Accrued depreciation, also known as accumulated depreciation, refers to the total amount of depreciation expense that has been recorded against a company's assets up to a specified point in time.
An acre is a standard unit of measurement used in the real estate and agriculture industries to denote a specific amount of land. It is used extensively in property transactions, valuations, and farming.
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.
In real estate appraisal, the adjusted sales price refers to the indicated price of a comparable property after adjustments have been made to account for differences between comparable and subject properties.
Adjustments (in Appraisal) refers to the dollar value or percentage amounts added to or subtracted from the sales price of comparable properties to provide an indication of the value of the subject property. These adjustments compensate for variations in features between the comparable and the subject property.
The Age-Life Method of Depreciation is a technique that estimates all forms of depreciation sustained by an asset, based on the effective age of the property or component, divided by the total economic life of the property or component.
The AI-GRS designation is a professional credential offered by the Appraisal Institute for general review appraisers, signifying expertise in reviewing appraisals and ensuring accuracy and compliance with industry standards.
A fundamental real estate concept that asserts the value of a property today is the present value of the sum of anticipated future benefits.
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 Institute is a professional organization for real estate appraisers, known for its high standards in education, experience, and professionalism. It offers various prestigious designations such as MAI, SRA, AI-GRS, and AI-RRS.
An Appraisal Management Company (AMC) acts as an intermediary between certified or licensed real estate appraisers and clients, often mortgage lenders, seeking appraisal services. These companies ensure compliance and standardization in the appraisal process to prevent undue influence and maintain objectivity.
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 appraisal review is a report that comments on the completeness and apparent accuracy of an appraisal report. The primary purpose of some reviews is to ensure compliance with technical rules such as USPAP; other reviews focus on validating the value estimate. The review may be presented as a narrative or a checklist.
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.
Appraiser pressure involves unethically requesting an appraiser to provide a valuation that is higher or lower than the property's actual worth.
An apprentice appraiser, also known as an appraiser trainee, is an entry-level real estate professional who is in the process of gaining the experience and education necessary to become a licensed appraiser.
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.
Artificial Intelligence (AI) is the ability of computer programs to evaluate information and make decisions according to pre-established criteria. In real estate, AI is used in applications such as automated mortgage underwriting, property management, valuation, and customer service.
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.
An assessor is a government official responsible for determining the value of a property for the purpose of ad valorem taxation. They evaluate real estate to assign tax values based upon current market conditions.
An Automated Valuation Model (AVM) is a computerized system that uses mathematical modeling to value properties. AVMs incorporate data from public property records and commonly utilize proprietary algorithms to deliver a property valuation. These models are often used for mass property appraisals, such as for property tax assessments and securing the preliminary values for mortgage lending.
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.
In real estate appraisal, the Principle of Balance asserts that there is an optimal mix of inputs that, when combined with land, will result in the highest land value. Key inputs include labor, capital, and entrepreneurship.
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.
A Building Capitalization Rate (Cap Rate) is a metric used in real estate to convert an income stream from a property into a lump sum value. It is a crucial tool for appraisers and investors to estimate the value of a property.
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.
Capitalized value refers to the present value of a future income stream, discounted at a specific rate called the capitalization rate. It is a crucial concept in real estate valuation for properties producing regular income.
The Case-Shiller/S&P Home Price Index is a measure developed by economists Carl Case and Robert Shiller for Standard & Poor's Corporation. It tracks the price changes of single-family homes in the U.S. by analyzing repeat sales of properties across various metropolitan areas.
Cash equivalent in real estate refers to converting the price of a property sold with either favorable or unfavorable financing into the price the property would have sold for if the seller had accepted all cash in the transaction.
The Central Appraisal District (CAD) is a government organization responsible for appraising the value of properties within its jurisdiction for tax assessment purposes. By providing a consistent valuation process, it avoids duplication and inconsistencies among various taxing entities.
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.
Class of property is a subjective division of buildings based on desirability among tenants and investors, considering factors like age, location, quality, and maintenance.
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.
The Comparative Sales Approach, also known as the Sales Comparison Approach, is a real estate appraisal method that estimates the value of a property by comparing it to similar properties that have recently sold in the same area.
