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Glossary of Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Acre Back to Top

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.

Active Listing Back to Top

See “Listing”.

Adequate Back to Top

Just enough to meet some requirement or purpose.

Adjustment Back to Top

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.

ADU Back to Top

Accessory Dwelling Unit. A self-contained, smaller living unit on the lot of a single family home.

Agent Back to Top

See appraiser. Not to be confused with real estate agent.

AMC Back to Top

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.

AMC Appraisal Back to Top

a property appraisal conducted by an appraisal management company (AMC).

Analysis Back to Top

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.

APN Back to Top

an Assessor’s Parcel Number (APN) is a number assigned to real property by the tax assessor of the property’s jurisdiction.

Appraisal Back to Top

Valuation completed by an appraiser on a property for reasons such as purchase, refinance, asset valuation, etc

Appraisal Date Back to Top

Date upon which the official appraisal is conducted

Appraisal Independence Requirements (AIR) Back to Top

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.

 

Appraised Value Back to Top

The value of the property determined by the appraiser

Appraiser Back to Top

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.

Arms-Length Transaction Back to Top

Aka arm’s length sale. A transaction in which both buyer and seller act willingly, independently and in their own self-interest.

As-Is Back to Top

The value of the property as it is, with no repairs made

Assessment Back to Top

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.

Assessor Parcel Number (APN) Back to Top

A unique number given to a parcel by the assessor. This number is helpful in identifying the property in rural locations with little data.

Audit Back to Top

An examination and verification of a report

Auditor Back to Top

A person qualified to audit

AVM Back to Top

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.

B
Broker Price Opinion (BPO) Back to Top

Anticipated sale price determined by an agent or broker

C
Capitalization Rate Back to Top

the rate of return on a real estate investment property based on the income that the property is expected to generate.

CBSA Back to Top

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.

CD Back to Top

Contract Date

Certified Appraiser Back to Top

Allow appraisal of one-to-four residential units without regard to value or complexity.

Clients Back to Top

Banks and lenders who contract Pro Teck to complete an order

Close, Closing Back to Top

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.

CMA Back to Top

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

CMA alt sales Back to Top

Additional sales provided in the CMA

CMA full details sheet Back to Top

MLS sheets for the CMA alternate sales

CMA one liner Back to Top

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].

COE Back to Top

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.”

Commentary Back to Top

Additional information required to justify methods used in valuation

Comparable Back to Top

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.

Comparable Sales (Comps) Back to Top

Properties similar to the subject that have recently sold. They are used to determine the value of the subject property.

Concessions Back to Top

A benefit or discount to help close a deal. Concessions are usually included in the closing costs of the deal.

Conclusion Back to Top

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.

Condition Report Back to Top

a disclosure of information known to the seller about the condition of the property for sale.

Condominium Back to Top

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.

Conventional Loan Back to Top

A mortgage loan made with real estate as security, that is neither insured by the FHA nor guaranteed by the VA.

Cooperative (co-op) Back to Top

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.

Cost Approach Back to Top

The process of providing an opinion of value of a property by adding the appraiser’s estimate of the reproduction or replacement cost of property improvements, less depreciation, to the estimated land value.

D
Date of Signature Back to Top

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).

Deed Back to Top

A written document that conveys title to or an interest in real estate.

Desktop Appraisal Back to Top

a property valuation that is completed by an appraiser remotely, using tax records and public information listed on the multiple listing service (MLS).

Dissimilar Back to Top

Not similar; different.

Distressed Sale Back to Top

Generally refers to foreclosures and short sales, selling at discounts to facilitate a quick sale

Dodd Frank Rules Back to Top

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.

DOM Back to Top

Days on Market. The number of days a property was offered for sale and exposed to the open market, typically via the MLS.

E
E&O Back to Top

The E & O is documentation of insurance against errors and omissions held by the appraiser.

Effective Date Back to Top

The date upon which an appraiser’s analyses, opinions, and conclusions go into effect

Exterior Appraisal Back to Top

an appraisal of one-unit properties based solely on the exterior features of the home. This is sometimes known as a drive-by appraisal

External Influence Back to Top

See external obsolescence

External Obsolescence Back to Top

Anything in and around the surrounding neighborhood, and/or the vicinity of the property that will influence the price of the property, positively or negatively. For example: airport flight path, rail road tracks

F
Fair Market Price Back to Top

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.

