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Appraisal Terminology

Absorption Rate
The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.

Abstraction Method
This method of estimating the value of property uses similar properties available in the same market to extract the value of a parcel of land.

Accessory Building
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.

Accretion
The natural growth of a piece of land resulting from forces of nature

Acre
43,560 square feet. A measurement of area.

Actual Age
The amount of time that has passed since a building or other structure was built.

Ad Valorem Tax

Taxes assessed based on the value of the land and improvements

Addendum
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.

Adjusted Basis
The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

Adjusted Sales Price

An estimate of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.

Aesthetic Value
The additional value a property enjoys based on subjective criteria such as look or appeal.

Affirmation
A declaration that a certain set of facts are truthful.

Affordability Analysis
A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

Amenity
Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.

Appraisal
A ''defensible'' and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

Appraisal Principles

The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

Appraisal Report
The end result of the appraisal process, usually consists of one major, standardized form such as the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the estimated value of the subject property and support that estimate with corroborating information.

Appraised Value
The estimated fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

Appraiser
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

Arms Length Transaction
Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.

Assessed Value

The value of a property according to jurisdictional tax assessment.

Assessment
The function of assigning a value to a property for the purpose of levying taxes.

Assessment Ratio
The comparative relationship of a property's assessed value to its market value.

Assessor
The jurisdictional official who performs the assessment and assigns the value of a property.

Asset
Any item of value which a person owns.

Attached Housing
Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.

Bill of Sale
A physical receipt indicating the sale of property.

Blighted Area
Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.

Bona Fide
Made or carried out in good faith; sincere.

Bridge Financing
An interim loan made to facilitate the purchase of a new home before the buyer's current residence sells and its equity is available to fund the new purchase.

Buffer Zone
A segment of land between two disparate municipal zones which acts as a shield to keep one zone from encroaching upon the other. Often used to separate residential districts from commercial areas.

Building Code
Regulations that ensure the safety and material compliance of new construction within a municipality. Building codes are localized to ensure they are adequate to meet the risk of common hazards.

Building Line or Setback
The statutory distance between buildings and the property line, imposed by municipalities, home associations, or other agreements.

Built-ins
Specific items of personal property which are installed in a real estate improvement such that they become part of the building. Built-in microwave ovens and dishwashers are common examples.

Bungalow
A one-story, home-style dating from the early twentieth century. Often characterized by a low-pitched roof.

Cape Cod Colonial
A single-story house style made popular in New England. Often characterized by a steep roof with gables.

Caveat Emptor
Literally translated: ''Let the buyer beware.'' A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.

Certificate of Occupancy
Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

Certificate of Reasonable Value (CRV)
Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.

Certificate of Title
A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

Certified General Appraiser

Generally, any professional who has met the local or state requirements, and passed the appropriate certification exam, and is capable of appraising any type of property.

Certified Residential Appraiser
A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

Chain of Title
The complete history of ownership of a piece of property.

Chattel
Any personal property which is not attached to or an integral part of a property. Chattel is not commonly taken into consideration when appraising the value of real property.

Clear Title
Ownership of property that is not encumbered by any counter-claim or lien.

Common Area Assessments
Fees which are charged to the tenets or owners of properties to cover the costs of maintaining areas shared with other tenets or owners. Commonly found in condominium, PUD or office spaces.

Common Areas
Any areas, such as entryways, foyers, pools, recreational facilities or the like, which are shared by the tenets or owners of property near by. Commonly found in condominium, PUD or office spaces.

Community Property
In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.

Comparables
An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property who's value is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.

Condemnation
The official process by which a property is deemed to be uninhabitable or unusable due to internal damage or other external conditions.

Condominium
A development where individual units are owned, but common areas and amenities are shared equally by all owners.

Condominium Conversion
Commonly, the conversion of a rental property such as an apartment complex into a CONDOMINIUM-style complex where each unit is owned rather than leased.

Contiguous
Connected to or touching along an unbroken boundary

Contingency
Something that must occur before something else happens. Often used in real estate sales when a buyer must sell a current home before purchasing a new one. Or, when a buyer makes an offer the requires a complete home inspection before it becomes official.

Covenant
A stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.

Cul-de-sac
A dead-end street. One with only one entrance/exit.

Date of Appraisal
The specific point in time as of which an appraiser designates the value of a home. Often stipulated as the date of inspection.

Deed
A document indicating the ownership of a property.

