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Glossary of Appraisal & Real Estate Terms

 

 

 

 

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

ABSORPTION RATE Back to top
The percentage of the number of properties in an area that have been sold compared to the number available. Illustrates the volatility of a market.

ABSTRACTION METHOD
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A method of estimating the value of property using similar properties available in the same market to extract the value of a parcel of land.

ACCELERATION CLAUSE
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A provision in a mortgage that gives the lender the right to demand immediate payment of the outstanding loan balance under certain circumstances, typically when the borrower defaults on the loan.

ACCESSORY BUILDING
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A building separate from the main structure on a property. Typically used for a specific purpose, like a workshop, storage shed or garage.

ACCRETION
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The growth of a piece of land resulting from forces of nature.

ACRE
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43,560 square feet. A measurement of area.

ACTUAL AGE
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The time that has elapsed since a building or other structure was built. See also: EFFECTIVE AGE

ADJUSTMENT DATE
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The date the interest rate will change on an adjustable rate mortgage.

AD VAL OREM TAX
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Taxes assessed according to the value of the land and improvements.

ADDENDUM
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A supplement to a document containing additional pertinent information. Appraisers use addenda to further explain items when space is inadequate on the standard appraisal form.

ADJUSTABLE-RATE MORTGAGE (ARM)
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A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.

ADJUSTED BASIS
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The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, less depreciation.

ADJUSTED SALES PRICE
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An estimate of a property's sales price after adjusting for differences between it and another comparable property.

AESTHETIC VALUE
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The increased value a property enjoys based on subjective criteria such as look or appeal.

AFFIRMATION
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A declaration that a certain set of facts are truthful.

AFFORDABILITY ANALYSIS
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A calculation used to guage the borrower's likelihood meeting the obligations of a mortgage for a property. Considers the down payment, closing costs and on-going mortgage payments.

AGENT
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A person acting on behalf of another for a particular transaction.

AMENITY
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Any feature of a property that increases its value or desirability. These might include natural amenities such as location, view or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.

AMERICAN SOCIETY OF APPRAISERS
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An organization of appraisal professionals and other people interested in the appraisal profession.

AMORTIZATION
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The repayment of a loan through regular periodic payment.

AMORTIZATION SCHEDULE
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The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

AMORTIZATION TERM
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The time period over which an amortized loan is repaid. Mortgages are typically amortized over 15 or 30 years.

ANNUAL PERCENTAGE RATE (APR)
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The rate of annual interest charged on a loan.

ANNUITY
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A sum of money paid at regular intervals, usually annually.

APPLICATION
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A form used to apply for a mortgage loan that details a potential borrowers income, debt, savings and other information used to determine credit worthiness.

APPRAISAL
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A ''defensible'' and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

APPRAISAL FOUNDATION
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A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).

APPRAISAL INSTITUTE
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A world-wide organization dedicated to real estate appraisal education, publication and advocacy.

APPRAISAL PRINCIPLES
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The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

APPRAISAL REPORT
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The end result of the appraisal process, usually consists of one major, standardized form such as the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the estimated value of the subject property and support that estimate with corroborating information.

APPRAISAL STANDARDS BOARD (ASB)
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An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation's Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.

APPRAISED VALUE
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The estimated fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

APPRAISER
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An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

APPRECIATION
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The natural rise in property value due to market forces.

ARMS LENGTH TRANSACTION
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Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.

ASSESSED VALUE
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The value of a property according to jurisdictional tax assessment.

ASSESSMENT
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The function of assigning a value to a property for the purpose of levying taxes.

ASSESSMENT RATIO
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The comparative relationship of a property's assessed value to its market value.

ASSESSOR
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The jurisdictional official who performs the assessment and assigns the value of a property.

ASSET
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Any item of value which a person owns.

ASSIGNMENT
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Transfer of ownership of a mortgage usually when the loan is sold to another company.

ASSUMABLE MORTGAGE
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A mortgage that can be taken over by the buyer when a home is sold.

ASSUMPTION
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When a buyer takes over, or assumes the sellers mortgage.

