When it comes to appraisals most people don’t really understand what they are and all the terminology associated with appraisals. There are a lot of terms you should know. But we understand that even the savviest person isn’t going to know everything. That’s why we’ve compiled a glossary of all the top appraisal terms you need to know.
Whether you’re buying or selling a home, refinancing or just looking to learn some new vocabulary then we’ve got you covered. This comprehensive appraisal glossary will cover the basics as well as a deep dive into each term in more detail.
This appraisal glossary is a compilation of terms gathered from numerous resources, primarily newer, and more technical standards and textbooks. As with any industry, technology and new appraisal standards and practices have continued to help grow appraisal terminology.
At ExcelAppraise, we strive to be up to date with the latest industry practices and will continue to update this glossary of appraisal terms.
The following is a list of the most recent and up to date appraisal terms that you need to know. Read the quick answers below, or click on each appraisal term for an in depth definition.
This is often referred to as the absorption rate, absorption is the amount of units or inventory of a specific commercial property type that becomes occupied during a time period in a particular market.
An appraisal is the process of having a property appraised by an appraiser. The appraiser gives their professional opinion of value based on several contributing factors.
An appraiser is a licensed professional who performs a competent valuation of your property. This is an unbiased opinion based on the property size and market value.
Comparables is a short term that compares similar properties in your area to whatever property is being appraised, whether that’s a home, commercial property, etc.
Concessions are lease buyouts, free rent, above-standard tenant improvement allowances, and moving allowances.
Depreciation is a loss in any property value no matter what the cause, usually due to wear and tear of the property or surrounding area.
Fair Market Value
Fair Market Value is the price the seller and the buyer agrees would sell on the open market.
Forecasting is an estimate an appraiser makes in advance of what your property value will be in the future based on past and current market trends.
Highest and Best Use
Highest and Best Use is what you can legally use vacant land for or how you can improve a property and also what is physically possible. There are four tests of highest and best use: physical possibility, legal permissibility, maximum productivity, and financially feasible.
Sales Comparison Approach
Sales Comparison Approach is what an appraiser values your home at by comparing your property to similar properties and the surrounding area.