Appraiser Jargon

You may have heard some appraisal terminology while in the process of buying or selling a home, or perhaps you saw some of these terms in other places on our site.

Just as other professions have their own terminology, so does the appraisal business, but it can be frustrating to hear words that you don't understand.

This is a special page on our site dedicated to just the subject of our appraiser jargon.

No matter where you saw or heard these words, here is some information to help you understand what they mean:

Adjustment:  When comparable properties have been looked up and evaluated, the appraiser may adjust the sales price up or down of the comparable properties to bring them into equivalency with the property being appraised.  The adjustments (up or down) may have to do with the differences in location, quality of construction, the area being lived in, acreage, frontage, various amenities and other similar types of features.  Adjustments to value is where the professional knowledge of a professional appraiser is so important, and so valuable.

Chattel:  By "Chattel" is meant the personal property of someone that is on the property being appraised but which does not work into the value of the property and therefore does not affect the value opinion in the appraisal report.

Comparable or "Comp”:  These are properties that are similar in ways to the subject property.  They are nearby and have sold recently.  These are used as a basis to determine the amount of fair market value of the property being appraised (subject property).

Drive-By:  This is an exterior-only examination of the subject property (the property being appraised) to determine that the home/property is there, has no obvious defects or visible damage on the outside.  Fannie Mae has a form for this numbered "2055", which is a term that you also may have heard, since "drive-by" appraisal is often termed "2055".

Fair Market Value:  This is the value of the property as determined by the appraiser, and is shown in the appraisal report.  This is also thought of as what a willing buyer would pay in an "arm's-length" transaction (meaning a transaction without a close relationship to the seller). 

Fannie Mae (FNMA): "FNMA" is an acronym for "Federal National Mortgage Association", which is a private corporation, but is sponsored by the government.  One of it's functions is to provide funds for mortgages. 

GLA:  This is the "Gross Living Area," which is the sum of all above grade (above ground level) floor space.  This also includes stairways and space in closets.  This amount is determined by using exterior wall measurements.

Latent Defects:  These are defects of the property that are not readily apparent but which could affect the fair market value of a home or property.  Some examples of "latent defects" are termite infestation or structural damage or defects.

MLS:  This is a term that is used quite often in the appraisal and real estate industries.  "MLS" stands for "Multiple Listing Service" and is a proprietary listing of all properties that are on the market in a specific area along with their listing prices.  It also contains a record of all recently closed sales with their prices of sale.  These are primarily used by real estate agents, but many appraisers pay for access to them and use them to help out with "comparables" and adjustments research.

Obsolescence:  This means the amount of degrade of assets as more desirable or modern alternatives come about.  "Functional obsolescense" is the absense or presence of a feature or features that render the property undesirable.  This can occur because of changes in the surrounding areas or neighborhood that make a feature of the property less desirable.

Subject:  This is short for the property that is being appraised.  Also called the "subject property".

Useful Life:  "Useful life" means the time during which a property can provide benefits to its owner.

URAR:  "URAR" is an acronym for "Uniform Residential Appraisal Report" and is a form provided by Fannie Mae (FNMA), numbered "1004".  This is the most required form by lenders when they need a full appraisal, which requires a walk-through inspection of the property.

USPAP:  "USPAP" is an acronym for "Uniform Standards of Professional Appraisal Practice".  This is a standard set forth for appraisers to carry out their business in an ethical and business-like manner and often is enacted into law in a state.  It is made publicly known by the Appraisal Foundation.  (The Appraisal Foundation is a non-government entity chartered by Congress to maintain appraisal standards among other things.)

Walk-Through:  A "Walk-Through" is an inspection of the interior of the home that is used in estimating value.  Various features are noted during this inspection, measurements taken, etc.

If you have any other questions about the terminology used on this website, or if you have heard appraisal jargon elsewhere and don't find it here, there is a recommended resource that you can use online that can provide you with great definitions of words:  Onelook.com.