The abstraction method is a technique used to estimate the land value by subtracting the depreciated value of the improvements from the total market price of the property.
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 by Summation, also known as the Cost Approach, is a real estate valuation method that determines the value of a property by adding the land value to the depreciated value of any improvements (such as buildings) made on it.
An Automated Valuation Model (AVM) is a computer-driven program that utilizes mathematical modeling, incorporating data from multiple sources, such as property sales histories, public records, and other real estate databases, to estimate the market value of a property.
Comparables, or comparable sales, refer to properties that are similar to the one being sold or appraised. These properties are typically used in the sales comparison approach to estimate the value of the subject property.
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.
Computer-Assisted Mass Appraisal (CAMA) refers to proprietary software designed to rapidly appraise one or more real properties. This software varies in complexity, from simple percentage increases in property values to sophisticated statistical models that evaluate comparable properties.
Deferred maintenance refers to the practice of postponing necessary repairs and maintenance activities on real estate properties. This neglect typically results from budget constraints or prioritization of financial resources toward other projects, and it consequently leads to physical depreciation.
Economic rent refers to the excess payment made to a factor of production over and above the amount needed to bring that factor into production. This term is often used in economics and appraisal contexts.
Elements of comparison are critical attributes or variables used in real estate to evaluate and contrast different properties during an appraisal or analysis process.
Form appraisal utilizes standardized forms, such as the Fannie Mae Form 1004, Form 2055, and the Uniform Residential Appraisal Report (URAR), to provide a systematic approach to real estate valuation.
Functional obsolescence is an appraisal term that refers to the loss of value from all causes within a property except those due to physical deterioration.
The International Association of Assessing Officers (IAAO) is a nonprofit, educational, and research association dedicated to promoting innovation and excellence in property appraisal, assessment administration, and property tax policy.
A loan application fee is a non-refundable charge required by a loan originator to cover the credit report, property appraisal, and other incidental expenses associated with underwriting a loan.
A Loan Package is a comprehensive collection of documents that are associated with a specific loan application. This package includes all necessary information required by the lender to evaluate and process the loan request.
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.
The Market Comparison Approach, also known as the Sales Comparison Approach, is a valuation method used primarily in real estate to estimate the value of a property by comparing it to similar properties recently sold in the same area.
A process whereby a specific mortgage lender certifies that a prospective borrower is financially qualified and creditworthy for a specific type of loan with specified terms for an amount up to a specified maximum. Actual advancement of the loan will depend on the suitability and value of the collateral property, which is unspecified at the time of pre-approval. Contrast PREQUALIFY.
An open-end mortgage is a type of loan that allows the borrower to secure additional funds from the lender, with a ceiling amount set on the maximum borrowing limit typically based on a percentage of the property's appraised value.
Paired Sales Appraisal is a comparative method used to determine the value of a specific property attribute by comparing similar properties that differ in just that one attribute.
Square Footage of Living Area is a crucial metric in real estate, measured by the exterior walls, excluding basements, garages, carports, patios, or atriums. Different regions may have varying standards on what counts towards the living area.
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.
