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.
AI-RRS is a designation offered by the Appraisal Institute for residential review appraisers to enhance their qualifications and credibility in performing and overseeing residential appraisal assignments.
Amenities refer to the nonmonetary benefits derived from property ownership that contribute to its desirability. This can include both tangible and intangible features such as pride of ownership, modern appliances, and fixtures.
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.
Appraisal by Comparison, also known as the Sales Comparison Approach, is a real estate valuation method that estimates a property's value based on the sale prices of similar properties in the same area.
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.
The Appraisal Institute of Canada (AIC) is the Canadian national society of professional real estate appraisers, founded in 1938, dedicated to serving the public interest through advancing high standards for the appraisal profession. The AIC grants the CRA (Canadian Residential Appraiser) and AACI (Accredited Appraiser Canadian Institute) designations.
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 Practices Board (APB) is a board within The Appraisal Foundation, established to identify and offer commentary on appraisal methods and techniques. Their guidance aims to promote clarity and consistency in appraisal practices, but adherence to their recommendations is voluntary.
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.
The Appraisal Standards Board (ASB) of the Appraisal Foundation creates, revises, and disseminates the Uniform Standards of Professional Appraisal Practice (USPAP) to ensure standardized, quality valuation practices in real estate.
The Appraiser Qualifications Board (AQB) sets the minimum education, experience, and exam standards for real property appraisers, ensuring consistency and quality within the appraisal profession.
An Appraiser Trainee is an entry-level position in the appraisal industry, designed for individuals gaining experience and working under the supervision of a licensed or certified appraiser. This role involves assisting with the research and preparation of appraisal reports.
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.
As-Is Value refers to the estimated or appraised value of a property in its current condition, considering any repairs, disrepair, or improvements necessary.
ASA (American Society of Appraisers) is a professional organization that offers designations for appraisers who meet rigorous criteria in various fields, including real estate, business valuation, machinery and equipment, fine arts, and more.
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.
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 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 Building Residual Technique is an appraisal method where the income attributed to land is subtracted from the net operating income to determine the income generated by the building, which is then capitalized into the building's value.
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 Residential Appraiser is a professional qualified to appraise residences and up to four units of housing with no limit on the value. This certification requires completion of specific education, experience, and adherence to professional appraisal standards.
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.
The conformity principle is an appraisal principle that asserts property values tend to reach their maximum potential when the neighborhood is reasonably homogeneous in terms of social and economic activity.
The principle of contribution states that the value of a property component is determined by the value it adds to the entire property.
A corridor in real estate refers to a long, narrow strip of land dedicated to a specific purpose such as transportation routes, utility lines, or communication cables. The use of corridors is critical in infrastructure development, providing a streamlined and organized space for essential services.
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.
The 'Cost to Cure' is the amount of money required to remedy a cause of depreciation in a property. A curable defect is one for which the cost to correct is less than the value added by the correction.
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 Departure Provision, formerly found in the Uniform Standards of Professional Appraisal Practice (USPAP), allowed appraisers to depart from specific requirements given that the departure did not result in misleading assignments. However, this provision was replaced with the Scope of Work rule, emphasizing transparency in how an appraisal is conducted.
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.
`Depth Tables` are a set of percentages indicating the proportion of site value attributable to each additional amount of depth in the lot. These tables help in understanding and appraising land value, especially when the depth of the lot exceeds standard dimensions.
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.
Economic obsolescence refers to the decrease in property value caused by external factors, such as environmental changes or new developments. It is also known as external obsolescence or environmental obsolescence.
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.
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.
Fannie Mae Form 1004 and Form 2055 are standard appraisal forms utilized by appraisers to report the appraised value of residential properties.
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.
Frontage refers to the linear distance that a piece of land directly abuts along a defined edge, such as a lake, river, street, or highway. It is a significant factor in real estate appraisal, as it often correlates with the desirability and value of a property.
Furniture, Fixtures, and Equipment (FF&E) are vital items that wear out more rapidly than other components in commercial properties like hotels or motels, and typically have a useful life of around 7 years.
