Appraisal terminology.

The rate at which available properties are sold or leased in a specific market during a given time period.

The total loss in value from all causes — physical deterioration, functional obsolescence, and external obsolescence — measured as the difference between cost new and the improvements' current contributory value..

"According to value" — property tax levied as a rate applied to assessed value.

A comparable's sale price after all adjustments for differences from the subject.

A dollar or percentage modification applied to a comparable sale's price to account for differences between the comparable and the subject property.

Negative influences on or near a property — busy roads, power lines, drainage problems, incompatible adjacent uses.

The simplest depreciation technique: effective age divided by total economic life, applied to cost new.

A land valuation technique that estimates land value by applying the typical ratio of land value to total property value observed in the market.

A feature that increases a property's desirability beyond bare utility — views, waterfront, pools, community facilities, walkability.

The American National Standards Institute standard for measuring residential floor area.

The act or process of developing an opinion of value for a property, performed by a licensed or certified appraiser following recognized methods and professional standards.

A third-party company that manages the appraisal process on behalf of lenders, handling appraiser selection, order assignment, quality review, and delivery.

Under USPAP, a written report that summarizes the appraiser's analysis and conclusions in sufficient detail for the intended users to understand the basis of the value opinion.

A required section of every appraisal report in which the appraiser makes specific attestations about the appraisal, including independence, USPAP compliance, inspection status, and the basis for the value opinion..

The legal requirement that appraisers must be free from improper influence, coercion, or pressure from parties with a financial interest in the transaction outcome.

An increase in property value over time, driven by market conditions, inflation, neighborhood improvement, or rising demand.

A transaction between unrelated parties who are each acting in their own self-interest, where neither party is under duress or undue influence.

The value of a property in its current physical condition, as of the effective date of the appraisal, without any hypothetical conditions or extraordinary assumptions about future improvements or changes..

The process of combining two or more adjacent parcels of land into a single ownership for a unified use.

The value assigned to a property by the local tax assessor for property tax purposes.

A large lump-sum payment due at the end of a loan that does not fully amortize over its term — common in commercial financing, where loans amortize on long schedules but mature early..

Any portion of a building that is below the ground level on any side.

The practice of selecting comparable sales that are both superior and inferior to the subject property in key features, so that the subject's indicated value falls within the range of adjusted comparable values..

A property valuation estimate provided by a licensed real estate broker, less detailed than a formal appraisal.

The regulations governing construction standards — structural, electrical, plumbing, fire, and energy requirements.

An income-approach technique that isolates the income attributable to the improvements: land income (land value × land cap rate) is deducted from total net income, and the residual is capitalized to indicate building value..

The set of legal rights that come with real property ownership — the rights to possess, use, enjoy, exclude others, and dispose of the property.

The ratio of a property's net operating income to its market value or sale price, expressed as a percentage.

A sale price restated as if the transaction were all-cash on market terms.

The municipal certification that a building complies with applicable codes and may be legally occupied.

An appraiser holding a state certification — Certified Residential or Certified General — earned through education, supervised experience hours, and a national examination.

The party who engages the appraiser for an assignment.

Fannie Mae's automated appraisal risk assessment tool that scores appraisals on a scale of 1.0 to 5.0 based on comparable selection, adjustment accuracy, and other quality factors.

A recently sold property that is similar to the subject property in terms of location, size, condition, and features, used as evidence to support the appraiser's opinion of value in the sales comparison approach..

An estimate of a property's value prepared by a real estate agent using recent sales, active listings, and pending sales data.

A USPAP rule requiring that an appraiser must have the knowledge and experience necessary to complete an assignment competently, or must take steps to acquire it before accepting the assignment..

Interest earned on both principal and previously accumulated interest.

The legal proceeding by which government exercises eminent domain.

A property use that complies with current zoning regulations and is consistent with the predominant land use pattern in the neighborhood.

The rent actually specified in a lease, as opposed to market rent — what the space would command today.

The amount a component or feature adds to the property's overall value — which is rarely its cost.

A valuation method that estimates value by calculating the cost to reproduce or replace the improvements, subtracting accrued depreciation, and adding the land value.

The current cost to construct the improvements — as reproduction cost (an exact replica) or replacement cost (equivalent utility with modern materials and design).

Depreciation economically worth fixing: the cure costs no more than the value it restores.

The Dodd-Frank requirement that appraisers must be paid fees that are customary and reasonable for the market area and property type, regardless of whether they are engaged directly by a lender or through an AMC..

The number of days between when a property is listed for sale and when it goes under contract.

The transaction value below which a federally related real estate transaction does not require an appraisal by a licensed or certified appraiser.

