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rightAppraiser 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. What res ipsa loquitur is to a lawyer and triple witching is to day traders, external obsolescence is to appraisers. Here are some examples of common appraiser jargon and their meanings:

 

Adjustment. After comparable properties have been identified, the appraiser may make adjustments to the sales price of the comparables to adjust them into equivalency with the subject property. Adjustments may account for differences in living area, lot size, location, construction quality, view, pool and the like.  This is where the professional expertise and experience of the appraiser is most valuable.

 

Chattel. Personal property (refrigerator, washer, dryer, etc.) that is not included into the estimated real property value in the appraisal report.

 

Comparables or "comps". Properties similar to the subject property within the market area which have sold recently, utilized as a basis to estimate the fair market value of the subject property. 

 

Drive-by. An appraisal that is limited to an exterior examination of the subject property to  determine that the subject property exists and has no obvious defects or damage visible from the outside.  

 

Fair market value. The appraiser's opinion of value as written in the appraisal report  reflects the fair market value of the subject property (what a willing buyer will pay to a willing seller in an arm's-length transaction).

 

GLA. "Gross Living Area" is the sum of all living area including stairways and closet space.  GLA is determined using exterior wall measurements and included in the cost approach as well.

 

MLS.  A Multiple Listing Service is a proprietary listing of all properties on the market in a given market area, as well as a record of recent closed sales and their sales prices. MLS is primarily utilized by real estate agents (Realtor's) however appraisers subscribe to these databases to assist in comparable selection and adjustment research.

 

Obsolescence.  The value of property diminishes as their capabilities degrade or more desirable alternatives are developed.  Functional obsolescence is the presence or absence of a feature which renders the property undesirable. Obsolescence can also occur because the surrounding area changes, making a feature of the property less desirable.

 

OREA. "Office of Real Estate Appraisers". The California state office which governs real estate appraisers.  

 

Useful life. The duration of time during which a property can provide benefits to its owner.

 

URAR. "Uniform Residential Appraisal Report" (Fannie Mae form 1004). It is the form most lenders require if they need a full appraisal (interior and exterior inspection).

 

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