This is the process of valuing a universe of properties as of a given date in a uniform order, utilizing standard methodology, employing a common reference for data and allowing for statistical testing (Boyce, 1984). The mass appraisal process is typically used for statistical or economic studies under government or semi-government administrative programs or as a basis for ad valorem property taxation. It should be noted that property taxation has remained and is still a common means of raising revenue to meet expenses of public sector entities and the services they provide. Mass appraisal data may also be used to determine the distribution of financial benefits or grants to government or semi government authorities. However, direction is provided on the substantive aspects of developing and communicating competent analysis, opinions and conclusions in the mass appraisal of real property.
The mass appraisal process includes the following:
- Identifying properties to be appraised;
- Defining the market area in terms of consistent behaviour on the part of property owners and would –be purchasers;
- Identifying characteristic supply and demand that affect the creation of value in that market area;
- Developing a model structure that reflects that relationship among the characteristics affecting value;
- Calibrating the model structure to determine the contribution of the individual property features affecting value
- Applying the conclusions reflected in the model to the characteristics of the property (ies) being appraised;
- Reviewing the mass appraisal results.
Mass appraisal techniques depend upon the extent and quality of land data available. This information may be quantitative (e.g. land areas, dimensions, building types, accommodation and fittings) or quantitative (e.g. assessment of physical condition, character, or market desirability of structural improvements and classification of submarket groupings).
The valuation basis for mass appraisal is the open market value, but subject to any modification of the concept as defined under specific instructions or legislation. The selection of mass appraisal methodology shall however be consistent with the type and quality of recorded information. Methodologies available include the cost approach, the sales comparison approach and the income capitalization approach.
In developing a mass appraisal, a Valuer must be aware or understand and correctly employ recognised methods and techniques necessary to produce and communicate credible mass appraisal outputs. Mass appraisal provides a systematic approach and uniform application of appraisal methods and techniques to obtain estimates of value that allow for statistical review and analysis of results.
Mass appraisal assignment often applies to the unencumbered value of property, that is, the hypothetical fee simple estate in land. Under these circumstances, all subsequent interests such as leasehold and reversionary interest are excluded. Mass appraisal systems are typically utilized by appraisal authorities that have statutory powers for discovery and collection of valuation data.
References
Boyce, B.N. (1984). Real estate appraisal terminologies. USA: Ballinger Publishing Co. www.lincolnnet.net
