Test Review: IAAO 311
7 steps of the mass appraisal process - Answer-define problem, scope, preliminary analysis, data collect,
hbu, apply approaches, reconciliation.
model specification - Answer-expresses those supply and demand factors that best explain values in a
specific market as an equation
model calibration - Answer-the process of solving for unknown quantities in a model
modern pricing theory - Answer-Value in exchange is determined by the interaction of supply and
demand. Any given market price will equalize the amount of a good produced and the amount of that
good purchased. An increase in home prices will decrease the amount of homes purchased. Conversely,
a decrease in prices will bring more buyers into the market.
additive models - Answer-assume that the impact of property characteristics upon value is independent
and therefore can be added.
V = b0 + (b1 × X1) + (b2 × X2) + (b3 × X3)
multiplicative models - Answer-assume that the impact of property characteristics upon value is
interactive and should therefore be multiplied.
V = Ro × SIZE × F1 × F2 × F3
, hybrid/generic models - Answer-combine both the additive and multiplicative structures. The hybrid
model is the most flexible model structure; however, it is also the most difficult to calibrate.
V = GQ × ((PI × QI) + (PL × QL) + OA)
IAAO Standards recommend that you conduct routine property inspections every - Answer-six years
Binary transformations reflect the levels of a discrete variable as - Answer-1 or 0
Scalar transformation - Answer-convert a discrete variable to relative values or numerical ratings. a. This
approach has the advantage of using one variable rather than multiple dummy variables. Whenever
possible, relative values are derived through market analysis. b. Scalar variables normally center on "0"
in additive models and on "1" in multiplicative models. Scalar variables are also referred to as
"linearized" variables.
For example, cooling might be coded as follows: i. Central air conditioning = 1.00 ii. Evaporative cooling =
0.50 iii. No cooling = 0
Logarithmic transformations - Answer-provide another means of handling nonlinear relationships in
linear models; also useful for capturing economies of scale.
Market or economic areas - Answer-broad geographic areas subject to similar economic influences and
value trends.
Subareas or neighborhoods - Answer-are clusters of homes that share similar location amenities
7 steps of the mass appraisal process - Answer-define problem, scope, preliminary analysis, data collect,
hbu, apply approaches, reconciliation.
model specification - Answer-expresses those supply and demand factors that best explain values in a
specific market as an equation
model calibration - Answer-the process of solving for unknown quantities in a model
modern pricing theory - Answer-Value in exchange is determined by the interaction of supply and
demand. Any given market price will equalize the amount of a good produced and the amount of that
good purchased. An increase in home prices will decrease the amount of homes purchased. Conversely,
a decrease in prices will bring more buyers into the market.
additive models - Answer-assume that the impact of property characteristics upon value is independent
and therefore can be added.
V = b0 + (b1 × X1) + (b2 × X2) + (b3 × X3)
multiplicative models - Answer-assume that the impact of property characteristics upon value is
interactive and should therefore be multiplied.
V = Ro × SIZE × F1 × F2 × F3
, hybrid/generic models - Answer-combine both the additive and multiplicative structures. The hybrid
model is the most flexible model structure; however, it is also the most difficult to calibrate.
V = GQ × ((PI × QI) + (PL × QL) + OA)
IAAO Standards recommend that you conduct routine property inspections every - Answer-six years
Binary transformations reflect the levels of a discrete variable as - Answer-1 or 0
Scalar transformation - Answer-convert a discrete variable to relative values or numerical ratings. a. This
approach has the advantage of using one variable rather than multiple dummy variables. Whenever
possible, relative values are derived through market analysis. b. Scalar variables normally center on "0"
in additive models and on "1" in multiplicative models. Scalar variables are also referred to as
"linearized" variables.
For example, cooling might be coded as follows: i. Central air conditioning = 1.00 ii. Evaporative cooling =
0.50 iii. No cooling = 0
Logarithmic transformations - Answer-provide another means of handling nonlinear relationships in
linear models; also useful for capturing economies of scale.
Market or economic areas - Answer-broad geographic areas subject to similar economic influences and
value trends.
Subareas or neighborhoods - Answer-are clusters of homes that share similar location amenities
