Appraiser Jargon

Have you heard an appraiser use any of these terms? Were you clueless about the meanings? 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 all professions have 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: When comparable properties have been identified, the appraiser adjusts the price of each property according to differences in living area (square footage), acreage, frontage, room counts, amenities and the like. The goal is to hypothetically make each comparable as "equal" to the subject property. This is where the professional expertise of an appraiser comes in most handy.

Appraisal Inspection: Inspection of subject property by the appraiser. A “home inspection” is done typically by a home inspector to look for material defects and major structural problems. An appraiser is not a home inspector and for that reason, is not liable for problems that are not evident.

APN: Assessor’s Parcel Number: is the number assigned by the county assessor to a parcel.

Chattel: Personal property that may be on the subject property but which does not figure into the opinion of value in the appraisal report. Because personal property is not a permanent part of the real estate, it typically receives no consideration.

Client: Client for the appraisal. We have a client /appraiser confidentiality requirement to only answer to this client. Neither the appraisal nor any result whatsoever is to be released to any other party without written permission from the client. Property owners may not receive a copy of the report because (in a typicalefi transaction) they are not the client.

Comparable or "comp”: Properties most similar to the subject property nearby which have sold recently, used as a basis to determine the market value of the subject property. The Uniform Standards of Professional Appraisal Practice (USPAP) establish guidelines for comparable selection.

Comp Check: Wikipedia's Full Definition, is edited as follows:

"A term used by mortgage professionals to request a real estate appraiser to run comparable sales in order to determine the value of a property before the appraiser is actually hired to complete the assignment.

The purpose of a comp check is to get an appraiser to estimate a value before being hired/paid for the assignment; thus, if hired, the appraiser is on the hook for the value they already reported.

The practice can be highly detrimental to the appraisal profession as it is illegal (see below). Moreover, it can cause harm to buyers and sellers of real estate alike as evidenced by the following article. [2]

Licensed real estate appraisers are bound by a set of laws called the Uniform Standards of Professional Appraisal Practice USPAP, written by the Appraisal Foundation [3]. See the Appraisal Foundation's ADVISORY OPINION 19 (AO-19) [4].

Drive-by: An appraisal that is limited to the exterior inspection of comparable sales and a confirmation that the property is actually there and has no obvious defects or damage visible from the exterior. Fannie Mae's form for this type of appraisal is its 2055, so you may hear a drive-by referred to as a "2055."

EDI: Electronic Delivery – Process in which the appraiser sends an appraisal report in a format (i.e. lighthouse, MCI.) and the client has the software to open and read that file.

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 seller would pay a willing buyer in an arm's-length transaction.

FHLMC: “Freddie Mac”-Federal Home Loan Mortgage Corporation

FNMA: “Federal National Mortgage Association. A congressionally chartered corporation which buys mortgages on the secondary market.

442 Form: Certificate of Completion: Request this form after house is finished. Use new order form and order number. Fee is $75.00 plus a possible trip fee of perhaps $75.00. (Example: Overton, NV)

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.

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.

Lender: Lender is often confused with client. But, the lender is typically the financial institution funding the loan (i.e., bank). Often, our client is also a lender, (i.e. a bank.)

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. Created by and used primary by real estate agents, many appraisers pay for access to these databases to aid in comparable selection and adjustment research.

Obsolescence: The value of assets 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.

Order: Order form sent by the client requesting an appraisal report

PDF: Portable Document Format: By Acrobat Adobe Writer: Appraisal converted to this format can be sent as attachments to e-mails for that clients can open and print an appraisal report which takes the place of hard copy.

REO: Real Estate Owned

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

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

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).

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.

Appraisers of Las Vegas Appraises Houses to High-Rises. Expert residential and commercial appraisals of all types of real estate by Nevada Licensed and Certified Residential and Certified General Commercial Appraisers in Las Vegas, Henderson, North Las Vegas, Boulder City, Clark County and all of Southern Nevada. We also provide appraisals in the Clark County communities of Summerlin, Paradise, Aliante, Seven Hills, Anthem, Green Valley, Southern Highlands, Sun City, Spanish Trails, Spanish Hills, Rhodes Ranch and all of the local condo communities.