Net operating income divided by annual debt service.

A market in which property values are trending downward, evidenced by falling sale prices, rising inventory, longer marketing times, and increasing seller concessions.

Postponed repairs and upkeep — worn roofs, peeling paint, broken systems.

A loss in value from any cause.

An appraisal performed without a physical inspection of the subject property, relying instead on public records, MLS data, prior appraisals, and other third-party data sources.

Converting a single year's stabilized net operating income into value by dividing by a market-derived capitalization rate.

The rate of return required by an investor to attract investment in a particular property, used in DCF analysis to convert future cash flows into present value.

A yield capitalization technique that estimates property value by projecting future cash flows (income minus expenses) over a holding period and discounting them to present value using a market-derived discount rate..

The 2010 federal financial reform law that included significant appraisal provisions: appraiser independence requirements, AMC registration, customary and reasonable fee mandates, and prohibition of BPOs for origination..

An appraisal based on an exterior observation of the property from the street, supplemented by public records, MLS data, and prior listings, without an interior inspection.

A non-possessory right to use another's land for a specific purpose — utility lines, driveways, drainage, or access.

The period over which improvements contribute value to the property — ending not when the building collapses, but when it no longer adds value above land.

The age of a property as indicated by its condition, maintenance, and updates, which may differ from its actual (chronological) age.

The date on which the appraiser's opinion of value applies.

Potential gross income minus vacancy and collection losses, plus other income (laundry, parking, late fees).

The ratio of a property's sale price to its effective gross income.

Freddie Mac's portal for electronic submission and quality review of appraisal reports.

The government's power to take private property for public use upon payment of just compensation.

A physical intrusion of a structure or improvement onto a neighboring property — a fence, driveway, or building over the line.

Any claim, lien, easement, or restriction that limits an owner's rights or affects title.

A written agreement between the appraiser and client that outlines the terms of the appraisal assignment, including the property, intended use, scope of work, fee, timeline, and any special conditions..

The return a developer requires for the risk and effort of creating a property — the difference between total development cost and completed value.

Hazardous substances affecting a property — leaking oil tanks, soil or groundwater contamination, asbestos.

The ratio of a municipality's average assessed values to average true market values, published annually by the NJ Division of Taxation.

A valuation of real property that does not require a state-licensed or certified appraiser, permitted for federally related transactions below the de minimis threshold.

Land that is not needed to support the existing improvements' highest and best use and can be separated and sold independently.

The estimated length of time a property would have been offered on the market before a hypothetical sale at the appraised value on the effective date.

A loss in property value caused by factors external to the property, such as a busy highway, industrial proximity, declining neighborhood, or unfavorable zoning changes.

A land valuation technique that estimates land value by subtracting the depreciated cost of improvements from the total sale price of an improved property.

An assumption that is directly related to a specific assignment and, if found to be false, could alter the appraiser's opinions or conclusions.

The price at which property would change hands between a willing buyer and a willing seller, neither under compulsion and both with reasonable knowledge of relevant facts.

A government-sponsored enterprise (GSE) that purchases and securitizes residential mortgages, setting appraisal standards and form requirements that apply to the majority of conventional mortgage loans in the United States..

The study of whether a proposed project's value upon completion exceeds its total cost, including profit.

The most complete form of property ownership — the full bundle of rights, limited only by government powers such as taxation, eminent domain, police power, and escheat.

The appraiser's concluded estimate of the defined value of the subject property as of the effective date, arrived at after analyzing all relevant data and reconciling the results of the applied valuation approaches..

The third test in highest and best use analysis: a use must generate sufficient income or value to justify the cost of development, including land cost, construction costs, and a market rate of return..

The 1989 federal law that established the modern appraisal regulatory framework, requiring state licensing of appraisers and USPAP compliance for all federally related real estate transactions..

A FEMA-mapped designation of flood risk.

Total building floor area divided by site area — zoning's density dial.

The legal process by which a lender takes title after borrower default; an REO (real-estate-owned) sale is the lender's subsequent disposition of the property.

The Fannie Mae designation for the Uniform Residential Appraisal Report (URAR), used for appraisals of one-unit properties and units in planned unit developments (PUDs).

A form used to update a previously completed appraisal to reflect current market conditions and confirm that the property condition has not materially changed.

The appraisal form for 2-4 unit residential properties, incorporating both the sales comparison approach and the income approach.

The standard appraisal form for individual condominium units, including analysis of the unit, the condominium project, and common elements.

An appraisal report form for exterior-only inspections of one-unit properties.