Fair Market Value Back to Top

The most probable price real estate should bring in a sale occurring under normal market conditions. C.f. fair market price.

Fee Simple Back to Top

The greatest possible estate or right of ownership of real property, continuing without time limitation. c.f. leasehold

FHA Back to Top

Federal Housing Administration. Insures loans made by approved lenders.

FHA Appraisal Back to Top

an appraisal conducted to confirm the property qualifies for an FHA loan.

Field Review Appraisal Back to Top

when a second appraiser conducts an additional property appraisal to provide a secondary analysis.

Flag Lot Back to Top

a lot shaped like a flag on a pole — a long, narrow section of road access that flows into a standard rectangular lot.

Flip Back to Top

Purchase of a property with the intent to sell it for a profit.

FLP Back to Top

Final List Price c.f. LP, SP

FMP Back to Top

See fair market price

FMV Back to Top

See fair market value

Form Back to Top

Standardized appraisal document that allows users to work seamlessly across formalized appraisal documents regardless of who prepared them

FSBO Back to Top

For Sale By Owner. The process of selling real estate without the representation of a real estate broker or real estate agent.

Functional Obsolescence Back to Top

Anything in and around the property that will influence the price of the property, positively or negatively. For example: insufficient bath count relevant to bedroom count, poorly located bedrooms

G
GBA Back to Top

Gross Building Area. All enclosed floor areas, as measured along a building’s outside perimeter.

Geo-Competent Back to Top

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).

GLA Back to Top

Gross living area is the total finished, habitable, above-grade space, measured along the building’s outside perimeter.

GRM Back to Top

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.

GSE Back to Top

Government-Sponsored Enterprises. For example Fannie Mae and Freddie Mac

H
Highest and Best Use Back to Top

The legally and physically possible use of land that is likely to produce the highest land (or property) value.

HOA Back to Top

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.

Home Appraisal Back to Top

a valuation of real estate property, in this case, a one-to-four-unit dwelling.

HUD Back to Top

Department of Housing and Urban Development is a Federal agency responsible for national policy and programs that address America’s housing needs, improve and develop the Nation’s communities and enforce fair housing laws.

I
Improvement Back to Top

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.

Inadequate Back to Top

Not sufficient or unsuitable

Income Approach Back to Top

An appraisal technique that uses a property’s earning capability as calculated by the capitalization of property income to determine the overall value

Income capitalization approach Back to Top

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.

Income Property Back to Top

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.”

Income-to-Rent Ratio Back to Top

the monthly or annual gross income a tenant must earn to be able to afford rent each month.

Inspection Date Back to Top

The actual date the subject property is inspected (not to be confused with the effective date of the appraisal).

J
Junior Lien Back to Top

a loan you take out using your house as collateral while you still have another loan secured by your house. This is sometimes known as a second mortgage.

K
Key Lot Back to Top

An interior lot location behind and adjacent to a corner lot that is not separated from the corner lot by a lane or other divider.

L
Landlocked Back to Top

A parcel of land that has no legal right of way or access to a road

Leased Fee Back to Top

The lessor’s interest and rights in the real estate being leased.

Leasehold Back to Top

The lessee’s right to possess and use real estate during the term of a lease.

Legal Description Back to Top

A legally binding description that enables any real estate to be located and properly identified

Letter of Engagement (LOE) Back to Top

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.

Licensed Appraiser Back to Top

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

Listings Back to Top

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.

LP Back to Top

List Price. c.f. FLP, SP

M
Manufactured Home Back to Top

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.

Mello-Roos Back to Top

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.

Mile Back to Top

a measurement of distance, 1-mile = 5,280 feet.

MLS Back to Top

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.

MLS Search Criteria Back to Top

Where the Data Provider has provided the search parameters

Multi-Family Residence Back to Top

Multiple separate housing units (residential) are contained within one building or several buildings (attached or detached) within one complex.

N
Neighborhood Back to Top

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.

Neighborhood Boundary Back to Top

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.

Non-Arms Length Transaction Back to Top

Aka non-arms length sale. See arms length transaction.

Non-Conforming Use Back to Top

A once lawful property use that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.

O
Occupancy Back to Top

Possession and use of property as owner or tenant.

