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.
Actual damages represent the compensation for losses incurred as a direct result of condemnation of private property. These damages cover only the tangible and concrete losses, excluding any indirect, severance, or consequential damages.
Aesthetic Value refers to the increment of market or user value attributed to the appearance of a property, which can significantly increase its desirability and market price.
Appraisal Approach refers to one of the three primary methods used to estimate the value of a property. The three key appraisal methods include the Cost Approach, Income Approach, and Sales Comparison Approach. Each methodology evaluates different aspects of the property to determine its fair market value.
The appraisal process, also known as the valuation process, is a systematic method used to estimate the market value of a property. This process involves a detailed analysis of various factors including property condition, location, and comparable sales.
An Appraisal Report is a comprehensive document that explains a property's value, including the data and methodologies used to determine that value. It provides detailed insights and is foundational in real estate transactions.
An appraised value is an estimate of a property's worth, calculated by a licensed appraiser during the home-buying process.
An appraiser provides a professional opinion on the value of a property. Certification for real estate appraisers in the United States includes CERTIFIED GENERAL APPRAISER and CERTIFIED RESIDENTIAL APPRAISER, among others. Appraisers must fulfill educational, experiential, and examination requirements.
Real estate appreciation refers to the increase in the value of a property over time. It can be influenced by a variety of factors including market demand, location, inflation, and property improvements. Appreciated value can enhance investment returns for property owners.
An arm's length transaction refers to a deal in which both parties act independently and in their own self-interest, ensuring that the transaction reflects true market value.
As-Is Value refers to the estimated or appraised value of a property in its current condition, considering any repairs, disrepair, or improvements necessary.
ASKED refers to the amount a property owner sets as the selling price for their property. This figure might differ from its appraised, market, or assessed value.
Assessed value or valuation is the value against which a property tax is imposed. The assessed value is often lower than the market value because of state law, conservative tax district appraisals, and infrequent reassessment.
The Assessment Ratio is the ratio of a property's assessed value to its market value. It is used by tax authorities to determine the amount of property tax due by property owners.
The Before and After the Taking provision is found in many states' condemnation laws and provides compensation to property owners based on the difference in property market value before and after the taking.
The intangible value inherent in a business apart from its tangible assets, which encompass buildings, land, and fixtures, and also the overall value of a business in its entirety, consisting of all its parts, both tangible and intangible.
A Comparative Market Analysis (CMA) is a crucial process in real estate that involves evaluating similar, recently sold properties ('comparables') to derive an estimated market value for a subject property. This aids in setting a realistic price for selling or buying real estate.
In real estate, 'COMPS' or 'Comparables' refer to properties similar in characteristics to the subject property that have recently sold and are used to help determine the market value of the subject property.
The Cost Approach is a real estate appraisal method that estimates the value of a property by calculating the cost of reconstructing the structure on the same piece of land. This approach considers the depreciated reproduction or replacement cost of improvements, plus the market value of the site.
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.
Direct damages refer to the compensation paid by a government entity for the value of land and improvements taken through eminent domain proceedings. It contrasts with indirect damages and severance damages.
The effective tax rate is a measure used to compare the tax payments with the market value of the property or annual income, facilitating comparisons across different jurisdictions with varying assessment ratios.
Equal and Uniform Taxation is a principle asserting that all individuals and property within the same class must be treated equally, with the same rate and value applied to property being taxed.
Equalization ensures that property taxes are assessed fairly across properties with similar market values, helping maintain tax consistency within a given area or class of properties.
An external appraisal, also known as an independent valuation, is conducted by an impartial third-party appraiser to determine the market value of a property, ensuring objectivity and compliance with regulatory standards.
Fair value is a measure used for the estimation of the market value of assets and liabilities based on orderly transactions between market participants. This valuation concept is essential in accounting to maintain proper financial statements and balance sheets according to standard principles.
A Fee Appraiser, also known as an Independent Fee Appraiser, is a professional who provides an objective evaluation of a property's market value based on current market conditions. This unbiased assessment is crucial for various real estate transactions and financing activities.
Fee Simple Value refers to the market value of a property assuming it is owned outright, free of any leases or mortgages. It provides an estimate of the highest value that a property could achieve in an open market without any encumbrances.
The final value estimate is the appraiser’s concluded value of a real estate property, determined after reconciling values from different appraisal approaches such as cost, sales comparison, and income.
A Guaranteed Sale is a promise by a brokerage firm to buy a listed property if it fails to sell within the agreed-upon listing period. This offering can attract more sellers by providing them a safety net and peace of mind.
Illiquidity refers to the inability to quickly convert an asset into cash without a significant loss in value. Real estate is considered an illiquid investment because of the time, effort, and costs required to sell properties.
Incurable depreciation or obsolescence refers to a defect in a property that cannot be rectified or is not financially feasible to rectify, often due to fundamental structural issues.
Interest rate risk refers to the potential variability in investment returns due to changes in interest rates. This risk can profoundly impact the market value of real estate investments and mortgage-backed securities.
Investment value refers to the estimated value of a real estate investment to a specific investor, which can vary from the property's market value based on the investor's unique situation and objectives.
Leased Fee Adjustment in real estate appraisal is the reduction in market value of a leased fee estate caused by current leases at below-market rent, resulting in a positive value for the leasehold estate held by the lessee enjoying the rent savings.