Depreciation
The natural decline in property value due to market forces or depletion of resources.

Detached Single-Family Home
A single building improvement intended to serve as a home for one family.

Duplex
A single-building improvement which is divided and provides two units which serve as homes to two families.

Easement
The right of a non-owner of property to exert control over a portion or all of the property. For example, power companies often own an easement over residential properties for access to their power lines.

Economic Depreciation
The decline in property value caused by external forces, such as neighborhood blight or adverse development.

Economic Life
The amount of time which any income-producing property is able to provide benefits to its owner.

Effective Age
The subjective, estimated age of a property based on its condition, rather than the actual time since it was built. Excessive wear and tear can cause a property's effective age to be greater than its actual age.

Eminent Domain
The legal process whereby a government can take ownership of a piece of property in order to convert it to public use. Often, the property owner is paid fair-market value for the property.

Encroachment
A building or other improvement on one property which invades another property or restricts its usage.

Encumbrance
A claim against a property. Examples are mortgages, liens and easements

Errors and Omissions Insurance

An insurance policy taken out by appraisers to cover their liability for any mistakes made during the appraisal process.

Facade
The front exposure of any building. Often used to describe an artificial or false front which is not consistent with the construction of the rest of the building.

Fair Market Value
The price at which two unrelated parties, under no duress, are willing to transact business.

Fee Appraiser
A certified, professional appraiser who estimates the fair market value of property and receives a set fee in exchange.

Fee Simple
A complete, unencumbered ownership right in a piece of property.

Final Value Estimate
The estimated value of a piece of property resulting from an appraisal following the USPAP guidelines.

Fixture
Any piece of personal property which becomes permanently affixed to a piece of real property.

Frontage
The segment of a property that runs along a point of access, such as a street or water front.

Functional Obsolescence
A decrease in the value of property due to a feature or lack thereof which renders the property undesirable. Functional obsolescence can also occur when the surrounding area changes, rendering the property unusable for its originally intended purpose.

Gable Roof
A steeply angled, triangular roof.

Gambrel Roof
A ''barn-like'' roof, where the upper portion of the roof is less-steeply angled than the lower part.

Georgian
A classic, English-style hose characterized by simple rectangular shape and multiple stories.

Grade
The slope of land around a building.

Gross Area
The sum total of all floor space, including areas such as stairways and closet space. Often measured based on external wall lengths.

Half-Section
320 acres

Height Zoning
A municipal restriction on the maximum height of any building or other structure.

Hidden Amenities
Assets of a property which contribute to its value, but are not readily apparent. Examples might include upgraded or premium building materials.

Highest and Best Use

The most profitable and likely use of a property. Selected from reasonably probable and legal alternative uses, which are found to be physically possible, appropriately supported and financially feasible to result in the highest possible land value.

Home Inspection
A complete examination of a building to determine its structural integrity and uncover any defects in materials or workmanship which may adversely affect the property or decrease its value.

Homeowner's Association
An organization of home owners in a particular neighborhood or development formed to facilitate the maintenance of common areas and to enforce any building restrictions or covenants.

Improved Land
Any parcel of land which has been changed from its natural state through the creation of roads, buildings or other structures.

Improvements
Any item added to vacant land with the intent of increasing its value or usability.

Improvement Ratio
The comparative value of a improved piece of land to its natural, unaltered state.

Income Approach
The process of estimating the value of property by considering the present value of a stream of income generated by the property.

Income Property
A piece of property whose highest and best use is the generation of income through rents or other sources.

Independent Appraisal

An estimation of value created by a professional, certified appraiser with no vested interest in the value of the property.

Inspection
The examination of a piece of property, its buildings or other amenities.

Latent Defects
Any defect in a piece of property which is not readily apparent, but which has an impact of the value. Structural damage or termite infestation would be examples of latent defects.

Legal Description
The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.

Like-Kind Property
Any property which is substantially similar to another property.

Manufactured Housing
Once known as ''mobile homes,'' manufactured housing is any building which has been constructed off site, then moved onto a piece of real property.

Marginal Land

Land whose value has been diminished due to some internal defect or external condition. In most cases, the cost to correct the flaw or condition is as much or more than the expected return from the property.

Metes and Bounds
A traditional way of describing property, generally expressed in terms of distance from a known landmark or intersection, and then following the boundaries of the property back to its origin.