A government-sponsored enterprise (GSE) that purchases and securitizes residential mortgages.

A loss in property value caused by deficiencies or superadequacies within the property itself, such as an outdated floor plan, insufficient electrical capacity, or an over-improvement relative to the neighborhood..

How well a property's design and layout serve current market expectations — bedroom/bath ratios, flow, ceiling heights, storage.

An appraiser's knowledge of and experience with a specific market area, including familiarity with local market conditions, comparable sales, neighborhood boundaries, and value influences.

The total value of an established operating business and the real estate it occupies — real property, tangible personal property, and intangible business value combined.

The total area of a building measured from the exterior walls, including all finished and unfinished, above-grade and below-grade spaces.

Sale price divided by annual gross income — the annual-income cousin of the monthly gross rent multiplier, typically used for commercial and larger residential income property..

The total finished, above-grade living area of a residential property, measured in square feet.

The ratio of a property's sale price to its gross monthly (or annual) rental income.

A long-term lease of land only, with the tenant constructing and owning the improvements during the term.

The rent paid for the use of land under a ground lease.

A land valuation method that estimates land value by capitalizing the ground rent (the rent paid for the use of land only, without improvements) at an appropriate capitalization rate..

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

The systematic analysis performed in every appraisal to determine the most profitable, legally permissible, physically possible, and financially feasible use of a property.

An organization in a subdivision, planned community, or condominium that makes and enforces rules for its members and manages common areas.

An appraisal in which a third-party (not the appraiser) conducts the property inspection and data collection, while the licensed appraiser completes the analysis and value opinion based on the collected data..

A condition that is contrary to known fact but is assumed for the purpose of analysis.

The defining physical characteristic of land: it cannot be moved.

Any structure or development permanently attached to land — buildings, garages, pools, paving, utilities.

A valuation method that estimates a property's value based on the income it generates or is expected to generate.

Depreciation not economically feasible to correct — short-lived components not yet worth replacing, structural deficiencies whose cure exceeds the value gained, and most external obsolescence..

The appraiser's on-site observation of a property to document its physical characteristics, condition, quality, and features.

The value of the destructible improvements for insurance purposes — typically replacement or reproduction cost of the structures, excluding land and site value.

The use or uses of an appraiser's reported appraisal or appraisal review as identified by the appraiser based on communication with the client at the time of the assignment.

The client and any other party the appraiser identifies, at the time of the assignment, as a user of the report.

A temporary use of a property that is expected to change in the foreseeable future as market conditions evolve or when the property becomes ripe for development to a higher use..

The value of a property to a particular investor based on that investor's own requirements — financing, tax position, yield expectations — as distinct from market value, which reflects the typical participant.

The constitutionally required payment to an owner whose property is taken by eminent domain — generally the fair market value of the property or interest acquired, plus damages to any remainder in a partial taking..

A land valuation method that estimates land value by capitalizing the net income remaining after deducting the return attributable to the improvements from the property's total net operating income..

The market value of a parcel of land as if vacant and available for development to its highest and best use.

Site area divided by building area.

The landlord's interest in a leased property: the right to receive contract rent during the lease term plus the reversion of the property when the lease ends.

The tenant's interest in a leased property — the right to occupy and use it for the lease term.

A use or structure lawfully established before current zoning that no longer conforms — "grandfathered." Such properties can usually continue but face limits on expansion and, critically, on rebuilding after major damage..

The first test in highest and best use analysis: a use must be allowed under current zoning, building codes, environmental regulations, deed restrictions, and other legal constraints to be considered..

A creditor's legal claim against property as security for a debt — mortgages, property taxes, judgments, and contractor (mechanic's) liens.

An assignment in which the scope of work is narrowed by agreement — fewer approaches to value, restricted inspection, or defined assumptions — while still complying with USPAP.

The asking price at which a property is offered for sale.

Loan amount divided by the lesser of price or appraised value.

The evaluation of a property's position relative to surrounding land uses, transportation, employment centers, schools, amenities, and negative influences.

A defined parcel of land, typically described by reference to a recorded plat or tax map.

The study of supply and demand conditions affecting a property — price trends, inventory, absorption, marketing times, and buyer profiles.

The geographic area within which properties compete for the same buyers.

The current state of supply and demand in the real estate market for a particular property type in a defined area.

A method of deriving capitalization rates, depreciation rates, or adjustment values directly from analysis of comparable market transactions rather than from theoretical formulas or published sources..

The rental income a property would most likely command on the open market, based on analysis of comparable rental properties in the area.

The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..

The estimated time it would take to sell a property starting from the effective date of the appraisal, looking forward.