Liquidation Price refers to the amount a property would fetch under an immediate sale, typically lower than its market value due to the urgency of the transaction and expenses involved. It contrasts with Market Value, which reflects a sale in normal market conditions.
An MAI Appraisal is an appraisal conducted by an individual holding the MAI designation from the Appraisal Institute, indicating that the appraiser has met rigorous education, experience, and ethical standards.
Market price is the actual price paid in a market transaction for an asset, in contrast to the market value. It reflects the monetary amount a buyer is willing to pay and a seller is willing to accept under normal market conditions.
The concept of Market Value in real estate refers to the most probable price at which a property would sell in a fair, open, and competitive market, with both buyer and seller acting prudently and knowledgeably, without compulsion.
A minority discount is a reduction from the market value of an asset, reflecting the lack of control and influence that a minority interest owner has over the business operations. This discount adjusts the perceived value of ownership stakes that do not confer control.
The Net Income Multiplier (NIM) is a valuation metric used to estimate a property's market value based on its Net Operating Income (NOI). It provides investors with a quick method to gauge the return on investment and compare property values within a specific market or region.
Net Realizable Value (NRV) is the estimated selling price of a property in the ordinary course of business, less reasonably predictable costs of completion and selling expenses. It is a crucial concept particularly in inventory and financial accounting, where it's used to ensure assets are not overstated in financial statements.
Overimprovement occurs when a property is improved to a level that it exceeds the optimal economic use for that particular property, resulting in a value that is not supported by the surrounding community or comparable properties.
Premium has multiple meanings in real estate: it refers to the cost of an insurance policy, the value of a mortgage or bond in excess of its face amount, and the amount over market value paid for some exceptional quality or feature.
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.
The principle of substitution posits that the value of a property is directly influenced by the availability and prices of comparable properties, assuming that a typical buyer finds similar properties interchangeable.
A government levy based on the market value of privately owned property, commonly referred to as ad valorem tax or real estate tax.
A professionally derived estimate of property value based on some expected future event, commonly used in real estate development and financing.
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 Real Estate Appraiser is a professional who evaluates and estimates the value of properties. The appraiser considers many factors, including location, condition, and market trends, to provide an unbiased opinion of the property's market value. Their services are crucial for transactions such as buying, selling, refinancing, and property taxation.
A realized gain refers to the financial gain generated from the sale or exchange of a property, though this gain may not always be subject to immediate taxation. In cases of tax-free exchanges, such as under Section 1031, the gain is realized but not recognized for tax purposes.
A reappraisal lease is a type of lease agreement where rental levels are periodically reviewed and adjusted based on appraisals conducted by independent appraisers. This ensures that the rent reflects the current market value of the property.
Reconciliation in appraisal involves analyzing values from different valuation approaches to arrive at a final estimate of a property's market value.
Reservation price refers to the highest price a buyer is willing to pay for a property while still achieving his or her primary objectives such as keeping monthly payments affordable or paying no more than market value for the property. A buyer negotiates to keep the sales price at or below this price point.
In an auction or other bidding procedure, a reserve price is the minimum amount that the seller is obligated to accept for the item. It ensures that the seller can withdraw the item from the sale if the bidding does not meet this amount.
Situs refers to the economic attributes of location, encompassing the relationship between a property and surrounding properties, distant points of interest, and the linkages to those points. This aspect of location contributes significantly to the market value of real estate.
Superadequacy refers to a condition where a component or feature of a property is considered beyond what is needed for its practical use or is excessive relative to standard expectations. Superadequacy can negatively impact the market value of a property as it may lead to over-improvements that are not valued by prospective buyers.
A Tax Appeal or Tax Protest is an effort to reduce ad valorem property taxes, typically based on the argument that the assessed value is greater than the market value or that the assessment does not ensure equal and uniform taxation.
Taxable Value, also referred to as Assessed Value, is the dollar amount assigned to a property for the purposes of calculating property taxes. It's an estimation of a property's market value determined by the local tax assessor.
In the context of real estate and eminent domain, an uneconomic remainder refers to the portion of a property left after a partial taking by condemnation, which has little or no value in the marketplace. This typically occurs because the taking leaves the remainder with limited access, or an irregular shape or size that renders it unusable.
The Uniform Residential Appraisal Report (URAR) is a standardized report form used by appraisers when estimating the market value of a residential property, often in conjunction with mortgage underwriting.
An unrealized gain refers to the increase in the market value of an asset that remains unsold, reflecting a rise in value relative to its purchase cost. It remains 'unrealized' until the asset is sold.
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.
Value in real estate represents the worth of all the rights arising from ownership. It quantifies the amount of one commodity that will be exchanged for another under specific conditions.
Value Definition pertains to a statement provided in an appraisal report that defines the estimated value of a property. It includes various types of values, such as market value for condemnation in a jurisdiction, value in use, and insurable value.
Value in exchange refers to the worth of a property based on its ability to be traded for goods and services. It differs from investment value or value in use, focusing primarily on what the property can be exchanged for in the open market.
Value In Use refers to the worth of a property in a specific use, typically its current usage. It may significantly differ from its market value, reflecting its utility in the given context.
A write-down is an accounting term that describes the reduction in the book value of an asset when its fair market value falls below its carrying value on the balance sheet. This is often recorded to reflect a decrease in the asset's value due to obsolescence, damage, or market conditions.