ATTACHED HOUSING
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Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.

BALLOON MORTGAGE Back to top
A mortgage loan in which the monthly payments are not large enough to repay the loan by the end of the term. So at the end of the term, the remaining balance comes due in a single large payment.

BALLOON PAYMENT
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The final large payment at the end of a balloon mortgage term.

BANKRUPTCY
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When a person or business is unable to pay their debts and seeks protection of the state against creditors. Bankruptcies remain on credit records for up to ten years and can prevent a person from being able to get a loan.

BILL OF SALE
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A physical receipt indicating the sale of property.

BIWEEKLY MORTGAGE
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A mortgage where you make half payments every two weeks, rather than one payment per month. This results in making the equivalent of 13 monthly payments per year, rather than 12, significantly reducing the time it takes to pay off a thirty year mortgage.

BLIGHTED AREA
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Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.

BONA FIDE
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Any genuine offer, made without intent to defraud or deceive.

BRIDGE FINANCING
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An interim loan made to facilitate the purchase of a new home before the buyer's current residence sells and its equity is available to fund the new purchase.

BROKER
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An individual who facilitates the purchase of property by bringing together a buyer and a seller.

BUFFER ZONE
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A segment of land between two disparate municipal zones which acts as a shield to keep one zone from encroaching upon the other. Often used to separate residential districts from commercial areas.

BUILDING CODE
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Regulations that ensure the safety and material compliance of new construction within a municipality. Building codes are localized to ensure they are adequate to meet the risk of common hazards.

BUILDING LINE OR SETBACK
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The statutory distance between buildings and the property line, imposed by municipalities, home associations, or other agreements.

BUILT-INS
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Specific items of personal property which are installed in a real estate improvement such that they become part of the building. Built-in microwave ovens and dishwashers are common examples.

BUNGALOW
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A one-story, home-style dating from the early twentieth century. Often characterized by a low-pitched roof.

BUY DOWN
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Extra money paid in a lump sum to reduce the interest rate of a fixed rate mortgage for a period of time. The extra money may be paid by the borrower, in order to have a lower payment at the beginning of the mortgage. Or paid by the seller, or lender, as incentive to buy the property or take on the mortgage.

CALL OPTION Back to top
A clause in a mortgage which allows the lender to demand payment of the outstanding balance at a specific time.

CAP
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Associated with Adjustable Rate Mortgages. A limit on how high monthly payments or how much interest rates may change within a certain time period or the life of the mortgage.

CAPE COD COLONIAL
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A single-story house style made popular in New England. Often characterized by a steep roof with gables.

CAPITAL
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Accumulated goods and money which is most often used to generate additional income.

CAPITAL EXPENDITURE
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An outlay of funds designed to improve the income-producing capabilities of an asset or to extend its economic life.

CASH-OUT REFINANCE
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Refinancing a mortgage at a higher amount than the current balance in order to transform a portion of the equity into cash.

CAVEAT EMPTOR
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Literally translated: ''Let the buyer beware.'' A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.

CERTIFICATE OF DEPOSIT
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A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.

CERTIFICATE OF DEPOSIT INDEX
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An index based on the interest rate of six month CDs. Used to set interest rates on some Adjustable Rate Mortgages.

CERTIFICATE OF ELIGIBILITY
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A document issued by the Veterans Administration that certifies eligibility for a VA loan.

CERTIFICATE OF OCCUPANCY
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Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

CERTIFICATE OF REASONABLE VALUE (CRV)
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Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.

CERTIFICATE OF TITLE
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A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

CERTIFIED GENERAL APPRAISER
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Generally, any professional who has met the local or state requirements, and passed the appropriate certification exam, and is capable of appraising any type of property.

CERTIFIED RESIDENTIAL APPRAISER
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A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

CHAIN OF TITLE
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The complete history of ownership of a piece of property.

CHATTEL
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Any personal property which is not attached to or an integral part of a property. Chattel is not commonly taken into consideration when appraising the value of real property.

CLEAR TITLE
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Ownership of property that is not encumbered by any counter-claim or lien.

