Mass Appraisal

Mass Appraisal is an opinion and estimate of value based upon the integrity and competence of
the appraiser using systematic and logical analysis of data available.

Fee appraisal is defined as an appraisal of properties one at a time for pay (fee).

Mass appraisal as defined by IAAO is “the systematic appraisal of a group of properties as
of a given date (January 1 with the exception of inventory, which may be appraised at its
market value as of September 1) using standardized procedures and statistical testing.
Mass appraisal requires the development of a valuation model capable of replicating the
forces of supply and demand over a large area.

A “group of properties” for the purpose of mass appraisal is a collection of properties
defined by political boundaries such as a school district, city, county or special purpose

Market value as established by the State Property Tax Code differs from the definition
established by USPAP, therefore a jurisdictional exception applies. The following definition
of market value, sec. 1.04 of the Texas Property Tax Code, means the price at which a
property would transfer for cash or its equivalent under prevailing market conditions if:
1. exposed for sale in the open market with a reasonable time for the seller to find a
2. both the seller and purchaser know all of the uses and purposes to which the
property is adapted and for which it is capable of being used and of enforceable
restrictions on its use
3. both the seller and purchaser seek to maximize their gains and neither is in a
position to take advantage of the other

Steps of appraisal process:
1. define the problem

  •  identify the property
  •  specify the property rights
  •  define the purpose and function of the appraisal
  •  specify the date of appraisal
  •  define the type of value to be estimated

2. preliminary survey & planning

  •  determine highest and best use of property
  •  consider which valuation approaches are most valid

3. data collection and analysis

  •  general information
  •  property-specific information
  •  comparative data

4. apply 3 approaches to value

  •  cost approach
  •  sales comparison (market) approach
  •  income approach

5. correlation and reconciliation of the indicated value

  1. determine which of the approaches is most appropriate for the subject by considering
    • a. relevance of each approach to subject
    • b. amount of reliability of the data collected
    • c. inherent strengths and weaknesses of each approach

6. final estimate of value

Steps for building a Mass Appraisal Schedule:
1. analyze the market to determine what features (of land and improvements)
enhance or detract from value
2. develop a classification system for land and improvements
3. build schedules for each classification of land and improvements
4. test the schedule using a ratio study (best way to test appraised values)

Benchmark is a property that is typical of a larger class. The benchmark is a collection of
central tendencies that is sufficient to define an entire class.

Baseline is the value that the benchmark represents.

Building a classification system using sales information:
1. estimate land value
2. subtract land value from the sales price of the property to produce a value for the
3. divide market value of improvements by square footage to produce a market price
per square foot
4. plot correlation of size and price on a graph
5. once these properties are compared and distinguishing characteristics are noted,
benchmarks can be identified and a classification system can be built on market data

Using the three approaches to value in Mass Appraisal:
1) Cost
a) develop preliminary improvement schedules based on class
b) in built-up neighborhoods, use allocation by abstraction to develop
2) Market
a) use ratio study (sales analysis) to determine adjustments to preliminary schedule
for specific features( fireplace, pool, etc.) that do not define characteristics of
b) use ratio study to develop a market based land schedule
c) conduct further ratio studies and make further adjustments as necessary to
achieve the desired level of accuracy and uniformity
3) Income