assessment ratios
- Quantify vertical inequity as a percentage of value (Correct answer)
- Calculate seasonal price adjustments in the market
- Identify time-trend corrections needed for older sales
Correct answer: Quantify vertical inequity as a percentage of value
The PRB quantifies vertical inequity by measuring the percentage by which assessments change as property values change, expressed as a percentage of value.
Question 6: In mass appraisal, 'base year value' refers to:
- The value assigned when a property first enters the assessment roll
- The inflation-adjusted replacement cost of improvements
- The last sale price recorded in the property's history
- The value established in the first year of a reassessment cycle (Correct answer)
Correct answer: The value established in the first year of a reassessment cycle
The base year value is the market value established for a property during a reappraisal, serving as the foundation for future assessments within an assessment cycle.
Question 7: When a mass appraisal model produces an R-squared (R²) value of 0.90, this indicates:
- The model has a 10% error rate
- 90% of the variation in sale prices is explained by the model's variables (Correct answer)
- The assessments are within 10% of the median ratio
- The COD is 90
Correct answer: 90% of the variation in sale prices is explained by the model's variables
An R² of 0.90 means the model's independent variables explain 90% of the variance in sale prices, indicating a strong predictive relationship.
CFE Statistical Analysis & Mass Appraisal 2
In Florida's mass appraisal system, which entity publishes guidelines and reviews the accuracy of county property assessments?