Glossary

Age (Actual)
Is the length of time improvements on the land have been in existence.

Age (Effective)
Is the estimated age for appraisal purposes, based on comparison with other structures of the same type, depending on the actual condition of the property.

Ad Valorem
Means “according to value”.

Appraisal
An opinion of the value of property, supported by evidence.

Assessment
The official act of discovering, listing and appraising property for ad valorem tax purposes.

Coefficient of Dispersion
A unit which measures uniformity. The average absolute deviation from the mean or median divided by the mean or median.

Comparable or Comp
A property which has a similar location and is similar in construction and amenities.

Correlation
Whereby the appraiser evaluates and selects from among two or more alternative conclusions to reach a single answer for a final value estimate.

Cost Approach to Value
An appraisal method in which the value of the land considered as vacant is added to the depreciated value of the improvements to obtain the estimated market value of the whole property.

Data Sheet
A form which lists the subject and comparable property and their amenities for comparison purposes.

Depreciation
Is a loss in property value from any cause.

Depreciation Observed
An estimate of depreciation, based on actual inspection of the property.

Physical Depreciation
Wear and tear.

Functional Obsolescence
From conditions within the structure.

Economic Obsolescence
From conditions outside the property.

Equalizing
A mass appraisal method whereby the last three years of sales in a given jurisdiction or neighborhood code are then studied as to how the sales correspond to the assessments (a sales ratio study). If, on an overall basis the median level of assessment is less than 33.333%, a multiplier is applied to all properties to increase the assessments; likewise, if the median level of assessments is above 33.333%, then a multiplier is applied to all properties to decrease assessments.

Exemption
A benefit, by law, which reduces the assessed value of a property.

Front Foot
A strip of land one foot wide fronting on a street and running the entire depth of the lot.

General Reassessment Year (Quadrennial)
A review and reassessment of all properties every four years by the Assessor. Individual assessment notices are mailed to each property owner, along with a publication of all assessments in the newspaper. During the ensuing three years, the Assessor, the Supervisor of Assessments (County Chief Assessment Officer), and the Board of Review has the authority, by statute, to equalize properties in the Township to arrive at a level of one third of market value.

Gross Rent Multiplier
Sale price divided by the gross income expressed in a percentage or multiplier. The relationship between the gross income and value.

Highest and Best Use
The value which will generate the highest net return to a property over a period of time. The use must be legal and reasonable, profitable and probable.

Home Improvement Amount
The amount a building value is increased attributed to the addition of a qualifying improvement.

Home Improvement Exemption
The 25,000 assessed value maximum per assessment year that will be credited on the tax bill.

Improvement
A building or structure.

Income Approach to Value
An appraisal method used to estimate the market value of a property based on the income it produces or is capable of producing. Also known as the Capitalization Approach.

Legal Description
A statement which serves to identify the location and boundaries of a parcel of land.

Levy
The amount of funds required from the property tax system to support a taxing body.

Market Approach to Value
An appraisal method in which the appraiser searches the market for selling prices of similar properties, and then, by the process of comparison and adjustments, estimates the value of the subject property. Also known as the Sales Approach or Comparison Approach.

Market Value
The most probable price expressed in terms of money the property would bring if exposed for sale in the open market in an arms length transaction between a willing seller and a willing buyer, both of whom are knowledgeable concerning all the uses to which it is adapted, and for which it is capable of being used. Implicit within the definition is: (1) that the value is the most probable price, not the highest not the lowest, not the average price; (2) the value is expressed in terms of money and a reasonable time for exposure to the market; (3) it requires an arms length transaction in the open market; (4) both buyer and seller are informed of the uses of the property; (5) it requires a willing buyer and a willing seller with no advantage being taken by either; and (6) it recognizes present use as well as potential use of the property.

Mass Appraisal
Process of valuing a universe of properties by employing a common reference for data in allowing for statistical testing. The State of Illinois is a mass appraisal state.

Median
The middle number of a list of numbers.

Median Level of Assessments
In Illinois the statutory median level of assessment is 33.333%.

Neighborhood
The environment of a subject property that has a direct and immediate impact on it’s value. The boundaries being either natural (rivers, lakes, hills, etc.), man-made (streets, highways, railroad tracks, etc.) and political (city limits, school or zoning districts, etc.).

Neighborhood Code
An internal code give to a particular neighborhood or area. This groups specific properties for market and sales ratio studies and prevents sales and data outside of the code to impact the study.

Parcel Index Number (PIN)
A 10 digit number used to identify a specific property or parcel of land.

Property Record Card (PRC)
A document which lists amenities of a parcel, which may include a drawing or photo of the property.

Quantity Survey Cost
A method of estimating the construction cost of a structure by making a detailed estimate of the quantities and cost of materials and labor plus addition of overhead and profit.

Real Estate
Real estate encompasses two categories: land and improvements. Land can be defined as the surface of the earth together with everything under its boundaries and everything over it, expanding indefinitely into space. Improvements consist of structures, fencing, paving, landscaping; any item that is considered immovable and (permanently) affixed to the land is considered real estate.

Real Property
The sum of the tangible and intangible rights in the land and improvements. It refers to the interest, benefits, and the rights inherent in ownership of physical real estate.

Reproduction Cost
is the cost of reproducing an exact replica on the basis of current prices with similar materials.

Replacement Cost
Is the cost of reproducing, at current cost, a similar property which is equally desirable and having a utility equivalent to the one under appraisal.

Sales Ratio
The relationship of the assessment to sale price expressed as a percentage. In Illinois the median ratio is 33.333%.

Sales Ratio Study
A mathematical study of the ratios in a given area or study sample to find the sales trend, median level and coefficient of dispersion. A sales ratio study will indicate if the assessments in the area or study sample must be adjusted to reach the legal level of 33.333%.

Square Foot Cost
Is the cost obtained by dividing the total construction cost of the building by the total square foot area as measured from the exterior face of the outer walls (ground area of the building) or by the square foot of each floor in the structure measured from the exterior face of the outer walls.

Tax Cap
More appropriately, the Levy Cap is designed to slow the rate of levy increases. This is a cap on local taxing bodies spending, not on real estate assessment. Levies, however, may increase more that 5% if: 1) bonds are sold with or without a referendum; 2) the municipality is a home rule community; 3) reassessments are necessary to keep properties at one third of market value. This is not an assessment cap.

 

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