Term
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Definition
| THE LOGISTICAL PREREQUISITES TO ACCOMPLISH A PROJECT AS DETERMINED BY A BUYER OR SELLER TO A PROJECT. |
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Term
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Definition
| AN INDEPENDENT INDIVIDUAL WHO CONTRACTS ON A FEE BASIS TO PREPARE AN APPRAISAL. |
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Term
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Definition
| TO DISCONTINUE USE OF REAL PROPERTY. TO DISCLAIM OR SURRENDER THE PREMISES, RENTS AND FIXTURES THERON WITH NO INTENTION TO RECLAIM THE REAL PROPERTY. |
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Term
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Definition
| THE HIGHEST FORM OF OWNERSHIP WHICH INCLUDES THE OWNERSHIP OF THE LEGAL RIGHTS OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, THE RIGHTS TO CONTROL, USE , POSSESS, EXCLUDE, ENJOY AND THE POWERS TO WILL, MORTGAGE, LEASE OR OTHERWISE ABANDON THE REAL PROPERTY. FEE, FEE SIMPLE, AND ABSOLUTE FEE SIMPLE ARE, IN MOST CASES, USED INTERCHANGEABLY. |
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Term
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Definition
| TO DERIVE A LAND VALUE ESTIMATE WHEN NO VIABLE LAND SALES ARE AVAILABLE WITHIN A GIVEN AREA AS USED WITHIN THE COST APPROACH. THE METHODOLOGY UTILIZED INCLUDES EXTRACTING A LAND VALUE ESTIMATE OF A PIECE OF REAL PROPERTY WHICH HAS BEEN IMPROVED, INCLUDING A STRUCTURE AND FIXTURES THERON BY ESTIMATING THE LAND VALUE, THEN SUBTRACTING THE COST OF THE IMPROVEMENTS PLUS THE TOTAL ACCRUED DEPRECIATION FROM THE SALES PRICE. THIS PROCEDURE IS NOT THE MOST PREFERRED METHOD OF LAND VALUE DERIVATION. IT IS USED, HOWEVER, WHEN LAND SALES ARE NOT READILY AVAILABLE WITHIN A GIVEN AREA. |
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Term
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Definition
| THE EXPANSION OF SOIL OR LAND ONTO REAL PROPERTY THROUGH NATURAL CAUSES, INCLUDING WIND, RAIN, LAKES AND STREAMS DEPOSITING SOIL WHICH BECOMES PART OF THE REAL PROPERTY. |
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Term
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Definition
| (AS USED IN THE COST APPROACH) A COLLECTIVE LOSS IN VALUE DUE TO PHYSICAL DETERIORATION, OUTDATED CONSTRUCTION FEATURES, AND ECONOMIC, LOCATIONAL AND ENVIRONMENTAL VARIABLES IN THE MARKET. THE TOTAL ACCRUED DEPRECIATION IS MEASURED AND SUBTRACTED FROM THE ESTIMATED COST TO REPLACE A NEW STRUCTURE AS OF A SPECIFIC EFFECTIVE DATE. |
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Term
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Definition
| AN AREA OF LAND WHICH CONTAINS 43,560 SQUARE FEET, AS FOUND IN THE RECTANGULAR SURVEY SYSTEM, OR UNITED STATES GOVERNMENT SURVEY SYSTEM OF LAND DESCRIPTION. ONE OF 640 ACRES AS FOUND IN ONE SECTION OF LAND. |
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Term
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Definition
| AS PROPOSED PRIMARILY IN THE INCOME APPROACH - THE MONEY EARNED AND COLLECTED IN EXCHANGE FOR THE USE OF REAL PROPERTY AS OF THE EFFECTIVE DATE OF THE APPRAISAL REPORT. |
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Term
