IAAO Course 101 Exam with Accurate
Solutions
Tax Rate (def.) - ANSWER-Percent of assessed value at which each property is taxed
in a given district.
Tax Rate (formula) - ANSWER-Tax revenue (amount) / Assessed value
Property Tax (formula) - ANSWER-Subject assessed value / Tax rate
Budget Revenue (formula) - ANSWER-Total budget - Other taxes
Effective Tax Rate (def.) - ANSWER-Reflects the relationship between total property
taxes on real property and the property's market value.
Effective Tax Rate (formula) - ANSWER-Assessment ratio (level) X Tax rate
Jurisdictions tax rate is derived by (formula) - ANSWER-Budget revenue (budget -other
taxes) / Assessed value
Assessment Ratio (def.) - ANSWER-Estimated fractional relationship between the
assessed values and market values of a group of properties.
Assessment Ratio (formula) - ANSWER-Assessed value / Market value
Neighborhood Life Cycle - ANSWER-Growth, Stability, Decline & Revitalization
Principle of Conformity - ANSWER-Value of a property depends on its relationship to its
surroundings; maximum market value is achieved when reasonable similarity among
improvements in the neighborhood.
Principle of Competition - ANSWER-Created by the potential for profits; availability must
be in harmony with demand; if one or the other is in excess prices will decrease or
increase.
Principle of Balance - ANSWER-Applied to an individual property; maximum value is
obtained when the four agents of production are balanced - land, labor, capital and
management.
, Principle of Change - ANSWER-Market value is never constant; estimate of market
value is only valid as of a specific date & changes in the market will impact future value
estimates.
Principle of Anticipation - ANSWER-Value created by the expected future benefits from
the property; related to the Principle of Change.
Principle of Consistent Use - ANSWER-Property must be valued with a single use for
the entire property; land cannot be valued with one use and improvements with another.
Principle of Contribution - ANSWER-Value of component depends on its contribution to
the whole; basis for adjustments in the sales comparison approach.
Principle of Supply - ANSWER-Amount of product producers are willing to sell under
various conditions during a given period.
Principle of Demand - ANSWER-Amount of product producers are willing and able to
buy during a given period; given the choices available.
Principle of Increasing & Decreasing Returns - ANSWER-Addition of successive
increments of one agent of production will decrease future incomes or amenities; or
additions of successive increments of one agent of productions added, future income or
amenities will increase to a point.
Principle of Progression - ANSWER-Association with better properties of the same type
increase value of a lower priced property.
Principle of Regression - ANSWER-Association with lower quality properties of the
same area decrease the value of a better quality property.
Principle of Substitution - ANSWER-Market value of a property set by cost of acquiring
an equally desirable and valuable property; underlies the 3 approaches to appraisal
(value).
Principle of Surplus Productivitiy - ANSWER-Net income remaining after the costs of
labor, management and capital have been satisfied; income earned by land; increase
income = increase value.
Types of Neighborhood Boundaries - ANSWER-Natural, Political and Man-made
Basic steps in definition of the appraisal problem are... - ANSWER-1) Identify the
property
2) Determine property rights conveyed
3) Purpose or function of the appraisal
4) Date of appraisal (date of value)
5) Definition of value
Solutions
Tax Rate (def.) - ANSWER-Percent of assessed value at which each property is taxed
in a given district.
Tax Rate (formula) - ANSWER-Tax revenue (amount) / Assessed value
Property Tax (formula) - ANSWER-Subject assessed value / Tax rate
Budget Revenue (formula) - ANSWER-Total budget - Other taxes
Effective Tax Rate (def.) - ANSWER-Reflects the relationship between total property
taxes on real property and the property's market value.
Effective Tax Rate (formula) - ANSWER-Assessment ratio (level) X Tax rate
Jurisdictions tax rate is derived by (formula) - ANSWER-Budget revenue (budget -other
taxes) / Assessed value
Assessment Ratio (def.) - ANSWER-Estimated fractional relationship between the
assessed values and market values of a group of properties.
Assessment Ratio (formula) - ANSWER-Assessed value / Market value
Neighborhood Life Cycle - ANSWER-Growth, Stability, Decline & Revitalization
Principle of Conformity - ANSWER-Value of a property depends on its relationship to its
surroundings; maximum market value is achieved when reasonable similarity among
improvements in the neighborhood.
Principle of Competition - ANSWER-Created by the potential for profits; availability must
be in harmony with demand; if one or the other is in excess prices will decrease or
increase.
Principle of Balance - ANSWER-Applied to an individual property; maximum value is
obtained when the four agents of production are balanced - land, labor, capital and
management.
, Principle of Change - ANSWER-Market value is never constant; estimate of market
value is only valid as of a specific date & changes in the market will impact future value
estimates.
Principle of Anticipation - ANSWER-Value created by the expected future benefits from
the property; related to the Principle of Change.
Principle of Consistent Use - ANSWER-Property must be valued with a single use for
the entire property; land cannot be valued with one use and improvements with another.
Principle of Contribution - ANSWER-Value of component depends on its contribution to
the whole; basis for adjustments in the sales comparison approach.
Principle of Supply - ANSWER-Amount of product producers are willing to sell under
various conditions during a given period.
Principle of Demand - ANSWER-Amount of product producers are willing and able to
buy during a given period; given the choices available.
Principle of Increasing & Decreasing Returns - ANSWER-Addition of successive
increments of one agent of production will decrease future incomes or amenities; or
additions of successive increments of one agent of productions added, future income or
amenities will increase to a point.
Principle of Progression - ANSWER-Association with better properties of the same type
increase value of a lower priced property.
Principle of Regression - ANSWER-Association with lower quality properties of the
same area decrease the value of a better quality property.
Principle of Substitution - ANSWER-Market value of a property set by cost of acquiring
an equally desirable and valuable property; underlies the 3 approaches to appraisal
(value).
Principle of Surplus Productivitiy - ANSWER-Net income remaining after the costs of
labor, management and capital have been satisfied; income earned by land; increase
income = increase value.
Types of Neighborhood Boundaries - ANSWER-Natural, Political and Man-made
Basic steps in definition of the appraisal problem are... - ANSWER-1) Identify the
property
2) Determine property rights conveyed
3) Purpose or function of the appraisal
4) Date of appraisal (date of value)
5) Definition of value
