ABSORPTION RATE
Back to top
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
Back to top
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 Back to top
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 Back to top
The natural growth of a piece of land resulting
from forces of nature
ACRE Back to top
43,560 square feet. A measurement of area.
ACTUAL AGE Back to top
The amount of time that has passed since a
building or other structure was built. See also:
EFFECTIVE AGE
AD VALOREM TAX Back to top
Taxes assessed based on the value of the land
and improvements
ADDENDUM Back to top
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.
ADJUSTABLE-RATE MORTGAGE (ARM)
Back to top
A type of mortgage where the interest rate
varies based on a particular index, normally the
prime lending rate.
ADJUSTED BASIS Back to top
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 Back to top
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 Back to top
The additional value a property enjoys based on
subjective criteria such as look or appeal.
AFFIRMATION Back to top
A declaration that a certain set of facts are
truthful.
AFFORDABILITY ANALYSIS Back to
top
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.
AGENT Back to top
A person who has been appointed to act on behalf
of another for a particular transaction.
AMENITY Back to top
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.
AMERICAN SOCIETY OF APPRAISERS
Back to top
An organization of appraisal professionals and
others interested in the appraisal profession.
AMORTIZATION Back to top
The repayment of a loan through regular periodic
payment.
AMORTIZATION SCHEDULE Back to top
The breakdown of individual payments throughout
the life of an amortized loan, showing both
principal contribution and debt service
(interest) fees.
AMORTIZATION TERM Back to top
The length of time over which an amortized loan
is repaid. Mortgages are commonly amortized over
15 or 30 years.
ANNUAL PERCENTAGE RATE (APR) Back
to top
The rate of annual interest charged on a loan.
ANNUITY Back to top
A sum of money paid at regular intervals, often
annually.
APPRAISAL Back to top
A ''defensible'' and carefully documented
opinion of value. Most commonly derived using
recent sales of comparable properties by a
licensed, professional appraiser.
APPRAISAL FOUNDATION Back to top
A not-for-profit educational organization
established by the appraisal profession in the
United States in 1987. It is dedicated to the
advancement of professional valuation and
responsible for establishing, improving, and
promoting the Uniform Standards of Professional
Appraisal Practice (USPAP).
APPRAISAL INSTITUTE Back to top
A world-wide organization dedicated to real
estate appraisal education, publication and
advocacy.
APPRAISAL PRINCIPLES Back to top
The basic building blocks of the property
valuation process, including property
inspection, market analysis and basic economics.
APPRAISAL REPORT Back to top
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.
APPRAISAL STANDARDS BOARD (ASB)
Back to top
An independent board of the APPRAISAL
FOUNDATION, which writes, amends, and interprets
USPAP. The ASB is composed of up to seven
appraisers appointed by the Foundation's Board
of Trustees. The ASB holds public meetings
throughout the year to interpret and amend
USPAP.
APPRAISED VALUE Back to top
The estimated fair market value of a property as
developed by a licensed, certified appraiser
following accepted appraisal principals.
APPRAISER Back to top
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.
APPRECIATION Back to top
The natural rise in property value due to market
forces.
ARMS LENGTH TRANSACTION Back to
top
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 Back to top
The value of a property according to
jurisdictional tax assessment.
ASSESSMENT Back to top
The function of assigning a value to a property
for the purpose of levying taxes.
ASSESSMENT RATIO Back to top
The comparative relationship of a property's
assessed value to its market value.
ASSESSOR Back to top
The jurisdictional official who performs the
assessment and assigns the value of a property.
ASSET Back to top
Any item of value which a person owns.
ATTACHED HOUSING Back to top
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 Back to top
A physical receipt indicating the sale of
property.
BLIGHTED AREA Back to top
Any region of a city or town that has fallen
into disrepair or otherwise has become
undesirable.
BONA FIDE Back to top
Made or carried out in good faith; sincere.
BRIDGE FINANCING Back to top
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.
