A measure of land, 1-acre = 43,560 square feet. Typically, values below 1 acre are given in square feet, above 1 acre values are in acres.
A calculation that is added or subtracted to a comp for a feature that differs from the subject. An adjustment places a value on the particular feature that differs from the subject. Adding or subtracting this value would then bring all comps in line with similar values, which will in turn lend more support to the subject’s suggested value.
Accessory Dwelling Unit. A self-contained, smaller living unit on the lot of a single family home.
Appraisal Management Company – an external third party that works between banks/lenders and real estate professionals to contract with licensed and certified appraisers to perform appraisals, manage the entire appraisal process, and to review and verify the work of appraisers.
Determining the essential features of a report and their relations to one another. It is essential for report analysis to defend your observations about these features with evidence, mostly in the form of relevant comps.
an Assessor’s Parcel Number (APN) is a number assigned to real property by the tax assessor of the property’s jurisdiction.
Valuation completed by an appraiser on a property for reasons such as purchase, refinance, asset valuation, etc
The Appraiser Independence Requirements (AIR) were developed by Freddie Mac, the Federal Housing Finance Agency (FHFA), Fannie Mae and key industry participants. These requirements provide important protections for mortgage investors, home buyers and the housing market. More information can be reviewed here: singlefamily.fanniemae.com/media/4711/display.
A person who has the knowledge and expertise necessary to estimate the value of a property. An appraiser acts independently of the buying and selling parties in a transaction in order to arrive at their fair value of an asset without bias.
Aka arm’s length sale. A transaction in which both buyer and seller act willingly, independently and in their own self-interest.
Aka assessed value. The dollar value assigned to a property for purposes of measuring applicable taxes. Assessed valuation is used to determine the value of a residence for tax purposes and takes comparable home sales and inspections into consideration.
A unique number given to a parcel by the assessor. This number is helpful in identifying the property in rural locations with little data.
Automated Valuation Model. AVMs are online databases that try to match up similar properties to give an idea of the range of sales prices that have historically been recorded. County assessors were some of the first to use such services because of budgetary and personnel limitations. However, this information is limited to factual data, such as the size of the house, number of rooms and bedrooms, age of the house, and distance surrounding the house. Fast and cheap, but reliant on the (in)accuracies of public data.
the rate of return on a real estate investment property based on the income that the property is expected to generate.
A Core Based Statistical Area in a U.S. geographic area defined by the Office of Management and Budget (OMB) based around an urban center of at least 10,000 people and adjacent areas that are socioeconomically tied to the urban center by commuting.
Allow appraisal of one-to-four residential units without regard to value or complexity.
The final step in executing a real estate transaction. The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On the closing date, the parties consummate the purchase contract, and ownership of the property is transferred to the buyer. Aka settlement.
Comparative Market Analysis. An informal opinion of a property’s price but done either for sellers to determine at what price they should list their property or for buyers to help them determine what price to offer. C.f. BPO
A format that provides statistical data [low and high price range, average, etc.], a list of comparable properties with a prief description of the property characteristics [room count, site size, gla, year built, list date, list price, sold date, sale price, DOM, etc].
Close of Escrow. Close of escrow means essentially that a real estate transaction has been completed and that the sale is final. An ‘escrow’ is a common feature of transactions. It is an independent third party that holds all monetary funds and documents until the close of sale. The seller of the property transfers all documents to the escrow agent, who holds them until the buyer transfers the money for sale to the agent who ultimately transfers it to the seller. Once this is done, it completes the transaction and is know as the closing of escrow, or often just “the closing.”
Often shortened to “comp”. Properties that are substantially equivalent to the subject property. Comps express estimate of value for the subject property. Normally, such properties have been recently sold or leased and are similar to the property being evaluated. Comparables need not be identical to the subject, but should be similar or relatively easy to adjust for differences in comparison.
Properties similar to the subject that have recently sold. They are used to determine the value of the subject property.
A benefit or discount to help close a deal. Concessions are usually included in the closing costs of the deal.
A summing up of the points and a statement of opinion or decisions reached. This statement of opinion is the main difference between a summary and a conclusion. A single paragraph could be both, but the conclusion, which may only be one sentence, will come last, and can still be distinguished from the rest of the summary.
a disclosure of information known to the seller about the condition of the property for sale.
The absolute ownership of an apartment or a commercial unit (unit can be attached or detached), by a legal description of the airspace that the unit actually occupies, plus an undivided interest in the ownership of the common elements, jointly owned with the other condominium unit owners.
A mortgage loan made with real estate as security, that is neither insured by the FHA nor guaranteed by the VA.
A multiunit residential building with title in a trust or corporation that is owned by and operated for the benefit of persons living within it, who are the beneficial owners of the trust or the stockholders of the corporation, each possessing a proprietary lease granting occupancy of a specific unit in the building.
