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.
Across the Fence is an appraisal technique used when evaluating property in condemnation situations, estimating the property's value based on the use of adjacent land.
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.
An appraisal is a professional opinion or estimate of the value of a property, which is conducted by a trained and certified appraiser.
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.
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.
The Appraisal Date, or Effective Date of Appraisal, is the specific date on which the appraised value of a property is based. This date can impact the value derived in the context of historical price trends, market conditions, and other relevant factors.
An appraisal fee is a payment made to an appraiser for evaluating the value of a property and producing an official appraisal report.
The Appraisal Foundation is an organization formed to establish uniform requirements for appraiser qualifications and reporting standards. It is governed by a Board of Trustees and includes three independent boards.
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.
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 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.
An appraised value is an estimate of a property's worth, calculated by a licensed appraiser during the home-buying process.
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.
Capitalization rate, commonly referred to as Cap Rate, is a real estate valuation measure used to compare different real estate investments. It is calculated by dividing the net operating income (NOI) by the current market value of the 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.
Collateral Underwriter® (CU™) is a proprietary appraisal risk assessment application developed by Fannie Mae to enhance appraisal quality. CU™ provides automated risk assessment and supports proactive management of appraisal quality.
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.
An estimate of the value of property using select indicators from sales of comparable properties, usually provided by a broker or salesperson, to help clients set listing and selling prices.
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 the process of using computer software to value large sets of properties within a given area, often for the purpose of property tax assessments.
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.
CoreLogic is a leading provider of data and analytics for real estate, offering comprehensive information on property value, mortgage, risk assessment, and more. CoreLogic's REALQUEST platform delivers detailed reports and insights critical for real estate professionals.
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.
Depreciated cost, also known as book value or adjusted tax basis, represents the value of a property after accounting for depreciation – the gradual reduction in the value of an asset over time. This figure is used in financial reporting and tax assessments to reflect the lowered worth of a property due to wear and tear, deterioration, or obsolescence.
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.
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.
Discounted Present Value (DPV) is the present value of expected future cash flows, discounted at a specific rate to account for the time value of money. It's often used to evaluate the attractiveness of an investment.
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.
Fair Market Rent (FMR) is the amount a property would command if it were available for lease on the open market, reflecting current rental market conditions. FMR is often used in determining rent subsidies under government programs and provides a benchmark for rental prices in a given area.
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.
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.
In real estate, 'homogeneous' refers to properties that are uniform in style, characteristics, and quality within a specific area. This uniformity often leads to maximized property values, as low-valued or unusual properties can negatively impact the value of nearby higher-cost properties.
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 Income Multiplier, also known as Gross Rent Multiplier, is a valuation method that establishes the relationship between a property’s purchase price and its gross rental income. It is commonly used to assess the attractiveness of an income-generating property investment.
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.
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.
Intrinsic Value refers to the inherent worth of a tangible property, distinguishing it from the perceived or market value. Assets like precious metals, art, and real estate are often evaluated for their intrinsic value due to their tangible desirability and utility.
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.
Inwood Tables provide a set of annuity factors used for calculating the present value of an annuity based on various interest rates and maturity periods. These tables are instrumental in real estate and financial analysis.
In condemnation proceedings, the larger parcel refers to the overall property from which the condemned property is taken. It includes properties that are affected, although not actually taken, to determine severance damages.
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.
The Market Approach, also known as the Sales Comparison Approach, is a real estate valuation method that compares a property with similar recently sold properties in the same area. This approach is commonly used for residential real estate and helps to determine the fair market value by looking at comparable sales (comps).
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.
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.
The Mortgage-Equity Technique, also known as the Ellwood Technique, is used in real estate financial analysis to value income-producing properties. It incorporates both mortgage financing terms and investor equity expectations.
Multiple regression is a statistical technique used to predict the value of one dependent variable based on the values of two or more independent variables. This method is commonly used in real estate for property valuation and mass appraising.
The multiplier is a factor used to extrapolate or derive a significant financial or economic value by applying it through multiplication. It is frequently used in real estate to determine property valuations and project population or economic growth based on certain key inputs.
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 Independent Fee Appraisers (NAIFA) is an organization that includes real estate appraisers who pursue various professional designations to certify their expertise and competence in the field.
The National Association of Real Estate Appraisers (NAREA) is a professional organization dedicated to standardizing and enhancing the practice of real estate appraisals through education, certification, and advocacy.
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 Land refers to the usable land area remaining after accounting for non-usable portions, such as floodplains, wetlands, or other environmentally restricted zones. This concept is crucial for property valuation and development planning.
The Overall Rate of Capitalization, often referred to as the Overall Rate of Return (ORR), is a key financial metric used in real estate to evaluate the income-generating potential of an investment property relative to its purchase price or market 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.
Physical depreciation or deterioration refers to the loss of value in real estate due to the wear and tear of structures over time. This can be caused by a variety of factors including breakage, deferred maintenance, the effects of aging materials, and normal wear and tear.
Present Value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return. PV calculations are fundamental in finance and real estate as they determine what a future amount of money is worth today.
A professionally derived estimate of property value based on some expected future event, commonly used in real estate development and financing.
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.
A distinguished collective of leading experts specializing in real estate valuation, business valuation, research, advisory, counseling, and market analysis services.
A reappraisal lease (also known as a revaluation lease) involves periodically reassessing the value of the leased property to adjust the rent accordingly based on prevailing market conditions. This ensures both the lessor and lessee engage under fair market terms over the lease duration.
Reconciliation in appraisal involves analyzing values from different valuation approaches to arrive at a final estimate of a property's market value.
Regression is a statistical technique used to estimate the relationships among variables. It is especially useful in real estate to predict property values based on factors like location, size, and age of a home.
In real estate, a rendition refers to the offering of an estimate of property value to the tax assessor. It is also known as rendering.
The Report Date is the date an appraisal report was prepared, typically reflecting the date the transmittal letter was assembled. It contrasts with the Appraisal Date, which is often the effective date of the valuation.
Residual Techniques are methods used to estimate the value of a building or land, based on the known value of the other and a specified rate of return.
Salvage value is the estimated value an asset will have at the end of its useful life. It is an important concept in accounting and real estate for calculating depreciation.
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).
Special Benefits are those affecting the untaken portion of property in a partial condemnation, benefiting the owner disproportionately compared to the general area. The value of special benefits may reduce a condemnation award.
The SRA designation is awarded by the Appraisal Institute to highly qualified residential appraisers, indicating a high level of expertise and ethical standards in residential real estate appraisals.
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.
An estimate of a property’s worth based on the opinion of the owner, or for a nonmonetary use, reflecting its personalized significance beyond market value.
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.
Surplus land is a portion of a parcel that exceeds the area required to support the current highest and best use of the property, but holds no separate value apart from the main parcel.
Sweat Equity represents the value added to a property due to improvements as a result of work personally performed by the owner. A prime example is when property owners pour their own time and energy into repairs and renovations, thereby increasing the property's value.
The underimprovement occurs when a property or development exists at a lower investment or utility level than the optimal usage potential of the site.
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.
A set of standards that guide professional appraisal practice in the United States and help ensure that appraisals are conducted consistently and ethically.
Yield Capitalization is a method used in real estate to derive the lump sum value of an income stream by a discounted cash flow (DCF) approach. This method is deemed more sophisticated compared to Direct Capitalization as it factors in the timing of cash flows and anticipates growth or decline in the asset value.
