Understanding Appraiser Jargon

Have you ever heard an appraiser use terms that left you scratching your head? If you’re curious about what those terms mean, you’re in the right place. Just as "res ipsa loquitur" is a familiar phrase to lawyers and "triple witching" to day traders, certain terms are second nature to appraisers.

On this page, we’ll demystify some common appraiser jargon and explain what these terms really mean. We aim to make the language of appraising as clear as possible, so you can better understand the process and our work.

Ever heard an appraiser use terms that seem like a foreign language? Here’s a guide to some common appraiser jargon and their meanings:

• Adjustment: When appraisers identify comparable properties, they adjust the sales price of each comp to match the subject property’s features. This includes accounting for differences in location, construction quality, condition, living area, acreage, and amenities. This process highlights the appraiser’s professional expertise.

• ADU (Accessory Dwelling Unit): A smaller, independent residential unit situated on the same lot as a primary single-family residence. It is a separate living space with its own entrance, kitchen, and bathroom. The ADU is not included in the Gross Living Area (GLA) of the main residence.

• Chattel: Personal property on the subject property that is not included in the appraisal report's value. For example, furniture or equipment.

• Comparable or "Comp": Properties similar to the subject property that have recently sold nearby. These are used to determine the fair market value of the subject property.

• Drive-by: An appraisal involving only an exterior examination of the property to verify its presence and condition without inspecting the interior. This type of appraisal may be referred to as a "2055" based on Fannie Mae’s form for this purpose.

• Fair Market Value: The appraiser’s opinion of value, reflecting what a willing buyer would pay a willing seller in an arm's-length transaction.

• GLA (Gross Living Area): The total above-grade floor space of a property, including stairways and closets, measured using exterior wall measurements. GLA only includes areas that are accessed through the main residence and excludes spaces like basements or attics unless they are finished and accessible from the main living areas.

• Latent Defects: Hidden defects that are not immediately visible but affect the property’s value, such as structural damage or termite infestation.

• MLS (Multiple Listing Service): A comprehensive database of properties on the market, including listing prices and recent sales prices. Real estate agents use this, and many appraisers access it to aid in comparable selection and adjustments.

• Obsolescence: The reduction in property value due to either physical degradation or the presence of more desirable alternatives. This can be classified into two types:

  • Functional Obsolescence: Loss of value due to outdated or less desirable features within the property itself, such as an inground pool that does not add as much value in the current market.

  • External Obsolescence: Loss of value due to external factors outside the property, such as being located on a busy street or in a declining neighborhood.

• Subject: The property being appraised, often referred to simply as the "subject property."

• Useful Life: The period during which a property remains beneficial and valuable to its owner.

• URAR (Uniform Residential Appraisal Report): Fannie Mae form 1004, the standard form required by most lenders for a full appraisal, which includes a walk-through inspection.

• USPAP (Uniform Standards of Professional Appraisal Practice): Standards for appraisal practice promulgated by the Appraisal Foundation, often enacted into state law, ensuring professionalism and consistency in appraisals.

• Walk-through: An inspection involving a visit to each part of the property’s interior to estimate its value.

If you have questions about these terms or need clarification on your appraisal, don’t hesitate to contact JLS Valuations, LLC.