Glossary of Appraisal Terms
Click any term below to jump to its definition. Use the “Return to Top” links to navigate back easily.
Jump to a Term (Alphabetical)
- Adjustment
- Appraisal
- As-Is Value
- Assessed Value
- AVM
- BPO
- Bulk Sale
- Bulk Value
- Client
- CMA
- Comparable Sales (Comps)
- Cost Approach
- Desktop Appraisal / Drive-by Appraisal
- Depreciation
- Effective Age
- Exposure Time
- Extraordinary Assumption
- Fee Simple Interest
- Functional Obsolescence
- Highest and Best Use
- Hybrid Appraisal
- Hypothetical Condition
- Income Approach
- Intended User
- Leasehold Interest
- Leased Fee Interest
- Market Rent
- Market Value
- Narrative Appraisal Report
- Reconciliation
- Restricted Appraisal Report
- Sales Comparison Approach
- Scope of Work
- USPAP
- URAR
Adjustment
A modification made to a comparable property to account for differences from the subject property. Methods include cost-to-cure, paired sales analysis, and cash equivalency.
Appraisal
An appraisal is any expression of value stated by an appropriately licensed/certified, and qualified appraiser. Without a professional license issued by the state of Alaska as a “Real Estate Appraiser,” the value opinion or market value determination is NOT an appraisal. Value opinions stated by real estate sales agents/brokers are NOT appraisals. Value opinions stated by tax assessors are NOT appraisals.
As-Is Value
The value of a property in its current condition, without any hypothetical repairs, renovations, or changes.
Assessed Value
The value assigned to a property by a tax assessor for the purpose of property taxation. It is often lower than market value due to assessment ratios or caps.
AVM
Automated Valuation Model. A computer-based algorithm that estimates property value using public records, recent sales, and other data without a physical inspection.
BPO
Broker Price Opinion. An estimate of property value provided by a licensed real estate broker or agent, often used by lenders in lieu of a full appraisal.
Bulk Sale
The sale of multiple properties or a large portfolio in a single transaction, often at a discount to individual market values.
Bulk Value
The estimated value of a group of properties sold together, typically lower per unit than individual retail values due to market absorption and risk factors.
Client
The party or parties who engage the appraiser to provide professional appraisal services. The client is identified in the engagement letter and appraisal report.
CMA
Comparative Market Analysis. An estimate of value prepared by a real estate agent using recent comparable sales; not an appraisal.
Comparable Sales (Comps)
Properties similar to the subject that have recently sold, used in the Sales Comparison Approach to estimate value.
Cost Approach
A valuation method that estimates value by calculating the cost to replace or reproduce the property, minus depreciation, plus land value.
Desktop Appraisal / Drive-by Appraisal
An appraisal performed without interior inspection, relying on exterior photos, public records, and MLS data.
Depreciation
Loss in value from any cause, including physical deterioration, functional obsolescence, and external obsolescence.
Effective Age
The age of a property based on its condition and utility, which may differ from chronological age due to maintenance or renovations.
Exposure Time
The estimated length of time a property would have been on the market to sell at the estimated market value.
Extraordinary Assumption
An assumption used in an appraisal that, if found to be false, could alter the appraiser’s opinions or conclusions.
Fee Simple Interest
Absolute ownership of real property, subject only to governmental powers (taxation, eminent domain, police power, escheat).
Functional Obsolescence
Loss in value due to features that are inadequate, outdated, or inefficient compared to current market standards.
Highest and Best Use
The reasonably probable and legal use of vacant land or improved property that is physically possible, appropriately supported, financially feasible, and results in the highest value.
Hybrid Appraisal
An appraisal that combines aspects of traditional and alternative methods, often involving third-party data collectors or desktop components.
Hypothetical Condition
A condition assumed to be true for the purpose of the appraisal, even though it may not be true in reality.
Income Approach
A valuation method that estimates value by converting anticipated future income into present value using capitalization or discounting techniques.
Intended User
The client and any other party the appraiser identifies as having a legitimate need for the appraisal results.
Leasehold Interest
The tenant’s right to use and occupy property under a lease agreement for a specified period.
Leased Fee Interest
The landlord’s ownership interest in a leased property, including the right to receive rental income.
Market Rent
The rental income a property would command on the open market under a new lease at the time of appraisal.
Market Value
The most probable price a property would bring in a competitive and open market under all conditions requisite to a fair sale.
Narrative Appraisal Report
A comprehensive written appraisal report that includes detailed analysis, supporting data, and conclusions.
Reconciliation
The process of analyzing and selecting from among alternative approaches or conclusions to arrive at a final value opinion.
Restricted Appraisal Report
A brief appraisal report intended for the client only, with limited discussion and no supporting data included.
Sales Comparison Approach
A valuation method that estimates value by comparing the subject property to similar recently sold properties, with adjustments for differences.
Scope of Work
The type and extent of research and analysis performed in an appraisal assignment, disclosed in the report.
USPAP
Uniform Standards of Professional Appraisal Practice. The ethical and performance standards for appraisers in the United States, promulgated by The Appraisal Foundation.
URAR
Uniform Residential Appraisal Report. A standardized form used for reporting single-family residential appraisals, also known as Fannie Mae Form 1004.