An abnormal sale refers to a property transaction that does not represent typical market conditions and hence, does not reflect the property's market value.
Acquisition appraisal, also known as acquisition valuation, refers to the evaluated market value of a property intended for acquisition, often for public use or eminent domain. This appraisal determines the compensation amount offered to the property owner.
In real estate appraisal, 'Actual Age' refers to the chronological age of a property or improvement, as opposed to its Effective Age, which can be altered by maintenance, renovation, and use.
The American Society of Appraisers (ASA) is a professional organization for appraisers across various disciplines, providing education, certifications, and resources to enhance appraisal practices.
A fundamental real estate concept that asserts the value of a property today is the present value of the sum of anticipated future benefits.
An application fee is a charge levied by a lender to a potential borrower for the time and effort required to accept and begin processing a loan application. This fee often covers the cost of an appraisal and a credit report.
An appraisal is a professional opinion or estimate of the value of a property, which is conducted by a trained and certified appraiser.
The Appraisal Subcommittee (ASC) is a federal government organization responsible for overseeing state appraisal boards, ensuring compliance and uniformity in appraisal qualification requirements, and maintaining a national registry of appraisers by state.
In real estate, the term 'Approach' often refers to the different methods or strategies used in appraising property value. Each approach considers various factors impacting the valuation of real estate.
Assumptions and limiting conditions are specific stipulations and constraints under which an appraisal is conducted. These conditions provide a framework within which the valuation can be understood and accepted.
In real estate appraisal, the Breakdown Method is a comprehensive approach used to divide accrued depreciation into distinct categories: physical depreciation, functional obsolescence, and economic obsolescence. This method contrasts with the age-life method of depreciation.
A Broker's Opinion of Value (BOV) is an analysis provided by a real estate broker to help clients make informed decisions about the listing price or a suitable bid for a property. While similar to a comparative market analysis, it is not as in-depth as a licensed appraisal used for mortgage lending.
The building/land ratio is a real estate metric that compares the value of improvements (like buildings) on a piece of land to the value of the land itself. This ratio helps investors and appraisers assess the value and utility of a property.
A capitalization rate (Cap Rate) represents the rate of return expected to be generated on a real estate investment property. It helps in deriving the property's current market value or the potential return on investment.
A Certificate of Reasonable Value (CRV) is a document issued by the Department of Veterans Affairs (VA) which sets a ceiling on the maximum VA mortgage loan amount based on an approved appraisal.
A Certified General Appraiser is a professional authorized to appraise any property type under state certification laws, ensuring compliance with the Appraisal Foundation's standards.
The Comparative Unit Method is an appraisal technique used to determine the value of a property by comparing it against standardized units.
Depreciation, in real estate appraisal, refers to the reduction in a property's value due to wear and tear, age, or other factors, which impacts its overall market value.
Depreciation (Appraisal) is a charge against the reproduction cost (new) of an asset for the estimated wear and obsolescence. This type of depreciation can be categorized as physical, functional, or economic.
Effective age refers to the age of a property based on the wear and tear it has sustained, as opposed to its actual chronological age.
A technique used in the appraisal of mortgaged income property to estimate its present value by discounting the future annual cash flow and expected resale proceeds.
Excess land refers to the portion of a property that sits beyond the amount needed to support its current highest and best use, and which has the potential for separate development.
A federally related transaction refers to a real estate transaction that is governed and regulated by federal agencies such as the Federal Reserve Board, FDIC, OCC, OTS, NCUA, Fannie Mae, Freddie Mac, FHA, and the Department of Veterans Affairs. For the transaction to be valid, it necessitates real estate appraisal conducted by state-licensed or certified appraisers.
An appraisal principle stating that the value distribution of a uniformly deep commercial lot is such that 40% lies in the front quarter, 30% in the next quarter, 20% in the third quarter, and 10% in the last quarter. This rule is essential in assessing property value for compensation in eminent domain cases.
The General Accredited Appraiser (GAA) designation is awarded to appraisers by the National Association of Realtors (NAR), signifying a high level of expertise in non-residential property appraisal.