The Comparative Unit Method is an appraisal technique used to determine the value of a property by comparing it against standardized units.
The Comparison Method, also known as the Sales Comparison Approach, is a real estate appraisal method that bases the value of a property on the sales prices of similar properties in the same area.
A contaminant is a substance, element, or compound that can cause harm to humans or other forms of life if released into the environment. Contaminants are commonly found in concentrations above acceptable levels or in places where they should not be. This term is particularly relevant in real estate during the due diligence process when evaluating property for purchase or financing.
The principle of contribution states that the value of a property component is determined by the value it adds to the entire 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.
A Certificate of Reasonable Value (CRV) is a document issued by the Department of Veterans Affairs (VA) that establishes the maximum loan amount that the VA will allow for a property. It is a critical component in the VA home loan process, providing assurance of the property's value.
Curb appeal refers to the attractiveness of a property, particularly residential homes, as seen from the street, and is a critical aspect in real estate marketing and valuation.
A Data Plant comprises compiled statistical information used by appraisers or other real estate professionals to evaluate property values, market trends, and comparable sales data, playing a pivotal role in real estate appraisal and market analysis.
The 'Date of Appraisal' refers to the specific date on which the value of a property is determined by an appraiser. It is a crucial component in real estate transactions as it establishes the value of a property at a specific point in time, impacting sale prices, taxes, and loan terms.
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 capitalization is a valuation method used in real estate to estimate the value of an income-producing property by dividing the net operating income (NOI) by the capitalization rate (cap rate).
The Direct Sales Comparison Approach, also known as the Sales Comparison Approach, is a real estate appraisal method used to estimate the value of a property by comparing it to recently sold properties with similar characteristics within the same market area.
In real estate slang, 'DOG' refers to an unwanted property that is typically hard to sell due to various issues such as poor appearance, poor construction, lack of market demand, or negative environmental conditions.
A drive-by appraisal, also known as an exterior-only appraisal, is a valuation of a property's market value based primarily on an external inspection from the street or perimeter without conducting an interior evaluation of the property.
In real estate condemnation, an economic unit refers to whether some or all of the property taken has a different highest and best use than the larger parcel.
The Effective Date of the Appraisal, often referred to as the Appraisal Date, is the specific point in time at which the value of the property is assessed. This date is crucial for reflecting the property's market conditions and physical state at that particular time.
Elements of comparison are critical attributes or variables used in real estate to evaluate and contrast different properties during an appraisal or analysis process.
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.
Equity represents the interest or value that an owner has in real estate over and above the liens or debts against it. It is calculated by subtracting the total liens from the market value of the property.
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.
Excess rent refers to the amount by which the rent specified in an existing lease exceeds the rental rate currently demanded in the market for similar properties. It carries implications for property valuation and investor decision-making.
Exposure Time in appraisal terminology refers to the estimated amount of time it would have taken to sell the subject property prior to the date of the appraised value. This metric contrasts with Marketing Time, which is considered after the appraised value date.
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.
An extraordinary assumption is an essential presumption made in an appraisal that, if proven false, would render the value opinion erroneous. It is crucial for scenarios where certain hypothetical or uncertain conditions affect the overall appraisal outcome.
Fair market value (FMV) is a critical concept in real estate, representing the estimated price at which a property would sell in the open market under normal circumstances. It is commonly used in property tax assessments, sales valuations, and condemnation proceedings.
Fair Market Value (FMV) is the price that a property would sell for on the open market. Calculating FMV helps in real estate transactions, taxation, litigation, and insurance claims.
Fannie Mae Form 1004 and Form 2055 are standard appraisal forms utilized by appraisers to report the appraised value of residential properties.
The Federal Rule is a method utilized in determining just compensation for property seized through condemnation. This rule is specifically applied in federal condemnation cases and various state cases. It is often referred to as the 'before and after' rule, representing the value difference of the property before and after the taking to determine fair compensation.
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 FHFA House Price Index (HPI) is a home price index compiled by the Federal Housing Finance Agency, based on data from loans held by home mortgage GSEs. It provides values for each state and metropolitan area in the United States.
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.
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 offered by the NATIONAL ASSOCIATION OF REALTORS® to appraisers who are state-certified general appraisers and meet additional requirements.