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Definition
| A METHOD OF ESTIMATING THE ASSESSED VALUE OF REAL PROPERTY FOR TAXATION PURPOSES. AD VALOREM IS LATIN FOR ACCORDING TO VALUE. TAX ASSESSORS ARE PROFESSIONAL ASSESSMENT OFFICIALS FOR A GOVERNMENTAL TAXING ENTITY. THE ASSESSED VALUE OF REAL PROPERTY AND THE MARKET VALUE WILL RARELY BE THE SAME. TAX ASSESSORS USE APPRAISAL THEORY TO ESTIMATE ASSESSED VALUE, NOT MARKET VALUE. |
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Term
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Definition
| A POSITIVE OR NEGATIVE MODIFICATION IN THE APPRAISAL VALUATION MADE TO COMPENSATE FOR A VARIABLE. ADJUSTMENTS ARE APPLIED TO A COMPARABLE PROPERTY TO OFFSET OR COMPENSATE FOR A DIFFERENTIAL. FOR EXAMPLE: ADJUSTMENTS ARE MADE FOR TREES, FIREPLACES, AND POOLS. THE NET RESULT OF THESE ADJUSTMENTS, WHEN APPLIED TO THE COMPARABLE, WILL RESULT IN A NET VALUE INDICATION. |
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Term
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Definition
| A MALICIOUS METHOD OF ACQUIRING REAL PROPERTY RIGHTS OR THE TITLE TO REAL PROPERTY FROM ANOTHER THROUGH UNAUTHORIZED, HOSTILE, OR PROLONGED USE. ADVERSE POSSESSION COMES FROM SQUATTERS RIGHTS. ADVERSE POSSESSION CAN BE DIFFICULT TO PROVE. THE STATUTORY TIME PERIODS ARE THREE, FIVE, TEN AND TWENTY FIVE YEARS. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - AS USED WITHIN AN OPERATING INCOME STATEMENT, THIS CALCULATION SHOWS THE REMAINING NET INCOME AFTER EXPENDITURES FOR DEBT SERVICES, LOST REVENUES AND OTHER EXPENSES. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - AS USED WITHIN AN OPERATING INCOME STATEMENT, THIS CALCULATION SHOWS THE REMAINING NET INCOME AFTER EXPENDITURES FOR DEBT SERVICES, LOST REVENUES AND OTHER EXPENSES. |
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Term
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Definition
| ENCOMPASSED WITHIN THE DEFINITION OF LAND, REAL ESTATE AND REAL PROPERTY. AIR RIGHTS INCLUDE THE RIGHTS TO CONTROL AND OCCUPY THE AIR SPACE ABOVE THE SURFACE TO REAL PROPERTY, EXTENDING "UPWARDS TO A REASONABLE ALTITUDE ABOVE," LEGAL TOPICS CONCERNING AIR RIGHTS INCLUDE THE USE OF SUNLIGHT RIGHTS, SOLAR POWER, VIEW AMENITIES AND THE PURCHASE OF BLOCKS OF AIR. ONE COMMON FORM OF AIR RIGHT OWNERSHIP INCLUDES CONDOMINIUM OWNERSHIP. |
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Term
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Definition
| TO DERIVE A LAND VALUE ESTIMATE WHEN NO VIABLE LAND SALES ARE AVAILABLE WITHIN A GIVEN AREA AS USED WITHIN THE COST APPROACH. (SEE ALSO ABSTRACTION PROCEDURE.) |
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Term
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Definition
| THE ACQUISITION AND GAINING OF SOIL AS A RESULT OF NATURAL WATER COURSE FLUCTUATIONS AND CHANGE. (SEE ALSO ACCRETION.) |
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Term
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Definition
| A SET OF FEATURES THAT ENHANCE PHYSICAL OR MATERIAL PLEASURES TO AN OWNER OF REAL PROPERTY. FOR EXAMPLE: LAKE VIEWS, DESIGN VARIATIONS, PROPERTY CONDITIONS AND PROPERTY LOCATIONS. AMENITIES FLUCTUATE IN VALUE ACCORDING TO THE USER OF THE AMENITY. |
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Term
