Appraisal Definitions
Are you familiar with these terms used by appraisers? Have you recently heard one of our appraisers employ a term, prompting you to seek its meaning? While we don't intend to sound cryptic, every profession comes with its own specialized language. Comparable to legal jargon such as "pro hac vice" or "gamma scalping" in financial realms, appraisers have their own lexicon. Below, we offer explainations for several prevalent appraiser terms:
Adjustment: When comparing properties, appraisers make adjustments to bring them in line with the subject property's features, accounting for differences in location, construction quality, living area, acreage, amenities, and more. This process showcases the invaluable expertise of an appraiser.
Chattel: Personal property on the subject property that doesn't factor into the appraisal's value opinion.
Comparable or "comp": Similar properties nearby that have recently sold, used to determine the subject property's fair market value.
Drive-by: An appraisal limited to an exterior examination of the subject property to verify its presence and check for visible defects. This type of appraisal is often referred to as a "2055" due to Fannie Mae's form for such appraisals.
Fair market value: The appraiser's opinion of the property's value, representing what a willing buyer would pay a willing seller in an arm's-length transaction.
GLA: "Gross Living Area," the total above-grade floor space, including stairways and closets, often measured using exterior wall dimensions.
Latent defects: Defects not readily apparent but affecting the property's fair market value, such as structural damage or termite infestation.
MLS: A Multiple Listing Service containing listings and sales data, frequently used by real estate agents and appraisers for comparable selection and research.
Obsolescence: The decrease in asset value due to degradation or changes in the surrounding area, rendering certain property features less desirable.
Subject: Short for the property being appraised.
Useful life: The duration during which a property can provide benefits to its owner.
URAR: "Uniform Residential Appraisal Report," Fannie Mae form 1004, commonly required by lenders for full appraisals with walk-through inspections.
USPAP: "Uniform Standards of Professional Appraisal Practice," promoting appraisal standards and professionalism, often mandated by state law and overseen by the Appraisal Foundation.
Walk-through: An inspection involving a visit to each part of the house to estimate its value.
Questions?
If you need further explanations regarding your appraisal, please don't hesitate to reach out to Conundrum Appraisals. We're here to help clarify and assist with any inquiries you may have.