Certified Residential Appraiser key terms

The amount and type of research and analysis an appraiser decides is necessary to produce credible assignment results, given the intended use, intended user, and other assignment conditions.

How the client and any other identified intended users will use the appraisal report, such as for mortgage lending, estate settlement, litigation, or tax appeal. It shapes the scope of work and reporting.

The client and any other party the appraiser identifies at the outset as relying on the report. Naming them helps ensure the report addresses their needs and limits unintended reliance.

A stated assumption about a fact that, if found false, could change the appraiser's conclusions. The appraiser must disclose it clearly and use it only when the uncertainty is reasonable.

A condition that is contrary to what exists at the effective date but is assumed for analysis, such as valuing a proposed building as if completed. It must be disclosed in the report.

The estimated period a property would have been offered on the open market before the effective date to achieve the stated value, given current market conditions and reasonable marketing effort.

A method that estimates value by comparing the subject property with recently sold similar properties, then adjusting the sale prices for differences in location, size, condition, and other features.

The characteristics used to judge whether a sale is comparable and to adjust its price, including property rights, financing, market conditions, location, physical features, and use. Adjustments are applied in a consistent order.

The final step in the valuation process where the appraiser weighs the indications of value from each approach and resolves them into a single, supportable opinion of value.

A single-year method that converts an estimate of one year's net operating income into a value indication by dividing it by a capitalization rate derived from the market.

A rough income approach tool equal to sale price divided by gross monthly or annual rent. It is applied to the subject's market rent for a quick value indication.

A method that estimates value as the cost to replace or reproduce the improvements new, minus depreciation, plus the value of the land as if vacant.

The total loss in value of improvements from all causes, physical deterioration, functional obsolescence, and external obsolescence, measured at the effective date compared with new construction cost.

A loss in value caused by outdated design, layout, or features of the improvements that make them less useful or desirable than a substitute property, measured by the cost to cure.

The age indicated by a property's condition and utility, which may differ from its actual age. It is used to estimate remaining economic life and depreciation.

The finished, heated, above-grade living space of a dwelling, measured to the outside of exterior walls, excluding areas such as garages, basements, and unfinished attics.

A national measurement standard for single-family houses that defines finished area, methods of measurement, and reporting so that square footage figures are consistent and comparable among appraisers.

A legal description that identifies a parcel by starting at a known point and following compass bearings and distances around the boundary, closing back at the point of beginning.

The reasonably probable, legally permissible, physically possible, financially feasible use that produces the greatest value, as supported by market evidence at the effective date.

The most probable rent a property would command in a competitive market, with typical lease terms and neither undue pressure on the landlord nor the tenant.

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

The most probable price a property should bring in a competitive, open market under all conditions required for a fair sale, with buyer and seller acting prudently and without undue pressure.

The Uniform Standards of Professional Appraisal Practice, the ethical and performance rules adopted by the Appraisal Standards Board that govern appraisal, review, and consulting assignments.

A USPAP requirement that an appraiser accept an assignment only when able to perform it competently, or disclose the lack of knowledge and take steps to gain it.

A USPAP provision allowing an appraiser to disregard a standard when it conflicts with applicable law or regulation, provided the conflict is disclosed and the rest of USPAP is followed.

The appraiser's documentation of research, data, analyses, and communications supporting a report. USPAP requires it be retained for at least five years after the report date or two years after litigation ends.

Additional requirements imposed by a client, regulator, or government agency that are more stringent than USPAP. USPAP allows them if they do not conflict with USPAP's requirements.

Federal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, religion, sex, national origin, familial status, or disability.

A federal law barring creditors from discriminating in credit decisions on protected bases such as race, sex, age, marital status, or receipt of public assistance, and requiring appraisals be unbiased.

The principle that appraisers must reach conclusions free of pressure from lenders, brokers, or others with a financial interest, as reinforced by federal rules on appraisal management and coercion.

The standard deviation of a data set divided by its mean, expressed as a percentage. It compares relative dispersion, letting appraisers compare variability across sales with different price levels.

The middle value in a data set arranged from lowest to highest; half the observations fall above and half below. It is less affected by extreme values than the mean.

A measure of how much individual values in a set vary from the average. A small figure means the data cluster tightly; a large one signals wide spread.

A statistical technique that estimates how a dependent variable such as sale price relates to one or more independent variables, producing coefficients used to adjust comparable sales.

The rate of return used to convert future income or a reversion into present value. In yield capitalization it reflects risk, liquidity, and expected growth.

A rate expressing the relationship between a single year's net operating income and value, derived from comparable sales, and used to convert income into an indication of value.