Metropolitan Area
The accumulated land in and around a city or other municipality which falls under the political and economic influence of that entity.

Misrepresentation
A statement by one party in a transaction that is incorrect or misleading. Most misrepresentations are deemed to be intentional and thus may constitute fraud. Others, however, some are rendered through simple mistakes, oversights or negligence.

Multi-Family Properties
Any collection of buildings that are designed and built to support the habitation of more than four families.

Natural Vacancy Rate
The percentage of vacant properties in a given area that is the result of natural turnover and market forces.

Neighborhood Life-Cycle
The evolution of neighborhood use and demographics over time. Economic fluctuations, municipal zoning changes and population shifts can effect the life cycle.

Neighborhood
A subsection of a municipality that has been designated by a developer, economic forces or physical formations.

Net Leasable Area

The space in a development, outside of the common areas, that can be rented to tenants.

New England Colonial
An architectural style dating from early American history typified by a two-story building with clapboard siding.

Non-Conforming Use
The use of land for purposes contrary to the applicable municipal zoning specifications. Often occurs when zoning changes after a property is in use.

Obsolescence
The process of an assets value diminishing due to the development of more desirable alternatives or because of the degradation of its capabilities.

Occupancy
A physical presence within and control of a property.

Occupancy Rate
The percentage of properties in a given area that are occupied.

Off-Site Improvements
Buildings, structures or other amenities which are not located on a piece of property, but are necessary to maximize the use of the property or in some way contribute to the value of the property.

Off-Street Parking
Designated parking spaces associated with a particular building or other structure which are not located on public streets.

On-Site Improvements
Buildings, structures or other amenities that are erected on a piece of property and contribute to its value.

Open Space
Any land which has not had any significant buildings or structures erected on it. Most often used to describe desirable neighborhood features like parks.

Owner Occupied
The state of property wherein the owner occupies at least some portion of the property.

Partial Interest
A shared ownership in a piece of property. May be divided among two or more parties.

Personal Property
Owned items which are not permanently affixed to the land.

Planned Unit Development (PUD)
A coordinated, real estate development where common areas are shared and maintained by an owner's association or other entity.

Plat
A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements.

Prefabricated
Any building or portion thereof which is manufactured and assembled off site, then erected on a property.

Property
Any item which is owned or possessed.

Quadraplex
Any building designed to accommodate four families.

Ranch House
An architectural style typified by a single-story, low-roof construction. Popular in the western U.S.

Raw Land
Any land which has not been developed.

Recording
The filing of a real estate transaction with the appropriate government agent (normally the RECORDER). A real estate transaction is considered final when it is recorded.

Residential Property
A piece of property whose highest and best use is the maintenance of a residence.

Rural
An area outside of an established urban area or metropolitan district.

Sale Price
The actual price a property sells for, exclusive of any special financing concessions.

Sales Comparison Approach

An appraisal practice which estimates the value of a property by comparing it to comparable properties which have sold recently.

Semidetached Housing
Two residences which share a common wall.

Single-Family Property
A property designed and built to support the habitation of one family.

Subdivision
A residential development that is created from a piece of land which has been subdivided into individual lots.

Subject Property
A term which indicates a property which is being appraised.

Survey
A specific map of a piece of property which includes the legal boundaries and any improvements or features of the land. Surveys also depict any rights-of-way, encroachments or easements.

Title
A specific document which serves as proof of ownership.

Tudor
A style of architecture typified by exposed stone, wood and brick construction. Similar in style to English manor homes.

Underimproved Land
A piece of land which has been improved, but not to the full extent of its potential.

Useful Life
The span of time over which a property can be used or can provide benefits to its owner.

Vacancy Rate
The current percentage of vacant properties in a given area, regardless of why they are vacant.

Variance
An exception to municipal zoning regulations granted for a specific time period to allow for non-conforming use of the land.

Walk-Through Inspection
A process whereby an appraiser examines a property in preparation for estimating its value. Also, the process of inspecting a property for any damage prior to that property being bought or sold.

Wear and Tear
A term used to indicate the normal damage inflicted on a property through every-day use.

Zero Lot Line
A municipal zoning category wherein a building or other fixture may abut the property line.

Zone
A specific area within a municipality or other jurisdiction which conforms to certain guidelines regarding the use of property in the zone. Typical zones include single-family, multi-family, industrial, commercial and mixed-use.

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