Certified Residential Appraiser flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Scope of work

The type and extent of research and analysis an appraiser performs, determined by the intended use, intended user, value definition, and complexity of the assignment.

Effective date

The date to which the appraiser's opinion of value applies; it may differ from the date the report is prepared or delivered.

Market value

An opinion of 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.

Exposure time

The estimated length of time a property would have been offered on the open market before the effective date to achieve the appraised value.

General data

Market-wide information such as economic, social, governmental, and environmental trends that affects property values and informs market analysis.

Sales comparison approach

A valuation method that estimates value by comparing the subject property with similar properties that have sold, then adjusting for differences in transactional and property characteristics.

Cost approach

A valuation method that estimates value as the current cost to construct a replacement or reproduction minus accrued depreciation, plus the land or site value.

Accrued depreciation

The difference between the cost of a new improvement and its current contributory value, including physical deterioration, functional obsolescence, and external obsolescence.

Capitalization rate

A rate used to convert net operating income into an indication of value, calculated as net operating income divided by sale price or value.

Reconciliation

The process of weighing the indications of value from the approaches used and forming a final value opinion based on relevance, reliability, and data quality, not simple averaging.

USPAP

The Uniform Standards of Professional Appraisal Practice, which sets minimum ethical and performance requirements for appraisers and is published by the Appraisal Standards Board.

Competency rule

A Uniform Standards of Professional Appraisal Practice requirement that an appraiser must have the knowledge and experience to complete an assignment competently or acquire it, disclose the lack, and take steps to become competent.

Workfile retention

The Uniform Standards of Professional Appraisal Practice require retaining the workfile for at least five years after the report date or two years after final disposition of a legal proceeding, whichever is later.

Jurisdictional exception

A Uniform Standards of Professional Appraisal Practice provision allowing an appraiser to comply with conflicting law or regulation by disclosing the exception and performing only the requirements not superseded by that law.

Advocacy prohibition

The Uniform Standards of Professional Appraisal Practice prohibit an appraiser from advocating for a client's position or accepting compensation contingent on a predetermined value, direction, or outcome.

Gross living area

The finished, heated, above-grade floor area of a dwelling measured to exterior dimensions using a consistent standard, typically ANSI Z765 for single-family homes.

Acre

A unit of land area equal to 43,560 square feet; appraisers use it to express site size for larger parcels and land valuations.

Functional obsolescence

A loss in value caused by outdated design, layout, or features that are less desirable than those in competing properties, such as a poor floor plan.

Surplus land

Land that exceeds the size needed to support the highest and best use of the improved property and cannot be separately developed or sold.

Absorption rate

The pace at which available properties are sold or leased in a market over a given period, often expressed as units per month and used to estimate demand.

Highest and best use

The reasonably probable, legally permissible, physically possible, financially feasible, and maximally productive use of a property that results in the highest value.

Months of supply

The number of months needed to sell current inventory at the current absorption rate, calculated as active listings divided by monthly sales.

Excess land

Land that is larger than needed for the existing improvement and can be separately subdivided or developed, adding value beyond the improved site.

Fair Housing Act

A federal law prohibiting discrimination in housing based on race, color, religion, sex, national origin, familial status, or disability; appraisers must avoid biased valuation practices.

Redlining

The illegal practice of denying or limiting financial services, including appraisals or loans, in specific neighborhoods based on protected characteristics rather than economic risk.

Steering

Directing prospective buyers or tenants toward or away from neighborhoods based on protected characteristics, an illegal discriminatory practice in housing and real estate.

Appraiser independence

The principle that appraisers must reach value opinions free from coercion, undue influence, or conflicts of interest, with compensation not tied to a predetermined result.

Coefficient of variation

A relative measure of dispersion calculated as the standard deviation divided by the mean, useful for comparing variability across data sets with different scales.

Median

The middle value in an ordered data set; half the observations lie above it and half below, and it is less affected by extreme outliers than the mean.

Paired sales analysis

A technique that compares two otherwise similar sales differing in one characteristic to isolate and estimate the market adjustment for that characteristic.

Gross income multiplier

A factor equal to sale price divided by gross income, used in the income approach to estimate value by multiplying the subject's gross income by the multiplier.

Standard deviation

A statistical measure of the average distance of observations from the mean, indicating the dispersion or variability of a data set.