The date the document is signed. In an appraisal, it’s the date a report is signed by the appraiser (not to be confused with the effective date of the appraisal).
a property valuation that is completed by an appraiser remotely, using tax records and public information listed on the multiple listing service (MLS).
Generally refers to foreclosures and short sales, selling at discounts to facilitate a quick sale
refers to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which are a series of regulations passed after the 2008 recession designed to prevent future financial crises.
The E & O is documentation of insurance against errors and omissions held by the appraiser.
The date upon which an appraiser’s analyses, opinions, and conclusions go into effect
an appraisal of one-unit properties based solely on the exterior features of the home. This is sometimes known as a drive-by appraisal
The most probable price, as of the date of inspection or other specifically defined date, which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. C.f. fair market value.
The most probable price real estate should bring in a sale occurring under normal market conditions. C.f. fair market price.
The greatest possible estate or right of ownership of real property, continuing without time limitation. c.f. leasehold
when a second appraiser conducts an additional property appraisal to provide a secondary analysis.
a lot shaped like a flag on a pole — a long, narrow section of road access that flows into a standard rectangular lot.
Standardized appraisal document that allows users to work seamlessly across formalized appraisal documents regardless of who prepared them
For Sale By Owner. The process of selling real estate without the representation of a real estate broker or real estate agent.
Gross Building Area. All enclosed floor areas, as measured along a building’s outside perimeter.
A partner has the knowledge, skills and resources needed to competently complete an assignment in accordance with the Uniform Standard of Professional Appraisal Practice (USPAP).
Gross living area is the total finished, habitable, above-grade space, measured along the building’s outside perimeter.
Gross Rent Multiplier. A figure used as a multiplier of the gross income of a property to produce an estimate of the property’s value.
The legally and physically possible use of land that is likely to produce the highest land (or property) value.
Home Owners Association. An organization of property owners in a residential condominium or subdivision development, usually authorized by a declaration of restrictions to establish property design and maintenance criteria, collect assessments, and manage common areas.
a valuation of real estate property, in this case, a one-to-four-unit dwelling.
Any permanent structure on real property, or any work on the property (such as planting trees) which increases its value. Therefore for lending purposes, the value of a property has two constituents: the value of the land itself, plus the value of any improvements–the house standing on that property.
An appraisal technique that uses a property’s earning capability as calculated by the capitalization of property income to determine the overall value
The process of providing an opinion of value of an income-producing property by capitalization of the annual net operating income expected to be produced by the property during its remaining economic life.
A property bought or developed to earn income through renting, leasing or price appreciation. Income property can be residential or commercial. Residential income property is commonly referred to as “non-owner occupied.”
the monthly or annual gross income a tenant must earn to be able to afford rent each month.
A legally binding description that enables any real estate to be located and properly identified
Order information provided at time of assignment. This information is required for the partner to determine scope of work. It contains the property address, borrower, POC, fee, due date on other client or order specific instructions.
Allows appraisal of non-complex one-to four residential units having a transaction value less than $1,000,000, and complex one-to-four residential units having a transaction value less than $400,000
Properties located in the same market area/neighborhood as the subject that are currently listed for sale. They are used to determine the value of the subject property. Indicates that the property is for sale on the open market.
A structure transportable in one or more sections, designed and equipped to contain not more than two dwelling units to be used with or without a foundation system.
Aka Community Facilities Act. Named after its authors, this Californian Act enabled “Community Facilities Districts” (CFDs) to be established by local government agencies as a means of obtaining community funding to pay for public works and some public services. It allowed public improvements to be funded despite local government’s restriction on raising property taxes by more than inflation. The down-side is that the payments levied on affected homes are fixed, and so in some down markets they can eventually prevent buyers from qualifying for loans because the effect on debt to income ratio by the Mello-Roos addition payment to the impound/escrow account.
Multiple Listing Service. The primary purpose of an MLS is to provide a facility for making an offer of cooperation and publishing a unilateral offer of compensation by a listing broker to other broker participants in that MLS. In other words, the compensation offered to a cooperating broker by the listing broker is published within the MLS to other cooperating brokers.
The subject market area seen as similar in marketing appeal and overall demand from a prospective buyer. This refers to a smaller, loosely defined geographical location within a larger city, town, or suburb. They often consist of social communities with considerable face-to-face interaction among their members. Neighborhoods are important because prices vary considerably in different neighborhoods.
The neighborhood boundaries define the subject market area, generally in terms of the four major landmarks to the north, south, east, and west. The neighborhood boundaries may be streets, highways, or natural or man-made features (such as an airport or river). Generally the neighborhood boundaries should encompass subject and comps; comps existing outside the boundaries require an explanation.
Opinion of Market Value. The appraiser’s opinion of the most probable price which a property should bring in a competitive and open market.