BROKER Back to top
An individual who facilitates the purchase of
property by bringing together a buyer and a
seller.
BUFFER ZONE Back to top
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 Back to top
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 Back to
top
The statutory distance between buildings and the
property line, imposed by municipalities, home
associations, or other agreements.
BUILT-INS Back to top
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 Back to top
A one-story, home-style dating from the early
twentieth century. Often characterized by a
low-pitched roof.
CAPE COD COLONIAL Back to top
A single-story house style made popular in New
England. Often characterized by a steep roof
with gables.
CAPITAL Back to top
Accumulated goods and money which is most often
used to generate additional income.
CAPITAL EXPENDITURE Back to top
An outlay of funds designed to improve the
income-producing capabilities of an asset or to
extend its economic life.
CAVEAT EMPTOR Back to top
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 Back to
top
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)
Back to top
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 Back to top
A document designating the legal owner of a
parcel of real estate. Usually provided by a
title or abstract company.
CERTIFIED GENERAL APPRAISER Back
to top
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
Back to top
A sub-classification of appraiser who is only
licensed to appraise residential property,
usually up to four units.
CHAIN OF TITLE Back to top
The complete history of ownership of a piece of
property.
CHATTEL Back to top
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 Back to top
Ownership of property that is not encumbered by
any counter-claim or lien.
CLOSING Back to top
A torturous process designed to induce cramping
in a home buyer's hands by requiring signature
on countless pieces of documentation that nobody
has ever read. Or, the process whereby the sale
of a property is consummated with the buyer
completing all applicable documentation,
including signing the mortgage obligation and
paying all appropriate costs associated with the
sale (CLOSING COSTS).
CLOSING COSTS Back to top
All appropriate costs generated by the sale of
property which the parties must pay to complete
the transaction. Costs may include appraisal
fees, origination fees, title insurance, taxes
and any points negotiated in the deal.
COLLATERAL Back to top
An asset which is placed at risk to secure the
repayment of a loan.
CO-MAKER Back to top
A second party who signs a loan, along with the
borrower, and becomes liable for the debt should
the borrower default.
COMMISSION Back to top
A percentage of the sales price or a fixed fee
negotiated by an agent to compensate for the
effort expended to sell or purchase property.
COMMON AREA ASSESSMENTS Back to
top
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 Back to top
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 Back to top
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.
COMPARABLE Back to top
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.
COMPOUND INTEREST Back to top
Interest paid on the principal amount, as well
as any accumulated interest.
CONCESSIONS Back to top
Additional value granted by a buyer or seller to
entice another party to complete a deal.
CONDEMNATION Back to top
The official process by which a property is
deemed to be uninhabitable or unusable due to
internal damage or other external conditions.
CONDOMINIUM Back to top
A development where individual units are owned,
but common areas and amenities are shared
equally by all owners.
CONDOMINIUM CONVERSION Back to
top
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.
CONSTRUCTION LOAN Back to top
A loan made to a builder or home owner that
finances the initial construction of a property,
but is replaced by a traditional mortgage one
the property is completed.
CONTIGUOUS Back to top
Connected to or touching along an unbroken
boundary
CONTINGENCY Back to top
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.
CONVENTIONAL MORTGAGE Back to top
A traditional, real estate financing mechanism
that is not backed by any government or other
agency (FHA, VA, etc.).
CORPORATE RELOCATION Back to top
A situation where a person's employer pays all
or some of the expenses associated with moving
from one location to another, usually over a
substantial distance. Relocation expenses often
include the amounts, such as brokerage fees,
incurred in the selling and buying of the
employee's primary residence.
COVENANT Back to top
A stipulation in any mortgage that, if not met,
can be cause for the lender to foreclose.
CREDIT Back to top
A loan of money for the purchase of property,
real or personal. Credit is either secured by an
asset, such as a home, or unsecured.
CUL-DE-SAC Back to top
A dead-end street. One with only one
entrance/exit.
