Glossary of Appraisal Terms

Whether you are buying a home, investing in the stock market or simply baking a cake, understanding the terminology used within that sphere is paramount to your success. To help you better understand the terms that will be used by an appraiser or that are contained within an appraisal you have had done we have compiled a lexicon of frequently used terms to help you educate yourself and navigate the process with confidence.

Adjustment - An adjustment is when an appraiser, after examining a specific property, will then make a comparative analysis to properties that are similar, but not specifically the same. Adjustments will then be made relative to the comparative size of the structure, its age and condition, the size of the plot and its location and any amenities that may or may not present (swimming pool, garage, tennis court, etc).

Chattel - Chattel is an item of tangible movable or immovable personal property that is not a part of an appraisal but is present on the property.

Comparable - Properties capable of, or suitable for, comparison within the same area, which have sold recently and are used as a basis to determine the fair market value of the property in question. Licensed appraisers are bound by the rules and regulations of The Uniform Standards of Professional Appraisal Practice (USPAP).

Drive-by - An appraisal that is conducted to determine if the property actually exists and is based on the absence of visible or obvious defects. Fannie Mae refers to this type of appraisal as a 2005.

Fair Market Value - What the current local property market considers to be a fair value assessment of a given property within it specific market place and what reasonable and willing buyers and sellers would expect.

GLA - "Gross Living Area," is the actual square foot space of a structure and is often times based simply upon the exterior dimensions of the building. The GLA, however, does not include sub-grade areas.

Latent Defect - This term applies to a defect that is not readily visible or noticeable and has not yet come forth but may emerge and develop. Poor plumbing, a rotting water tank, lack of proper insulation or drainage are all latent defects to watch out for.

Multiple Listing Service - The MLS is a listing of all properties on the local market in a given area and their prices, as well as a record of all recent closed sales and their sales prices. Although this is a service that is maintained and benefits realtors, appraisers will also avail themselves of this listing to help them to determine the CMA and to make adjustments.

Obsolescence - When newer technologies or features become a standard in the market place, or the existing ones fall into disrepair, they become obsolete and will effectively lower the value of the property. Out-dated heating and air-con systems are a very good example of functional obsolescence. Obsolescence can also apply to the neighborhood the property is in. If a prison or landfill project has emerged within the area since the home was built or there is a new expressway running close to the property, that is noisy and noxious, these would be examples of possible obsolescence.

Useful Life - The time that a property is of use or can afford specific benefit to an owner.

URAR Or 1004 - Uniform Residential Appraisal Report, or the Fannie Mae form 1004, respectfully. These reports are based on a very detailed and specific list of criteria that is verified by a thorough on-site inspection of a property.

USPAP - Short for Uniform Standards of Professional Appraisal Practice, USPAP promotes standards and professionalism in appraisal practice, and is often enacted into state law. USPAP is part of the Appraisal Foundation, a non-governmental entity overseen by Congress to set the standards for appraisals.

Walk-Through - A thorough, and physical, on-sight appraisal of a property that is conducted within the structure to catalog and verify all criteria.

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