Certified General Appraiser key terms

The reasonably probable, legally permissible, physically possible, financially feasible, and maximally productive use of a property that produces the greatest value as of the effective date of the appraisal.

A temporary use of a site that is not the highest and best use but returns some income while a more productive use is being assembled, financed, or permitted.

An existing use permitted to continue because it predates a zoning or land-use restriction, even though new uses of that type would not be allowed today.

The geographic region from which demand for a property type is drawn; primary data are gathered firsthand by the appraiser, while secondary data come from published or third-party sources.

The pace at which available space or units are leased or sold in a market over a given period, usually expressed as units per month or per year, net of new supply.

The most probable rent a property would command in a competitive market, with typical lease terms and neither undue stimulus nor special concessions, as of a stated date.

The rent actually specified in an existing lease between the parties, which may be above or below market rent because of concessions, escalations, or negotiated terms.

The average rent over a lease term after subtracting concessions such as free rent, tenant improvement allowances, and moving expenses, expressed on a per-period basis.

An allowance that reduces potential gross income for space expected to sit vacant and for rent that is expected to go uncollected, based on market evidence rather than the current rent roll alone.

The total income a property could generate at full occupancy using market rent for all space, before any deductions for vacancy, collection loss, or operating expenses.

Potential gross income plus miscellaneous income, reduced by vacancy and collection loss; the income actually available to cover operating expenses and provide a return.

Effective gross income less operating expenses and reserves for replacement, but before debt service, income taxes, depreciation, and capital improvements.

The rate that converts a single year's net operating income into an indication of value, derived from comparable sales or band-of-investment analysis.

A method that divides a stabilized income figure by a market-derived rate or multiplies it by a factor to produce a value indication in a single step.

A method that discounts projected periodic cash flows and a reversion to present value using a discount rate, explicitly modeling change in income and value over time.

The lump-sum proceeds an owner expects to receive at the end of the holding period, typically from sale or refinance, discounted to present value in a yield analysis.

The rate applied to the final year's income to estimate the sale price at the end of the holding period; it usually differs from the going-in rate.

The tenant's right to use and occupy property under a lease; it has value when contract rent is below market rent for the remaining term.

The ratio of a property's sale price to its gross rent, used in the income approach to indicate value by comparing comparable sales' multipliers to the subject's income.

An approach that estimates value by analyzing prices paid for comparable properties and adjusting them for differences from the subject as of the effective date.

The characteristics analyzed in the sales comparison approach, including property rights, financing, conditions of sale, market conditions, location, and physical features.

Quantitative adjustments use dollar or percentage amounts for measurable differences; qualitative adjustments rank comparables as superior, similar, or inferior when reliable data cannot support a precise figure.

A method that estimates value as the cost of a new improvement less depreciation, plus the value of the land as if vacant, assuming a rational buyer would pay no more than replacement cost.

The current cost to construct a building with equivalent utility using modern materials and methods, as distinct from replicating the original structure exactly.

The current cost to build an exact replica of the subject improvement using the same materials, design, and methods, often used when historic character contributes to value.

The total loss in improvement value from all causes as of the effective date, measured as the difference between replacement cost new and market value of the improvements.

Loss in value from wear and tear, aging, and damage to building components; it is curable when repair cost is recovered by added value and incurable otherwise.

Loss in value because of inadequacies or superadequacies in design, layout, or building technology relative to what the market expects, whether curable or incurable.

Loss in value caused by factors outside the property itself, such as neighborhood decline, proximity to nuisances, or adverse market conditions; it is generally considered incurable.

The market-derived incentive a developer expects for taking on the risk of building; in the cost approach it is often added as a percentage of costs or as a separate line item.

The most probable price in a competitive and open market under all conditions requisite to a fair sale, with buyer and seller acting prudently and knowledgeably, price unaffected by undue stimulus.

The value a specific property has for a specific use or owner, which may differ from market value because it reflects the owner's particular operations or needs.

The price expected when a property must be sold within a limited, often short, marketing period, typically lower than market value because of the forced timing.

The date as of which the appraiser's opinion of value applies, which may differ from the date the report is prepared or the property is inspected.

An assumption, directly stated in the report, that if found false could change the appraiser's opinion of value; it must be clearly disclosed and supported by the assignment.

A condition contrary to what exists as of the effective date, such as assuming a vacant site or completed construction, which must be clearly disclosed in the report.

The amount and type of research and analysis needed to develop a credible assignment result, determined by the problem, intended use, and the appraiser's professional judgment.

The use or uses of an appraiser's reported value opinion identified by the appraiser before the assignment, such as mortgage lending, litigation, or financial reporting.

The client and any other party specifically identified by the appraiser as users of the report; the appraiser must identify them before accepting the assignment.

A USPAP provision allowing departure from a Standards Rule when it conflicts with applicable law or regulation; the appraiser must disclose the exception and cite the law.

Acting as an advocate for a client's position, which is prohibited in an appraisal assignment because it compromises the impartiality and objectivity required of the appraiser.

The requirement that an appraiser's judgment be unaffected by personal, financial, or client interests, and that the appraiser not accept assignments with contingent fees.

A fee that is wholly or partly dependent on the amount of value reported, the outcome of the assignment, or a subsequent event, which is prohibited in most appraisal work.

A signed statement in the report affirming that the appraiser complied with USPAP, has no undisclosed interest in the property, and that the reported analyses and conclusions are limited only by stated assumptions.

A USPAP reporting requirement to disclose the prior sale or transfer of the subject property within a specified period before the effective date, including price and any known relationship between parties.

The final step in the valuation process where the appraiser weighs the indications from each approach and forms a single value opinion, explaining why certain approaches were given more weight.

The estimated length of time a property would have been on the market before the effective date to achieve the appraised value, given the stated marketing conditions.

A prospective estimate of how long it would take to sell a property at a given price after the effective date, reflecting current and expected market conditions.