The fourth and final test in highest and best use analysis: among all financially feasible uses, the maximally productive use is the one that produces the highest residual land value (or highest property value for improved properties)..

A legal description that traces a property's perimeter by courses and distances from a point of beginning — bearings, feet, and monuments.

The standards body that develops and maintains the XML data formats used for electronic exchange of mortgage industry data, including appraisal reports.

A property combining two or more uses — commonly residential over retail.

The estimated time it would take to sell all current listings at the current sales pace, calculated by dividing active inventory by the average monthly sales rate.

A loan secured by real property, giving the lender a lien and the right to foreclose on default.

The appraiser's evaluation of the area surrounding the subject property, including property values, market trends, land use, demographics, and external factors that influence value.

The net adjustment is the sum of a comparable's positive and negative adjustments; the gross adjustment is the sum of their absolute values.

The annual income remaining after deducting all operating expenses from effective gross income, but before deducting debt service (mortgage payments) and income taxes.

New Jersey's four credential levels for real estate appraisers: Licensed Trainee, Licensed Residential, Certified Residential, and Certified General.

The state regulatory body under the NJ Division of Consumer Affairs that licenses, regulates, and disciplines real estate appraisers in New Jersey.

New Jersey requires licensed and certified appraisers to complete continuing education hours every two-year renewal cycle, including a mandatory USPAP update course and NJ-specific law module..

FEMA-designated areas in New Jersey that identify flood risk levels, ranging from high-risk Special Flood Hazard Areas (Zone AE, VE) to moderate and low-risk zones.

A New Jersey program that provides funding for the acquisition and development of land for recreation and conservation purposes.

A comprehensive reassessment of all properties within a New Jersey municipality to bring assessed values in line with current market values.

The legal process by which a NJ property owner challenges their property's assessed value at the County Board of Taxation or NJ Tax Court.

Loss in value from causes other than physical wear: functional obsolescence arises from the property's own design or features; external obsolescence from influences outside the property lines.

Operating expenses divided by effective gross income.

The recurring costs of owning and operating an income-producing property, including property taxes, insurance, management, maintenance, utilities, and reserves for replacement.

An improvement that exceeds what the neighborhood supports — the $400,000 kitchen in a $350,000 market.

A technique used to estimate the value contribution of a specific property feature by comparing two sales that are identical except for that one feature.

Any interest in real estate that is less than the full fee simple — a fractional ownership share, a life estate, an easement, or mineral rights.

A property under contract that has not yet closed.

Movable items not permanently affixed to the real estate — furniture, appliances not built in, equipment.

A loss in property value resulting from wear and tear, damage, structural failure, or neglect of the physical improvements.

The second test in highest and best use analysis: a use must be physically achievable given the property's size, shape, topography, soil conditions, access, and available utilities..

A type of residential development where individual lots are owned in fee simple, but common areas (parks, pools, clubhouses) are shared and maintained by a homeowners association.

A recorded map of a subdivision showing lots, blocks, streets, and easements.

The increase in value that results from combining two or more adjacent parcels into a single, larger parcel.

The total income a property would generate at full occupancy and market rents, before any deduction for vacancy or collection loss.

Sale price divided by gross living area — the most common unit of comparison in residential markets.

The principle that property values are supported when properties in an area are reasonably similar in use, style, and value.

The principle that a prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute.

The recent transaction history of the subject and comparables.

Insurance protecting the lender on conventional loans above 80% LTV, paid by the borrower.

The specific legal interest being valued in an assignment — most commonly fee simple, but potentially a leased fee, leasehold, or partial interest.

A forecast of a property's value at a future date, based on anticipated changes in market conditions, property improvements, or other factors.

Comparison analysis that ranks comparables as superior, inferior, or similar to the subject without assigning dollar amounts.

Comparison analysis that measures differences between the subject and comparables in dollars or percentages, supported by techniques such as paired sales analysis, cost-based estimates, or statistical methods like regression..

The physical land and everything permanently attached to it — structures, fixtures, and natural features.

The interests, benefits, and rights inherent in the ownership of real estate.

The process by which an appraiser evaluates and weighs the results from the different valuation approaches (sales comparison, cost, and income) to arrive at a final opinion of value..

The estimated number of years a property's improvements are expected to continue contributing to the property's value, calculated as total economic life minus effective age..

The updating or restoration of improvements — kitchens, baths, systems, finishes.

A rented property used to support a market rent conclusion — the rental analog of a comparable sale, adjusted for location, size, condition, and lease terms..

The estimated cost to construct a building with equivalent utility to the subject improvements, using current materials, standards, and design, but not necessarily an exact replica..