Gross Building Area (GBA) is the total floor area of a building, typically measured from the external walls and including all areas within the building. It encompasses the entire footprint of the building.
The Gross Income Multiplier (GIM) is a valuation metric used in real estate to evaluate the value of a property by comparing its gross income to its purchase price. It is a useful tool in determining the profitability and potential return on investment of income-producing properties.
The Gross Income Multiplier is a tool used in real estate valuation to compare properties by evaluating the price of a property relative to its gross rental income.
The Gross Rent Multiplier (GRM) is a simplified ratio used by real estate investors to evaluate the potential profitability of an income-generating property. It is calculated by dividing the property's purchase price by its gross annual rental income.
Gross Rent Multiplier (GRM) is a real estate metric used to evaluate and compare rental income properties. It is calculated by dividing the property’s sales price by its gross annual rental income.
The Gross Rent Multiplier (GRM) is a metric used by real estate investors to evaluate the potential profitability of an investment property based on its rental income.
The remaining balance of a loan when the term of the loan exceeds the term of a lease.
Highest and Best Use (HBU) is a real estate appraisal term that represents the legally, financially, and physically feasible use that, at the time of appraisal, is expected to produce the highest net return to the land and/or buildings over a given period of time. This concept can be applied whether the property is vacant or already developed.
In real estate, historic cost refers to the original financial expenditures incurred during the construction or acquisition of a property. This term contrasts with the original cost, which represents the purchase price paid by the current owner.
The Home Price Index (HPI) is a measure of the relative level of prices in a specific housing market at a specific time. The index values indicate change over time rather than an average or median price in dollars. They are typically pegged to a starting value and show the appreciation or depreciation in housing prices.
The Improvement Ratio measures the relative value of improvements on a property compared to its unimproved value, providing insight into the investment in enhancements versus the land value itself.
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.
An independent fee appraiser is a professional who estimates the value of a property without any vested interest in the property and is not affiliated with a lending association or investor.
Just Compensation refers to the amount of money paid to a property owner when their property is legally taken by the government under the power of eminent domain. The payment is intended to be equivalent to the Fair Market Value of the property taken.
The Land Residual Technique is a method used in real estate appraisal to estimate the value of land by using the net operating income (NOI) and the value and return of improvements on the property. It is especially useful for feasibility analysis and determining the highest and best use of a property.
The land/building ratio is a comparative value of land relative to the improvements, commonly used in the assessment of property worth in real estate to understand property valuation dynamics.
Leased Fee refers to the landlord's ownership interest in a property that is under lease. It's the structure for defining income from rental property, emphasizing the importance of anticipated rental income for assessing value.
Leased fee value represents the worth of a property to the landlord based on the current rental agreements in place. It's crucial for understanding property valuation under existing lease conditions.
A licensed appraiser is a professional who holds a designation that allows them to appraise non-complex residential properties of one to four units valued up to $1 million and complex properties of one to four units up to $250,000.
Loan-to-Value Ratio (LTV) is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The LTV ratio is crucial in assessing the risk of a loan.
Market rent refers to the rental income a property can be expected to earn in the open market under typical conditions. It is contrasted with contract rent, which is the actual rent agreed upon by both parties.
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.
Mass appraising involves assessing groups of properties to estimate their values using sophisticated statistical methods, often employed by tax authorities for property tax assessments.
The National Association of Real Estate Appraisers (NAREA) is a professional organization dedicated to maintaining high standards in the practice of real estate appraisal. NAREA provides education, certification, and professional support to individuals in the appraisal industry.
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.
In real estate, the term 'OFFSET' can refer to various contexts, including a reduction or counterbalance in value resulting from condemnation. It's often intertwined with terms like 'SETOFF' or 'SPECIAL BENEFITS,' relevant to compensation in property takings.
The Overall Capitalization Rate (Cap Rate) is a metric used to evaluate the return on investment of a real estate property, usually expressed as a percentage. It helps investors determine the potential profitability of a property by comparing the annual net operating income (NOI) to the property's current market value or acquisition cost.
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.
The paired sales method is a real estate appraisal approach that involves comparing sales of properties that have similar characteristics to determine the impact of specific property features on market value.