A hypothetical condition in real estate appraisal is an assumption made contrary to fact for the purpose of analysis. It allows valuation or analysis to occur in a different context than the actual current conditions or circumstances.
The intended use of an appraisal is a key element in the appraisal process, defining the purpose and context in which a property's market value assessment will be used.
The International Right of Way Association (IR/WA) provides education and professional development for individuals in the right-of-way industry, covering areas such as law, engineering, and appraisal. The association also offers the esteemed SR/WA designation.
Loan processing encompasses the various steps taken by a lender to approve a loan, from the initial application to the closing of the loan. It involves verifying the borrower's information and fulfilling necessary requirements to ensure the legality and financial viability of the loan.
The Loan-to-Value (LTV) ratio is a critical financial metric in real estate and lending that compares the loan amount to the appraised value of the property, influencing mortgage terms, interest rates, and approval processes.
Marshall & Swift provides construction cost data that helps in estimating building costs across various types, quality levels, and geographic areas. This information is crucial for appraisers, insurers, and real estate professionals.
Normal wear and tear physical depreciation refers to the gradual loss of a property's value due to usage and aging, which includes minor damages, material degradation, and obsolescence occurring under normal usage conditions.
In real estate, 'Price' refers to the amount of money that buyers and sellers agree upon for the exchange of property. While it represents the transactional amount, it can often differ significantly from 'Value,' which is an estimate or opinion of worth provided by an appraiser.
Property refers to the legal rights an individual or entity has over certain resources, including real estate and personal belongings. These rights allow the owner to use, enjoy, and dispose of their property as they see fit, subject to certain restrictions enforced by law.
The purpose of an appraisal assignment is to clearly define the goal of the appraisal process, whether it is to estimate market value, insurance value, value in use, or some other specific value.
A Quantity Survey is a meticulous method used by appraisers to estimate the reproduction cost (new) of an improvement. It involves a detailed cost estimate of all materials, labor, and overhead required to replicate a structure.
Real estate refers to land and anything attached to it, including buildings and other structures. It encompasses ownership, use, and transfer of physical property. Real estate business activities include accounting, appraisal, legal advising, brokerage, counseling, regulation, and financing.
Recapture rate in appraisal describes the rate at which an investment is recovered in a wasting asset. It is added to the discount rate to derive the capitalization rate. This rate can be calculated using methods such as straight-line, sinking fund, or annuity.
Reconciliation in appraisal involves analyzing values from different valuation approaches to arrive at a final estimate of a property's market value.
A tally of annual operating expenses for a Subject Property revised specifically for appraisal purposes. It considers stabilized annual figures and makes necessary adjustments to items to reflect accurate property operations and value.
Residual value or income refers to the remaining value or income after necessary deductions to meet fixed obligations. This term is crucial in both real estate investments and appraisals.
A Restricted Appraisal Report is a type of valuation report containing minimal detail, intended solely for the client's use, and not for any other party. It stands in contrast to a more comprehensive Appraisal Report.
Revaluation or re-evaluation, also known as reassessment, is an updated appraisal process conducted to determine the current value of property for taxation and other purposes.
The Scope of Work is a detailed explanation of the work program undertaken to conduct an appraisal assignment, outlining the research and methods used. It is required by the Uniform Standards of Professional Appraisal Practice (USPAP).
Stabilized Value refers to the valuation of a property after it has achieved a consistent occupancy rate and stable operating expenses, reflecting its true income-generating potential under normal market conditions.
Upfront charges refer to various fees and costs that a homeowner must pay at the closing of a real estate transaction. These include points, recording fees, mortgage title policy, appraisal fees, and credit report fees.
The stated application intended for the information included in the appraisal. Appraisals can serve various purposes such as condemnation, liquidation, or mortgage collateral.
Valuation in real estate refers to the process and outcome of estimating the market worth or price of a property. Accurate valuation is crucial for various purposes including sales, taxation, loan collateral, and investment analysis.
The valuation process is a systematic method used by appraisers to derive an estimate of the value of a property, essential for making informed real estate transactions.