CLOSING
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A torturous process designed to induce cramping in a home buyer's hands by requiring signature on countless pieces of documentation that nobody has ever read. Or, the process whereby the sale of a property is consummated with the buyer completing all applicable documentation, including signing the mortgage obligation and paying all appropriate costs associated with the sale (CLOSING COSTS).

CLOSING COSTS
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All appropriate costs generated by the sale of property which the parties must pay to complete the transaction. Costs may include appraisal fees, origination fees, title insurance, taxes and any points negotiated in the deal.

CLOSING STATEMENT
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The document detailing the final financial arrangement between a buyer and seller and the costs paid by each.

COLLATERAL
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An asset which is placed at risk to secure the repayment of a loan.

CO-BORROWER
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A second person sharing obligation on the loan and title on the property.

COLLECTION
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The process a lender takes to pursue a borrower who is delinquent on his payments in order to bring the mortgage current again. Includes documentation that may be used in foreclosure.

CO-MAKER
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A second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.

COMMON LAW
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As opposed to statute law. Laws that have been established by custom, usage and courts over many years.

COMMISSION
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A percentage of the sales price or a fixed fee negotiated by an agent to compensate for the effort expended to sell or purchase property.

COMMON AREA ASSESSMENTS
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Fees which are charged to the tenets or owners of properties to cover the costs of maintaining areas shared with other tenets or owners. Commonly found in condominium, PUD or office spaces.

COMMON AREAS
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Any areas, such as entryways, foyers, pools, recreational facilities or the like, which are shared by the tenets or owners of property near by. Commonly found in condominium, PUD or office spaces.

COMMUNITY PROPERTY
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In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.

COMPARABLES
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An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property who's value is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.

COMPOUND INTEREST
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Interest paid on the principal amount, as well as any accumulated interest.

CONCESSIONS
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Additional value granted by a buyer or seller to entice another party to complete a deal.

CONDEMNATION
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The official process by which a property is deemed to be uninhabitable or unusable due to internal damage or other external conditions.

CONDOMINIUM
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A development where individual units are owned, but common areas and amenities are shared equally by all owners.

CONDOMINIUM CONVERSION
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Commonly, the conversion of a rental property such as an apartment complex into a CONDOMINIUM-style complex where each unit is owned rather than leased.

CONSTRUCTION LOAN
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A loan made to a builder or home owner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.

CONTIGUOUS
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Connected to or touching along an unbroken boundary

CONTINGENCY
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Something that must occur before something else happens. Often used in real estate sales when a buyer must sell a current home before purchasing a new one. Or, when a buyer makes an offer the requires a complete home inspection before it becomes official.

CONTRACT
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A legally binding agreement, oral or written, between two parties.

CONVENTIONAL MORTGAGE
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A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).

CONVERTIBLE ARM
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A mortgage that begins as and adjustable, that allows the borrower to convert the loan to a fixed rate within a specific timeframe.

COOPERATIVE (CO-OP)
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A form of ownership where each resident of a multiunit property owns a share in a cooperative corporation that owns the building. With each resident having rights to a specific unit within the building.

CORPORATE RELOCATION
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A situation where a person's employer pays all or some of the expenses associated with moving from one location to another, usually over a substantial distance. Relocation expenses often include the amounts, such as brokerage fees, incurred in the selling and buying of the employee's primary residence.

COST OF FUNDS INDEX (COFI)
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An index of financial institutions costs used to set interest rates for some Adjustable Rate Mortgages.

COVENANT
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A stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.

CREDIT
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A loan of money for the purchase of property, real or personal. Credit is either secured by an asset, such as a home, or unsecured.

CREDIT HISTORY
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A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.

CREDITOR
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A person to whom money is owed.

CREDIT REPORT
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A detailed report of an individuals credit, employment and residence history prepared by a credit bureau. Used by lenders to determine credit worthiness of individuals.

CREDIT REPOSITORY
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Large companies that gather and store financial and credit information about individuals who apply for credit.

CUL-DE-SAC