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.
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.
The Income Approach is one of three methods used to appraise real estate value, primarily utilized for properties that generate consistent income, such as apartments, office buildings, hotels, and shopping centers.
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 appraisal is a value estimate provided by an individual who does not stand to benefit financially from the property's value or its income. The independence ensures the appraisal is impartial and objective, which is crucial for making informed financial decisions.
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.
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.
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.
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.
MAI is a professional appraisal designation conferred by the Appraisal Institute, indicating a high level of expertise and competency in appraising a broad range of real estate types.
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.
In real estate appraisal terminology, 'Marketing Time' refers to the estimated duration a property would need to be on the market to sell, following the date of the appraised value.
The National Association of Independent Fee Appraisers (NAIFA) is a professional organization that represents fee appraisers in the real estate industry. It aims to promote the highest standards of professionalism, ethics, and competency among its members.
The National Association of Review Appraisers and Mortgage Underwriters (NARA/MU) is a professional organization that provides certification, training, and support for individuals involved in property appraisal and mortgage underwriting. Membership in NARA/MU signifies a dedication to the highest standards of professional practice and ethics in the real estate appraisal and mortgage underwriting industries.
A Narrative Report Appraisal provides a comprehensive and detailed examination of property value using expository and descriptive paragraphs, unlike more structured formats such as forms, letters, or tables.
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 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.
Principle (Appraisal) refers to basic economic facts that underpin the theory of valuation in real estate. Key principles include substitution, contribution, anticipation, and highest and best use, which assist in accurately determining a property's market value.
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.
The Property Residual Technique in appraisal is a method used to estimate the value of a property based on its potential future income and the reversionary value of the building and land.
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 Registered Trainee Appraiser, often referred to as an 'apprentice' or 'trainee,' is a designation in the appraisal industry requiring 75 hours of precertification education, including training in the Uniform Standards of Professional Appraisal Practice (USPAP), but does not require an exam or prior experience.
Reproduction cost is the expense involved in duplicating a property exactly, denoting the total amount required to construct a replica of the structure using the same materials, design, and workmanship as the original.
A Residential Accredited Appraiser (RAA) is a professional designation that signifies an appraiser's commitment to advanced residential valuation education, proficiency, and industry best practices.
A Review Appraiser is a professional who specializes in conducting thorough assessments of appraisal reports to ensure accuracy, adherence to standards, and quality compliance. They play a crucial role in the real estate appraisal process by validating the work of the original appraiser.
The Sales Comparison Approach is one of the three primary appraisal approaches used to estimate the market value of a property by comparing it to similar properties that have recently sold in the same area.
A Senior Residential Appraiser (SRA) is a highly skilled professional credential granted by the Appraisal Institute, certifying an appraiser’s advanced ability to value residential properties accurately and ethically.
Split-Rate Capitalization is a technique in real estate appraisal to estimate property value by using different capitalization rates for different periods, typically to account for varying degrees of risk and return over time.
A State-Certified Appraiser is a professional who has met the stringent requirements set by state appraisal boards, ensuring they possess the expertise to provide accurate property valuations for various purposes such as sales, mortgages, and investments.
In real estate appraisal, the 'subject property' refers to the property currently being appraised. Understanding its value, attributes, and market comparables is essential for accurate property valuation.
The forecast ratio of the next year's operating income to the sale price at the time the property is expected to be resold. Contrast to Going-In Cap Rate.
The Uniform Residential Appraisal Report (URAR) is a standardized form used by appraisers to provide a comprehensive valuation of residential properties. It is required by major secondary mortgage purchasers.
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.
Uniform Standards of Professional Appraisal Practice (USPAP) is a set of requirements covering ethics, record keeping, research, and reporting promulgated by the Appraisal Foundation, and adhered to by its members.
A set of standards that guide professional appraisal practice in the United States and help ensure that appraisals are conducted consistently and ethically.
A unit of comparison is a critical tool used in real estate appraisal to compare properties of varying sizes and characteristics. These units ensure consistent evaluation and assist in determining a property's fair market value.
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.