DATE OF APPRAISAL Back to top
The specific point in time as of which an
appraiser designates the value of a home. Often
stipulated as the date of inspection.
DEBT Back to top
An obligation to repay some amount owed. This
may or may not be monetary.
DEBT EQUITY RATIO Back to top
The ratio of the amount a mortgagor still owes
on a property to the amount of equity they have
in the home. Equity is calculated at the
fair-market value of the home, less any
outstanding mortgage debt.
DEED Back to top
A document indicating the ownership of a
property.
DEED-IN-LIEU (OF FORECLOSURE)
Back to top
A document given by a borrower to a lender,
transferring title of the property. Often used
to avoid credit-damaging foreclosure procedures.
DEED OF TRUST Back to top
A document which transfers title in a property
to a trustee, who's obligations and powers are
stipulated. Often used in mortgage transactions.
DEED OF CONVEYANCE Back to top
A document which transfers ownership of a
property from a Trustee back to a borrower who
has fulfilled the obligations of a mortgage.
DEED OF RELEASE Back to top
A document which dismisses a lien or other claim
on a property.
DEED OF SURRENDER Back to top
A document used to surrender any claim a person
has to a property.
DEFAULT Back to top
The condition in which a borrower has failed to
meet the obligations of a loan or mortgage.
DELINQUENCY Back to top
The state in which a borrow has failed to meet
payment obligations on time.
DEPOSIT Back to top
Cash given along with an offer to purchase
property, Also called EARNEST MONEY.
DEPRECIATION Back to top
The natural decline in property value due to
market forces or depletion of resources.
DETACHED SINGLE-FAMILY HOME Back
to top
A single building improvement intended to serve
as a home for one family.
DISTRESSED PROPERTY Back to top
A mortgaged property which has been foreclosed
on.
DUPLEX Back to top
A single-building improvement which is divided
and provides two units which serve as homes to
two families.
DWELLING Back to top
A house or other building which serves as a
home.
DOWN PAYMENT Back to top
An amount paid in cash for a property, with the
intent to mortgage the remaining amount due.
EARNEST MONEY DEPOSIT Back to top
A cash deposit made to a home seller to secure
an offer to buy the property. This amount is
often forfeited if the buyer decides to withdraw
his offer.
EASEMENT Back to top
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 Back to top
The decline in property value caused by external
forces, such as neighborhood blight or adverse
development.
ECONOMIC LIFE Back to top
The amount of time which any income-producing
property is able to provide benefits to its
owner.
EFFECTIVE AGE Back to top
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 Back to top
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 Back to top
A building or other improvement on one property
which invades another property or restricts its
usage.
ENCUMBRANCE Back to top
A claim against a property. Examples are
mortgages, liens and easements
EQUITY Back to top
The difference between the fair market value of
a property and that amount an owner owes on any
mortgages or loans secured by the property.
EQUITY BUILDUP Back to top
The natural increase in the amount of equity an
owner has in a property, accumulated through
market appreciation and debt repayment.
ERRORS AND OMISSIONS INSURANCE
Back to top
An insurance policy taken out by appraisers to
cover their liability for any mistakes made
during the appraisal process.
ESCROW Back to top
An amount retained by a third party in a trust
to meet a future obligation. Often used in the
payment of annual taxes or insurance for real
property.
ESTATE Back to top
The total of all property and assets owned by an
individual.
FACADE Back to top
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 Back to top
The price at which two unrelated parties, under
no duress, are willing to transact business.
FANNIE MAE Back to top
A private, shareholder-owned company that works
to make sure mortgage money is available for
people to purchase homes. Created by Congress in
1938, Fannie Mae is the nation's largest source
of financing for home mortgages.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
Back to top
The U.S. Government agency created in 1933 which
maintains the stability of and public confidence
in the nation's financial system by insuring
deposits and promoting safe and sound banking
practices.
FEDERAL HOUSING ADMINISTRATION (FHA)
Back to top
A sub-agency of the U.S. Department of Housing
and Urban Development created in the 1930's to
facilitate the purchase of homes by low-income,
first-time home buyers. It currently provides
federally-subsidized mortgage insurance for
private lenders.
FEE APPRAISER Back to top
A certified, professional appraiser who
estimates the fair market value of property and
receives a set fee in exchange.
FEE SIMPLE Back to top
A complete, unencumbered ownership right in a
piece of property.
FINAL VALUE ESTIMATE Back to top
The estimated value of a piece of property
resulting from an appraisal following the USPAP
guidelines.
FIRST MORTGAGE Back to top
The primary loan or mortgage secured by a piece
of property.
FIXED-RATE MORTGAGE (FRM) Back to
top
A mortgage which has a fixed rate of interest
over the life of the loan.
FIXTURE Back to top
Any piece of personal property which becomes
permanently affixed to a piece of real property.
FLOOD INSURANCE Back to top
Supplemental insurance which covers a home owner
for any loss due to water damage from a flood.
Often required by lenders for homes located in
FEMA-designated flood zones.
FLOOR PLAN Back to top
The representation of a building which shows the
basic outline of the structure, as well as
detailed information about the positioning of
rooms, hallways, doors, stairs and other
features. Often includes detailed information
about other fixtures and amenities.
FORECLOSURE Back to top
The process whereby a lender can claim the
property used by a borrower to secure a mortgage
and sell the property to meet the obligations of
the loan.
FORFEITURE Back to top
The loss of property or money due to the failure
to meet the obligations of a mortgage or loan
secured by that property.
FRONTAGE Back to top
The segment of a property that runs along a
point of access, such as a street or water
front.
FUNCTIONAL OBSOLESCENCE Back to
top
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 Back to top
A steeply angled, triangular roof.
GAMBREL ROOF Back to top
A ''barn-like'' roof, where the upper portion of
the roof is less-steeply angled than the lower
part.
GENERAL LIEN Back to top
A broad-based claim against several properties
owned by a defaulting party.
GEORGIAN Back to top
A classic, English-style hose characterized by
simple rectangular shape and multiple stories.
GINNIE MAE Back to top
A wholly owned corporation created in 1968
within the U.S. Department of Housing and Urban
Development to serve low-to moderate-income
homebuyers.
GOVERNMENT MORTGAGE Back to top
Any mortgage insured by a government agency,
such as the FHA or VA.
GRADE Back to top
The slope of land around a building.
GRANTEE Back to top
Any person who is given ownership of a piece of
property.
GRANTOR Back to top
Any person who gives away ownership of a piece
of property.
GROSS AREA Back to top
The sum total of all floor space, including
areas such as stairways and closet space. Often
measured based on external wall lengths.
HALF-SECTION Back to top
320 acres
HEIGHT ZONING Back to top
A municipal restriction on the maximum height of
any building or other structure.
HIDDEN AMENITIES Back to top
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 Back to top
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 Back to top
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 Back to
top
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.
HOMEOWNER'S INSURANCE Back to top
A policy which covers a home owner for any loss
of property due to accident, intrusion or
hazard.
HUD-1 STATEMENT Back to top
A standardized, itemized list, published by the
U.S. Department of Housing and Urban Development
(HUD), of all anticipated CLOSING COSTS
connected with a particular property purchase.
IMPROVED LAND Back to top
Any parcel of land which has been changed from
its natural state through the creation of roads,
buildings or other structures.
IMPROVEMENTS Back to top
Any item added to vacant land with the intent of
increasing its value or usability.
IMPROVEMENT RATIO Back to top
The comparative value of a improved piece of
land to its natural, unaltered state.
INCOME APPROACH Back to top
The process of estimating the value of property
by considering the present value of a stream of
income generated by the property.
INCOME PROPERTY Back to top
A piece of property whose highest and best use
is the generation of income through rents or
other sources.
INDEPENDENT APPRAISAL Back to top
An estimation of value created by a
professional, certified appraiser with no vested
interest in the value of the property.
INSPECTION Back to top
The examination of a piece of property, its
buildings or other amenities.
INSURABLE TITLE Back to top
The title to property which has been
sufficiently reviewed by a title insurance
company, such that they are willing to insure it
as free and clear.
INTEREST RATE Back to top
A percentage of a loan or mortgage value that is
paid to the lender as compensation for loaning
funds.
INVESTMENT PROPERTY Back to top
Any piece of property that is expected to
generate a financial return. This may come as
the result of periodic rents or through
appreciation of the property value over time.
JOINT TENANCY Back to top
A situation where two or more parties own a
piece of property together. Each of the owners
has an equal share, and may not dispose of or
alter that share without the consent of the
other owners.
LATENT DEFECTS Back to top
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.
LEASEHOLD ESTATE Back to top
A type of property ''ownership'' where the buyer
actually has a long-term lease on the property.
LEGAL DESCRIPTION Back to top
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.
LENDER Back to top
The person or entity who loans funds to a buyer.
In return, the lender will receive periodic
payments, including principal and interest
amounts.
LIEN Back to top
Any claim against a piece of property resulting
from a debt or other obligation.
LIKE-KIND PROPERTY Back to top
Any property which is substantially similar to
another property.
LIQUID ASSET Back to top
Any asset which can be quickly converted into
cash at little or no cost, or cash itself
LOAN-TO-VALUE RATIO (LTV) Back to
top
The comparison of the amount owed on a mortgaged
property to its fair market value.
MANUFACTURED HOUSING Back to top
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 Back to top
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.
MASTER ASSOCIATION Back to top
An umbrella organization that is made up of
multiple, smaller home owner's associations.
Often found in very large developments or
condominium projects.
METES AND BOUNDS Back to top
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 Back to top
The accumulated land in and around a city or
other municipality which falls under the
political and economic influence of that entity.
MINERAL RIGHTS Back to top
The legal right to exploit and enjoy the
benefits of any minerals located below the
surface of a parcel of land.
MISREPRESENTATION Back to top
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.
MORTGAGE Back to top
A financial arrangement wherein an individual
borrows money to purchase real property and
secures the loan with the property as
collateral.
MORTGAGE BANKER Back to top
A financial institution that provides primary
and secondary mortgages to home buyers.
MORTGAGE BROKER Back to top
A person or organization that serves as a
middleman to facilitate the mortgage process.
Brokers often represent multiple mortgage
bankers and offer the most appropriate deal to
each buyer.
MORTGAGEE Back to top
The entity that lends money in a real estate
transaction.
MORTGAGE INSURANCE Back to top
A policy that fulfills that obligations of a
mortgage when the policy holder defaults or is
no longer able to make payments.
MORTGAGE INSURANCE PREMIUM (MIP)
Back to top
An fee that is often included in mortgage
payments that pays for mortgage insurance
coverage.
MORTGAGE LIFE INSURANCE Back to
top
A policy that fulfills the obligations of a
mortgage when the policy holder dies.
MORTGAGOR Back to top
The entity that borrows money in a real estate
transaction.
MULTI-FAMILY PROPERTIES Back to
top
Any collection of buildings that are designed
and built to support the habitation of more than
four families.
NATIONAL SOCIETY OF REAL ESTATE APPRAISERS
Back to top
An organization founded in 1956 which promotes
standards of professionalism in its members.
NATURAL VACANCY RATE Back to top
The percentage of vacant properties in a given
area that is the result of natural turnover and
market forces.
NEIGHBORHOOD LIFE-CYCLE Back to
top
The evolution of neighborhood use and
demographics over time. Economic fluctuations,
municipal zoning changes and population shifts
can effect the life cycle.
NEIGHBORHOOD Back to top
A subsection of a municipality that has been
designated by a developer, economic forces or
physical formations.
NET LEASABLE AREA Back to top
The space in a development, outside of the
common areas, that can be rented to tenants.
NEW ENGLAND COLONIAL Back to top
An architectural style dating from early
American history typified by a two-story
building with clapboard siding.
NON-CONFORMING USE Back to top
The use of land for purposes contrary to the
applicable municipal zoning specifications.
Often occurs when zoning changes after a
property is in use.
NONLIQUID ASSET Back to top
Any asset which can not be quickly converted
into cash at little or no cost.
OBSOLESCENCE Back to top
The process of an assets value diminishing due
to the development of more desirable
alternatives or because of the degradation of
its capabilities.
OCCUPANCY Back to top
A physical presence within and control of a
property.
OCCUPANCY RATE Back to top
The percentage of properties in a given area
that are occupied.
OFF-SITE IMPROVEMENTS Back to top
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 Back to top
Designated parking spaces associated with a
particular building or other structure which are
not located on public streets.
ON-SITE IMPROVEMENTS Back to top
Buildings, structures or other amenities that
are erected on a piece of property and
contribute to its value.
OPEN SPACE Back to top
Any land which has not had any significant
buildings or structures erected on it. Most
often used to describe desirable neighborhood
features like parks.
ORIGINAL EQUITY Back to top
The amount of cash a home buyer initially
invests in the home.
OWNER OCCUPIED Back to top
The state of property wherein the owner occupies
at least some portion of the property.
PARTIAL INTEREST Back to top
A shared ownership in a piece of property. May
be divided among two or more parties.
PERSONAL PROPERTY Back to top
Owned items which are not permanently affixed to
the land.
PERSONAL RESIDENCE Back to top
The primary domicile of a person or family.
PLANNED UNIT DEVELOPMENT (PUD)
Back to top
A coordinated, real estate development where
common areas are shared and maintained by an
owner's association or other entity.
PLAT Back to top
A plan or chart of a piece of land which lays
out existing or planned streets, lots or other
improvements.
POINT Back to top
A percentage of a mortgage amount (one point = 1
percent).
PREFABRICATED Back to top
Any building or portion thereof which is
manufactured and assembled off site, then
erected on a property.
PRIME RATE Back to top
The interest rate that banks and other lending
institutions charge other banks or preferred
customers.
PRINCIPAL Back to top
The amount owed on a mortgage which does not
include interest or other fees.
PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI)
Back to top
The most common constituents of a monthly
mortgage payment.
PRIVATE MORTGAGE INSURANCE (PMI)
Back to top
A form of mortgage insurance provided by
private, non-government entities. Normally
required when the LOAN TO VALUE RATIO is less
that 20%.
PROPERTY Back to top
Any item which is owned or possessed.
QUADRUPLE Back to top
Any building designed to accommodate four
families.
QUITCLAIM DEED Back to top
A legal document which transfers any ownership
an individual has in a piece of property. Often
used when the amount of ownership is not known
or is unclear.
RANCH HOUSE Back to top
An architectural style typified by a
single-story, low-roof construction. Popular in
the western U.S.
RAW LAND Back to top
Any land which has not been developed.
REAL ESTATE Back to top
A piece of land and any improvements or fixtures
located on that land.
REAL ESTATE APPRAISAL Back to top
A licensed professional who facilitates the
buying and selling of real estate.
REALTOR® Back to top
A real estate agent or broker who is a member of
the National Association of Realtors.
RECORDER Back to top
A local government employee whose role it is to
keep records of all real estate transactions
within the jurisdiction.
RECORDING Back to top
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.
RELOCATION SERVICE Back to top
Any company or agency that assists corporate
employees in relocating from one place to
another. Services may include hiring and
coordinating real estate agents, moving
companies, utilizes and the like.
REMODEL Back to top
An activity designed to improve the value or
desirability of a property through rebuilding,
refurbishing, redecorating or adding on to it.
RESIDENTIAL PROPERTY Back to top
A piece of property whose highest and best use
is the maintenance of a residence.
RURAL Back to top
An area outside of an established urban area or
metropolitan district.
SALE PRICE Back to top
The actual price a property sells for, exclusive
of any special financing concessions.
SALES COMPARISON APPROACH Back to
top
An appraisal practice which estimates the value
of a property by comparing it to comparable
properties which have sold recently.
SCARCITY Back to top
An economic principal that dictates the price of
a good or service through the interaction of
supply and demand. When an item is scarce, its
price tends to rise, given a constant demand.
Real Estate is a classic example of scarcity.
SECOND MORTGAGE Back to top
A loan secured by the equity in a home, when a
primary mortgage already exists.
SECONDARY MORTGAGE MARKET Back to
top
An economic marketplace where mortgage bankers
buy and sell existing mortgages.
SEMIDETACHED HOUSING Back to top
Two residences which share a common wall.
SERVICER Back to top
A financial institution which collects mortgage
payments from borrowers and applies the
appropriate portions to principal, interest and
any escrow accounts.
SINGLE-FAMILY PROPERTY Back to
top
A property designed and built to support the
habitation of one family.
SUBDIVISION Back to top
A residential development that is created from a
piece of land which has been subdivided into
individual lots.
SUBJECT PROPERTY Back to top
A term which indicates a property which is being
appraised.
SURVEY Back to top
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.
SWEAT EQUITY Back to top
The method whereby a home owner develops equity
in a property, either during the purchase or
throughout its life, by personally constructing
improvements rather than paying to have them
built.
TAX-EXEMPT PROPERTY Back to top
Any property which is not taxed.
TENANCY Back to top
The right to occupy a building or unit.
TITLE Back to top
A specific document which serves as proof of
ownership.
TITLE COMPANY Back to top
An organization which researches and certifies
ownership of real estate before it is bought or
sold. Title companies also act at the
facilitator ensures all parties are paid during
the real estate transaction.
TITLE INSURANCE Back to top
A policy which insures a property owner should a
prior claim arise against the property after the
purchase has been completed. This also covers a
lender should a question of ownership arise.
TITLE SEARCH Back to top
The process whereby the TITLE COMPANY researches
a properties title history and ensures that no
outstanding claims exist.
TUDOR Back to top
A style of architecture typified by exposed
stone, wood and brick construction. Similar in
style to English manor homes.
UNDER IMPROVED LAND Back to top
A piece of land which has been improved, but not
to the full extent of its potential.
UNENCUMBERED PROPERTY Back to top
Any property which has no outstanding claims or
liens against it.
UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL
PRACTICE (USPAP) Back to top
Developed in 1986 by the Ad Hoc Committee on
Uniform Standards and copyrighted in 1987 by The
Appraisal Foundation, USPAP forms the guidelines
followed by every licensed and certified real
estate appraiser in the United States. The
purpose of these Standards is to establish
requirements for professional appraisal
practice, which includes appraisal, appraisal
review, and appraisal consulting. The intent of
these Standards is to promote and maintain a
high level of public trust in professional
appraisal practice.
USEFUL LIFE Back to top
The span of time over which a property can be
used or can provide benefits to its owner.
VACANCY RATE Back to top
The current percentage of vacant properties in a
given area, regardless of why they are vacant.
VARIANCE Back to top
An exception to municipal zoning regulations
granted for a specific time period to allow for
non-conforming use of the land.
VETERANS AFFAIRS, DEPARTMENT OF (VA)
Back to top
The successor to the Veteran's Administration,
this government agency is responsible for
ensuring the rights and welfare of our nation's
veterans and their dependents. Among other
duties, the VA insures home loans made to
veterans.
WALK-THROUGH INSPECTION Back to
top
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.
WARRANTY Back to top
An affidavit given to stipulate the condition of
a property. The person giving the warranty
assumes liability if the condition turns out to
be untrue.
WEAR AND TEAR Back to top
A term used to indicate the normal damage
inflicted on a property through every-day use.
ZERO LOT LINE Back to top
A municipal zoning category wherein a building
or other fixture may abut the property line.
ZONE Back to top
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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