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Definition
| A DIRECT REDUCTION METHOD OF FINANCING AND REPAYMENT OF A MORTGAGE DEBT (DEEDS OF TRUSTS IN OREGON) IN EQUAL INSTALLMENTS OF BOTH PRINCIPAL AND INTEREST OVER A PRESCRIBED PERIOD OF TIME. FOR EXAMPLE, THE MONTHLY PAYMENT OF A $10,000.00 LOAN OVER TEN YEARS WITH AN INTEREST RATE OF TEN PERCENT IS $152.57. DURING THE TEN YEAR PERIOD, A TOTAL OF $18,311.60 IS PAID. THE INTEREST PAID OVER THE TEN YEAR TERM IS $8,311.60, WHICH IS 83.12 PERCENT OF THE ORIGINAL AMOUNT BORROWED. |
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Term
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Definition
| OF A SERIES OF TENANTS, THE LARGEST ONE WHICH GENERATES THE HIGHEST PORTION OF CONSUMER TRAFFIC. ANCHOR TENANTS TYPICALLY ARE THE FIRST TENANTS OF A STRIP CENTER, REGIONAL OR SUPER REGIONAL MALL. THEIR ASSOCIATION WITH THE DEVELOPMENT CREATES THE DESIRE FOR OTHER TENANTS TO BE NEARBY. MAJOR RETAILERS WILL TYPICALLY SERVE AS ANCHORS IN A REGIONAL MALL, WHEREAS GROCERY STORES WILL TYPICALLY SERVE AS THE ANCHORS FOR A NEIGHBORHOOD STRIP CENTER. |
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Term
| ANTICIPATION, PRINCIPLE OF |
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Definition
| AN APPRAISAL PRINCIPLE WHICH STATES THAT THE BUYER AND SELLER ANTICIPATE AN INCREASE IN VALUE WHEN BUYING PROPERTY. |
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Term
| ANNUAL PERCENTAGE RATE (APR) |
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Definition
| THE RATE OF INTEREST CHARGED TO BORROWERS FOR THE USE OF MONEY. THE "TRUTH IN LENDING ACT", AS PART OF FEDERAL RESERVE REGULATION TWO, REQUIRES COMMERCIAL BANKS TO DISCLOSE THE ACTUAL ANNUAL PERCENTAGE RATE BEING CHARGED ON A LOAN. FOR EXAMPLE, A BUYER IS SEEKING FINANCING OF A $200,000.00 HOME AND HAS AGREED TO MAKE A DOWN PAYMENT OF $50,000.00. THE BUYER AD LENDER HAVE AGREED TO FINANCE $150,000.00 AT 12 PERCENT INTEREST FOR THIRTY YEARS. THE BUYER PURCHASES FOUR POINTS WITH A ONE-POINT ORIGINATION FEE, TOTALING FIVE POINTS. EACH POINT REPRESENTS ONE PERCENT OF THE LOAN AMOUNT. TO CALCULATE THE APR, TAKE THE LOAN AMOUNT OF $150,000.00 AND SUBTRACT THE DISCOUNT POINTS TOTALING $7,500.00 FROM THE LOAN AMOUNT. THEN, $142,500.00 BECOMES THE PRESENT VALUE WITH A PAYMENT OF $1,542.92. WHEN AMORTIZED OVER 30 YEARS, THE APR IS ACTUALLY 12.69 PERCENT INCLUDING THE COST OF FINANCING. $150,000.00 AT 12 PERCENT FOR 30 YEARS EQUALS $1,542.92 / $150,000.00 MINUS $7,500.00 (POINTS) AT 30 YEARS EQUALS 12.69 PERCENT. |
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Term
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Definition
| AN ORGANIZATION LOCATED IN WASHINGTON, D.C., WITH AUTHORITY FROM THE APPRAISAL INDUSTRY TO REGULATE THE ACTIVITIES OF THE PROFESSION. THE FOUNDATION WAS GRANTED ITS AUTHORITY FROM THE FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT (FIRREA) PASSED IN 1989, AND IMPLEMENTS THE UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP). THE RULES AND STANDARDS DEVELOPED BY USPAP FORMULATE THE MINIMUM STANDARDS AND QUALIFICATIONS OF PROFESSIONAL APPRAISERS AS SET BY ITS NINE-MEMBER APPRAISAL ORGANIZATION. |
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Term
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Definition