OLD Back to Top

Original List Date

OLP Back to Top

Original List Price

OMV Back to Top

Opinion of Market Value. The appraiser’s opinion of the most probable price which a property should bring in a competitive and open market.

Orders or Cases Back to Top

Appraisals or Broker Price Opinions (BPO)

Original Appraisal (OA) Back to Top

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.

Original Appraisal (OA) Sales Back to Top

Comparables utilized in the original appraisal report.

Over-Improvement Back to Top

An improvement that is more than warranted by the property’s highest and best use and thus not likely to contribute its cost to the total market value of the property. c.f. under-improvement

P
Partners Back to Top

The appraisers and agents/brokers that we contract to complete orders for us

PC/POS Back to Top

Purchase Contract (more commonly Purchase and Sales)

Physical Depreciation Back to Top

“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.”

PIN Back to Top

Property Identification Number, see APN.

Planned Urban Development (PUD) Back to Top

A subdivision consisting of individually owned residential and/or commercial parcels or lots as well as areas owned in common.

Point of Contact (POC) Back to Top

The POC is the person that must be contacted by the partner to schedule an interior inspection

Purchase and Sales Contract (P&S) Back to Top

The document signed after a buyer and seller mutually agree on the price and terms of a real estate transaction

Q
Qualitative Risk Analysis Back to Top

the process of assessing the probability and impact of risks to a project.

R
Real Estate Agent Back to Top

A person with a real estate license. Not to be confused with a Real Estate Broker.

Real Estate Broker Back to Top

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.

Real Estate Owned (REO) Back to Top

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.[1] 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).

Reconciliation Back to Top

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.

Reconciliation Appraisal Back to Top

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

Remaining Economic Life Back to Top

The number of years of useful life left to a building from the date of appraisal.

Replacement Cost Back to Top

The current construction cost of a building having exactly the same utility as the subject property.

Report Back to Top

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

Report Date Back to Top

Date when the appraisal report is trasmitted to the client

Reproduction Cost Back to Top

The current construction cost of an exact duplicate of the subject building.

RESPA Back to Top

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

Review Value Back to Top

Opinion of value based on the subject’s DNA, externalities & analysis/review of the CMA alt sales

S
Sales Approach Back to Top

A property valuation technique that compares sales of similar properties to the property being appraised

Sales Comparison Approach Back to Top

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.

Sales Price or Sold Price (SP) Back to Top

The actual price that a buyer pays for a property. c.f. LP, FLP

Service Level Agreement (SLA) Back to Top

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.

Short Pay Off (SPO) Back to Top

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.

Short Sale Back to Top

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.

Signature Date Back to Top

The date the report is signed

Similar Back to Top

Having a likeness or resemblance, especially in a general way: two similar houses

Single Family Residence (SFR) Back to Top

A dwelling designed for occupancy by one family

SME Back to Top

Subject Matter Expert

Sold Date (SD) Back to Top

The date a property sold, close of escrow.

SSP Back to Top

Suggested Sale Price

Subdivision Back to Top

A group of houses created by the same builder or in the same general area

Subject Property Back to Top

The property being valued by the appraiser or agent/broker

Subject-To Back to Top

The value of the property if repairs are made

Summary Back to Top

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

Survey Back to Top

The process of measuring land to determine its size, location and physical description or a map showing the results of a survey.

T
Turn Time Back to Top

The time between receiving the order and submitting the order agreed upon by partner at time of assignment

U
UCDP Back to Top

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.

Under Improvement Back to Top

An improvement that is less than a property’s highest and best use. c.f. over-improvement

Uniform Appraisal Dataset (UAD) Back to Top

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 (URAR) Back to Top

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 (USPAP) Back to Top

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.

URAR Appraisal Back to Top

the uniform residential appraisal report (URAR) allows for standard reporting and analysis of single-family dwellings, applies to a one-unit property or one-unit property with an accessory unit.

V
VA Mortgage Back to Top

A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs to limit possible loss by the lender.

Z
Zoning Back to Top

Municipal or county regulation of land use within designated districts or zones.

Top Questions to Ask When Hiring an AMC
Everything you need to evaluate an AMC summed up in seven simple questions. This 10-page guide can help you understand why these seven questions and answers are crucial to your evaluation/selection process.
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