The estimated cost to construct an exact replica of the subject improvements using the same materials, construction methods, workmanship, and design as of the effective date of the appraisal..

An annual allowance set aside from income to fund the periodic replacement of short-lived building components such as roof, HVAC, appliances, carpet, and exterior paint..

The most abbreviated report option under USPAP, intended only for the client and containing minimal detail.

A private deed or association restriction limiting how a property may be used — architectural standards, minimum sizes, use prohibitions.

An appraisal with an effective date in the past.

The future return of property rights — the landlord's repossession at lease end, or the projected sale proceeds at the end of a holding period in a discounted cash flow analysis.

An easement granting passage across a property — for a road, driveway, railroad, or utility corridor.

A valuation method that estimates a property's value by comparing it to similar properties that have recently sold in the same market area.

The type and extent of research and analysis performed in an appraisal assignment.

A contribution from the seller to the buyer that reduces the buyer's out-of-pocket costs, such as paying for closing costs, points, or repairs.

Costs the seller pays on the buyer's behalf — closing costs, rate buydowns, repairs credits.

The minimum required distance between a structure and lot lines, streets, or other features, established by zoning.

A sale in which the lender agrees to accept less than the mortgage balance owed.

Land that has been prepared for use — graded, with access and utilities available.

Improvements to the land itself rather than buildings — grading, driveways, walkways, landscaping, fencing, septic and well systems.

The market value of the land as if vacant and available for development to its highest and best use.

A charge against specific properties to fund an improvement that benefits them — sewers, sidewalks, road paving.

The division of a parcel into multiple lots, or the resulting development.

The property being appraised.

An improvement or feature that exceeds what the market demands for the property type and location, resulting in a cost that is not fully recoverable in the sale price.

A Certified Residential or Certified General appraiser who supervises a Licensed Trainee appraiser, providing mentorship, training, and oversight.

The economic principle that value is created and sustained by the interaction of available properties (supply) and ready buyers (demand).

Land that is not needed for the existing improvements but cannot be separately sold, subdivided, or developed independently due to physical, legal, or practical constraints..

A licensed surveyor's measurement and mapping of a property's boundaries, improvements, and encroachments.

The municipality's official map dividing land into blocks and lots for assessment purposes.

The Congressionally authorized organization that sets appraisal standards (USPAP) and minimum appraiser qualification criteria.

An adjustment applied to a comparable sale to account for changes in market value between the date of the comparable's sale and the effective date of the appraisal.

The legal evidence of ownership rights in real property.

The surface contours of a site — level, sloping, rolling, or steep.

Move-in ready — no repairs or updating needed.

A standardized six-level scale for rating the physical condition of a property's improvements, ranging from C1 (new or recently constructed) to C6 (in need of substantial repairs and rehabilitation)..

A standardized six-level scale for rating the quality of a property's construction, ranging from Q1 (highest quality, custom-built luxury) to Q6 (basic or substandard quality construction)..

An improvement below the level the site and neighborhood would support — a modest cottage on an estate lot.

A standardized data specification developed by Fannie Mae and Freddie Mac that defines how appraisal data fields must be completed, ensuring consistency and enabling automated analysis of appraisal reports..

A web-based portal operated by Fannie Mae and Freddie Mac where appraisal reports are electronically submitted and checked for UAD compliance, data quality, and potential red flags before delivery to lenders..

The standard appraisal report form (Fannie Mae Form 1004 / Freddie Mac Form 70) used for most single-family residential mortgage appraisals.

The nationally recognized ethical and performance standards for the appraisal profession, established by The Appraisal Foundation.

A common denominator used to compare properties — price per square foot of living area, price per unit, price per acre, or a gross rent multiplier.

The value a property has for a specific use or to a specific user, which may differ from its market value at highest and best use.

The USPAP rule establishing requirements for appraiser conduct, management, confidentiality, and record keeping.

The deduction from potential gross income for expected unoccupied periods and uncollected rent, expressed as a percentage based on market evidence.

The percentage of available rental units or space that is unoccupied at a given time.

The process of estimating the worth of an asset.

Permission from a zoning board to deviate from a specific zoning requirement — a reduced setback, undersized lot, or expanded use — typically granted on hardship grounds.

An average in which some data points count more than others.

The documentation an appraiser must maintain to support the analyses, opinions, and conclusions in the appraisal report.

Local government regulation of land use — districts that control permitted uses, density, height, setbacks, and lot requirements.

Whether a property's current use and improvements conform to the zoning ordinance: legal, legal nonconforming (grandfathered), illegal, or no zoning.