| THE FORMAL IMPARTIAL REPORTING OF AN ESTIMATED CONCLUSION OF VALUE. AN APPRAISAL REPORT CAN BE A LETTER, A STANDARD FORM OR A NARRATIVE REPORT. MOST RESIDENTIAL APPRAISAL REPORTS ARE A FORM REPORT. THE LENGTH OF A RESIDENTIAL FORM REPORT CAN RANGE BETWEEN 10 - 40 PAGES. |
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Term
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Definition
| AN UNBIASED, DISINTERESTED THIRD PARTY WHO DRAWS CONCLUSIONS AND REPORTS AN ESTIMATE OF VALUE BASED ON THE INTERPRETATION OF VALUE OF BUYER AND SELLERS IN THE MARKET PLACE. |
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Term
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Definition
| APPLIED IN ALL THREE APPROACHES TO THE APPRAISAL PROCESS; IT IS THE RESULT OF REAL PROPERTY GAINING OR ASCENDING IN VALUE. APPRECIATION IS BASED ON MULTIPLE VARIABLES INCLUDING TIME, INFLATION, LOCATION, SUPPLY, DEMAND, MONEY SUPPLY AND NUMEROUS OTHER ECONOMIC AND MARKET VARIABLES. |
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Term
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Definition
| A RIGHT, PRIVILEGE OR PHYSICAL POSSESSION OF A TANGIBLE OR INTANGIBLE ITEM THAT PASSES WITH AND IS INHERENT TO THE TITLE OF REAL PROPERTY. TYPES OF APPURTENANCES INCLUDE EASEMENTS BY NECESSITY, BY PRESCRIPTION OR IN GROSS. FOR EXAMPLE, THE COMMON ELEMENTS WITHIN A CONDOMINIUM REGIME GRANTING AN OWNER, ONCE RECEIVING TITLE, TO USE THE RECREATIONAL FACILITIES WITHIN THE COMMON GROUNDS. |
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Term
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Definition
| AS USED IN MATHEMATICS, THE SURFACE OF A BUILDING OR LOT. THIS IS USED TO DETERMINE THE NUMBER OF SQUARE INCHES, FEET, METERS OR YARDS OF A SURFACE. |
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Term
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Definition
| A FAIR MARKET EXCHANGE, IN AN OPEN COMPETITIVE MARKET, BETWEEN A KNOWLEDGEABLE BUYER AND SELLER, NEITHER OF WHICH ARE INFLUENCED BY DURESS OR HARMFUL ACTION. BOTH PARTIES ARE ACTIN IN THEIR OWN BEST INTEREST. BOTH PARTIES GAIN AND LOSE SOMETHING OF VALUE. |
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Term
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Definition
| TO PROVIDE AN INTERPRETATION OF VALUE BASED ON THE CURRENT CONDITION OF THE REAL PROPERTY, WITHOUT REGARD TO THE POTENTIAL FUTURE MARKETABILITY. |
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Term
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Definition
| AN INTERPRETATION OF VALUE BASED ON THE PROJECTED COMPLETION OF SPECIFIC IMPROVEMENTS AS OF A PREDETERMINED DATE. |
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Term
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Definition
| THE PROCESS OF MERGING TWO OR MORE TRACTS OF LAND INTO ONE LARGE TRACT WHICH MAY INCREASE THE OVERALL MARKETABILITY AND VALUE OF THE PROPERTY. FOR INSTANCE, TWO SEPARATE ON-ACRE TRACTS HAVE A VALUE OF $5,000.00 EACH. WHEN COMBINED INTO A TWO-ACRE TRACT, THE PERCEIVED MARKET VALUE BECOMES $12,000.00, A GAIN OF $2,000.00 AFTER BEING COMBINED. THIS INCREASED VALUE IS REFERRED TO AS PLOTTAGE OR PLOTTAGE VALUE. CONVERSELY, ASSEMBLAGE CAN CREATE A LOSS IN VALUE. THE ADDITION OR SUBTRACTION OF VALUE WHEN COMBINING TWO OR MORE TRACTS IS DEPENDENT ON THE USES OF SIMILAR SALES IN THE SAME AREA. |
