SAEE Mass Appraisal Techniques 5 — Questions and Answers
Question 1: In mass appraisal, 'time trending' of sales is performed primarily to:
- Identify fraudulent property transfers
- Adjust historical sales prices to reflect current market conditions at the assessment date (Correct answer)
- Eliminate outlier sales from the dataset
- Calculate the effective age of improvements
Correct answer: Adjust historical sales prices to reflect current market conditions at the assessment date
Time trending adjusts sale prices to the lien date so that sales from different periods can be validly compared within the same model.
Question 2: Which of the following best describes an 'arm's length' transaction in the context of mass appraisal sales ratio studies?
- A sale where the buyer and seller are related parties
- A sale conducted under duress or foreclosure
- A sale between unrelated, motivated parties with adequate market exposure (Correct answer)
- A sale involving a government entity as buyer or seller
Correct answer: A sale between unrelated, motivated parties with adequate market exposure
An arm's length transaction occurs between independent, willing parties with full knowledge of the facts, making it a valid market indicator.
Question 3: In additive multiple regression for mass appraisal, what does a negative coefficient for 'distance to city center' most likely indicate?
- Properties farther from the city center tend to have higher values
- Distance has no statistically significant effect on value
- Properties closer to the city center tend to have higher values (Correct answer)
- The variable should be removed from the model due to multicollinearity
Correct answer: Properties closer to the city center tend to have higher values
A negative coefficient means that as distance increases, value decreases — indicating proximity to the city center adds value.
Question 4: What is the purpose of an 'equalization study' in the context of mass appraisal?
- To ensure all properties are assessed at the same dollar amount
- To compare assessment levels across different jurisdictions or property classes for fairness and uniformity (Correct answer)
- To remove all exempt properties from the tax roll
- To set the millage rate for the coming fiscal year
Correct answer: To compare assessment levels across different jurisdictions or property classes for fairness and uniformity
Equalization studies compare assessment ratios across jurisdictions or classes to identify and correct systematic inequities in assessments.
Question 5: A mass appraisal model that consistently undervalues newer properties compared to older properties of similar market value is exhibiting:
- Vertical inequity
- Horizontal inequity based on age bias (Correct answer)
- Acceptable level of COD for residential property
- Correct application of physical depreciation schedules
Correct answer: Horizontal inequity based on age bias
Systematic under- or over-appraisal of a specific property characteristic (like age) within the same value range is a form of horizontal inequity.
Question 6: Which data source is typically considered most reliable for establishing land values in mass appraisal when improved sale data is abundant?
- Assessor's internal cost schedules
- Vacant land sales (Correct answer)
- Land allocation from improved property sales using abstraction
- Subdivision development cost analysis
Correct answer: Vacant land sales
Vacant land sales provide the most direct market evidence of land value because no allocation or abstraction from improvements is required.
Question 7: In the context of mass appraisal model calibration, what does a high R-squared (R²) value indicate?
- The model has too many independent variables and should be simplified
- A large proportion of the variation in sale prices is explained by the model's variables (Correct answer)
- The model's predictions are unbiased at all value levels
- The COD exceeds the IAAO acceptable threshold
Correct answer: A large proportion of the variation in sale prices is explained by the model's variables
R² measures the proportion of variance in the dependent variable (sale price) explained by the independent variables, with values closer to 1.0 indicating a better-fitting model.
SAEE Mass Appraisal Techniques 5
In mass appraisal, 'time trending' of sales is performed primarily to: