Appraiser jargon

Have you heard an appraiser use any of these terms? Did you just hear one of our appraisers use it and you came here to figure out what it meant? We don't mean to speak a foreign language, but any profession has its jargon. Here are some examples of common appraiser jargon and their meanings:

 

Adjustment.  When comparable properties have been identified, the appraiser makes adjustments to the Sales Price of each of the comparables to bring them into equivalency with the subject property, accounting for differences in location, construction quality, living area, acreage, frontage, amenities and the like.  This is where the professional expertise of an appraiser is most valuable.

 

Comparable or "comp”.  Properties like the subject property nearby which have sold recently, used as a basis to determine the fair market value of the subject property. 

 

Drive-by.  An appraisal that is limited to an exterior-only examination of the Subject to make a determination that the property is actually there and has no obvious defects or damage visible from the outside.  Fannie Mae's form for this type of appraisal is its 2055, so you may hear a drive-by referred to as a "2055."

 

Fair market value.  The appraiser's opinion of value as written in his or her appraisal report should reflect the fair market value of the property -- what a willing buyer would pay a willing seller in an arm's-length transaction. Sometimes used interchangeably with Market Value.

 

GLA.  "Gross Living Area," the sum of all above grade floor space, including stairways and closet space.  GLA is often determined using exterior wall measurements. GLA can differ based on how a property is measured, or the measurement of a room over the garage or finished attic space. Some banks will allow unpermitted areas to be included in the GLA and some will not.

Latent defects.  A defect on the property that is not readily apparent but which impact the fair market value.  Structural damage or termite infestation might be examples. During the appraisal walk through, latent defects may not be visible to the appraiser, since the walk through is a visual observation of the property and is not a home inspection.

 

MLS.  A Multiple Listing Service is a proprietary listing of all properties on the market in a given area and their listing prices, as well as a record of all recent closed sales and their sales prices. 

 

Obsolescence.  Obsolescence is the presence or absence of a feature which renders the property less desirable.  Obsolescence can include physical deterioration to the property, external influences, such as a busy road or an airport nearby, or functional issues such as lack of first floor bath, etc.

Personal Property. All property that is not considered "real property" or "real estate". Includes items that are movable without damage to itself or the real estate. Examples are hot tubs, sheds without permanent foundations, swingsets, trampolines, furniture, above ground pools, etc.

 

Subject.  Short for the property being appraised -- the "subject property."

Real Estate. Technically the term for an identified parcel of land, including improvements, but most people use this term interchangeably with the term Real Property. The improvements on a parcel of land must be permanently attached to the land (for example, a permanent foundation) in order to count as real estate. Examples are the house itself, as well as improvements permanently attached to the house, such as decks, covered porches, fireplaces, etc.

 

URAR.  Short for Uniform Residential Appraisal Report, Fannie Mae form 1004, it is the form most lenders require if they need a full appraisal (that is, with walk-through inspection). If you are obtaining an appraisal for purposes other than a mortgage finance transaction, such as pre-listing, PMI removal, estate or divorce, then the URAR will not be used. A General Appraisal report form will be used and explained to you by Tidewater Home Appraisals. 

 

USPAP.  Short for Uniform Standards of Professional Appraisal Practice, USPAP promotes standards and professionalism in appraisal practice, and is often enacted into law in a state.  It is promulgated by the Appraisal Foundation, a non-governmental entity chartered by Congress to, among other things, maintain appraisal standards.

 

Walk-through.  An inspection that includes a visit to each part of the interior of the house used in estimating value. Expect the appraiser to walk through the entire interior of your house, check the attic and crawl space if the loan is for FHA, and walk around the entire exterior of the house.