Appraiser Jargon 

Sometimes it sounds like people in the real estate industry speak a different language. Use this list to help you understand specific terms when you are going through the home buying or home selling process.

Adjustment: When comparable properties have been identified, the appraiser makes adjustments to the Sales Price of each of the comparables to bring them into equivalency with the subject property, accounting for differences in location, construction quality, living area, acreage, frontage, amenities and the like. This is where the professional expertise of an appraiser is most valuable.

Chattel: Personal property that may be on the subject property but which does not figure into the opinion of value in the appraisal report. For example, 

Comparable or "Comp": Properties which are within the same locale, have similarities to the subject property and have sold recently. These properties are compared to the subject property and then used to help determine the fair market value of the subject property.

Drive-by: An appraisal that is limited to an exterior-only examination of the subject property to make a determination that the property is actually there and has no obvious defects or damage visible from the outside. Fannie Mae's form for this type of appraisal is it's 2055 form, so you may hear a drive-by report referred to as a "2055."

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 buyer would pay a willing seller in an arms-length transaction.

Gross Living Area (GLA): The sum of all above grade (ground) 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 impacts the fair market value. Some examples could be structural damage or termite infestation.

MLS: A "Multiple Listing Service" is a proprietary list 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 primarily by real estate agents, many appraisers pay for access to these databases to aid in finding comparable properties.

Obsolescence: The value of property assets diminish 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 of changes to the surrounding area, which might make a feature of the property less desirable.

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

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

Uniform Residential Appraisal Report (URAR): The Fannie Mae form 1004 which is the form most lenders require if they need a full appraisal with a walk-through inspection.

USPAP: Acronym for "Uniform Standards of Professional Appraisal Practice". USPAP promotes standards and professionalism in appraisal practice and has been enacted into law in the state of Colorado. It is promulgated by the Appraisal Foundation, a non-governmental entity chartered by Congress to maintain appraisal standards.

Walk-through: An inspection that includes a visit to each part of the interior of the house used in estimating value.

If you have a question about any of these terms or need an explanation of an item on your appraisal, please contact us at 303-916-7307 or bizappraisal@msn.com.