A formal, impartial estimate or opinion of value, usually written, of an adequately described property, as of a specific date, and supported by the presentation and analysis of relevant data. It is prepared as a result of the retainer, for reliance by identified parties, and for which the appraiser accepts responsibility. Only a state-certified appraiser can provide a certified appraisal. C.f. BPO, CMA: informal estimates.
“Wear and tear on the improvements – includes deferred maintenance (items needing immediate repair), short-lived components (furnaces, hot water heaters, roof, carpet, etc.), and long-lived components.”
A subdivision consisting of individually owned residential and/or commercial parcels or lots as well as areas owned in common.
The POC is the person that must be contacted by the partner to schedule an interior inspection
the process of assessing the probability and impact of risks to a project.
A person with a real estate license. Not to be confused with a Real Estate Broker.
Aka broker. A person who has passed a broker’s license exam. A broker can work alone, or hire real estate agents to work for them. Notice therefore a broker is a more qualified position. A broker cannot assess the value of a property (you must be an appraiser for that) but as real estate professionals they have a knowledge of the local real estate market that uniquely qualifies them to perform the informal estimates required of a BPO. Not to be confused with Real Estate Agent.
A class of property owned by a lender-typically a bank, government agency, or government loan insurer-after an unsuccessful sale at a foreclosure auction. A foreclosing beneficiary will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the beneficiary will legally repossess the property. This is commonly the case when the amount owed on the home is higher than the current market value of this foreclosure property, such as with a high loan-to-value mortgage following a real estate bubble. As soon as the beneficiary repossesses the property it is listed on their books as REO and categorized as an asset (non-performing asset).
When two or more reports on the same property differ in suggested value by more than a specified tolerance, the reconciliation process requires an appraiser to gives weight to the more reasonable report and justifies this decision with reasoned commentary.
the process through which appraisers take values derived through different techniques and/or different people, reviews the different figures to arrive at a final estimate of value
The number of years of useful life left to a building from the date of appraisal.
The current construction cost of a building having exactly the same utility as the subject property.
The origination appraisal, bpo or other product that is the end product generated by Pro Teck as a result of a specific client order. C.f. order, case
The current construction cost of an exact duplicate of the subject building.
Real Estate Settlement and Practices Act. Requires borrowers be provided details of cost of the real estate settlement process, limits the use of escrow accounts, and bans certain practices such as kickbacks for referring services related to the settlement. CFPB Document Link
A property valuation technique that compares sales of similar properties to the property being appraised
This is one of three approaches to value in appraisal theory (income and cost being the other two). In this approach, value is based on a comparative analysis of recent sales prices of similar properties, after making adjustments for seller concession, time, and other differences in the properties.
The actual price that a buyer pays for a property. c.f. LP, FLP
Defined values for delivery schedule (turn-around time) for a specific client and report type. Internal reporting tracks how well our actual values compare to this defined tolerance, and future case volume often depends on how these statistics rank in comparison to our competitors.
Aka Liquidation: A type of RMV that is specifically for liquidation or short sale purposes. The most recent product in an SPO RMV will always be an interior valuation product. Most SPOs include a purchase offer which needs to be reviewed and commented on in the RMV.
A short sale is defined as a transaction where title transfers, where the sales price is insufficient to pay the total of all liens and costs of sale, and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies. Short sale values are typically sold at a lesser value than average market value (if short sales are not typical market value), meaning the partner is taking a loss in sale value from. This typically means the seller’s principal is greater than sales price or (current market value), providing the partner with a negative balance on property sale. Short sales are done to avoid the seller/partner going through a foreclosure process.
Having a likeness or resemblance, especially in a general way: two similar houses
A comprehensive but brief restatement of the most important of previously stated facts or observations. It is more important to be comprehensive than brief. c.f. conclusion
The GSEs developed the Uniform Collateral Data Portal® (UCDP®), which is a single portal for the electronic submission of appraisal data. Lenders are required to use the UCDP to deliver electronic appraisal data that conforms to the UAD before the delivery date of the mortgage loan to Fannie Mae or Freddie Mac. This requirement applies to all conventional mortgage loans for which an appraisal report is required.
An improvement that is less than a property’s highest and best use. c.f. over-improvement
To improve the quality and consistency of appraisal data for loans delivered to the government-sponsored enterprises (GSES), Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency (FHFA), developed the Uniform Appraisal Dataset (UAD), which defines all fields required for an appraisal submission for specific appraisal forms and standardizes definitions and responses for a key subset of fields.
Uniform Residential Appraisal Report (form 1004). A single family appraisal form designed to report an appraisal of a one-unit property or a one-unit property with an accessory unit, including a unit in a PUD.
Uniform Standards of Professional Appraisal Practice. Rules and standards for ethical and performance obligations of appraisers established to promote and maintain a high level of public trust in appraisal practice.