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Term
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Definition
| ASSESSED VALUE IS THAT ESTIMATE OF VALUE DETERMINED BY A COUNTY TAX AUTHORITY FOR THE PURPOSE OF CALCULATING THE ANNUAL TAXES ON REAL PROPERTY. |
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Term
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Definition
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Term
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Definition
| THE FORCIBLE REMOVAL, THROUGH NATURAL CAUSES, OF SOIL OR LAND WHICH ALTER REAL PROPERTY BOUNDARIES. AVULSION CAN OCCUR THROUGH CHANGES IN THE PATH OF A WATERWAY OR BY VIOLENT ACTS OF NATURE SUCH AS EARTHQUAKES. |
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Term
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Definition
| ALSO REFERRED TO AS BULLET MORTGAGE! A FORM OF MORTGAGE IN WHICH A PRINCIPAL AND INTEREST PAYMENT IS ESTABLISHED WITH A CLAUSE CALLING FOR THE REMAINING PORTION OF A LOAN TO BE PAID IN FULL AS OF A SPECIFIC FUTURE DATE. FOR EXAMPLE: ONE BORROWS $100,000.00 AT TEN PERCENT INTEREST, THE MONTHLY PAYMENT IS BASED ON A 30-YEAR MORTGAGE T BE PAID IN MONTHLY INSTALLMENTS OF $877.57. AT THE END OF THREE YEARS, THE REMAINING BALANCE MUST BE PAID IN FULL. THE LOAN BALANCE AFTER THREE YEARS IS $98,151.65 WHICH MUST THEN BE PAID IN FULL. |
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Term
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Definition
| AS USED IN THE COST APPROACH, THE MEAN OR AVERAGE COST OF SIMILAR COMPONENTS OF A STRUCTURE OR BUILDING AS DETERMINED THROUGH COST MANUALS. |
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Term
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Definition
| AS USED IN ESTABLISHING THE LEGAL DESCRIPTION OF REAL PROPERTY, THE BASE LINE IS THE IMAGINARY EAST-WEST LINE USED BY SURVEYORS TO LOCATE REAL PROPERTY. THE NORTH-SOUTH LINES ARE CALLED PRINCIPAL MERIDIANS. THIS FORM OF LEGAL DESCRIPTION, CALLED THE RECTANGULAR SURVEY SYSTEM, IS AN OUTDATED METHOD OF DETERMINING REAL PROPERTY BOUNDARIES. IN OREGON, SURVEYORS NO LONGER ORIGINATE LEGAL DESCRIPTIONS OF PROPERTY USING THIS SYSTEM. THE OUTDATED FORMAT IS USED ONLY TO IDNETIFY THE TRACT. |
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Term
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Definition
| AN INDEXING METHOD WHICH STATES THAT 100 BASIS POINTS IS EQUAL TO ONE PERCENT OF INTEREST. FOR EXAMPLE; THE CURRENT INTEREST RATE ON A LOAN IS 12.75%. THE INDEX INCREASES 25 BASIS POINTS. THIS INCREASE, WILL PRODUCE A NEW INTEREST RATE OF 13%. |
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Term
| BEFORE TAX CASH FLOW (BTCF) |
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Definition
| USED PRIMARILY WITHIN THE INCOME APPROACH. AS USED WITHIN AN OPERATING INCOME STATEMENT, THIS CALCULATION SHOWS THE NET OPERATING INCOME (NOI) AFTER EXPENDITURES FOR DEBT SERVICE, LOST REVENUES AND ALL OTHER EXPENSES HAVE BEEN PAID, BUT DOES NOT INCLUDE THE ORDINARY TAXABLE INCOME EXPENSES TO BE PAID. |
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Term
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Definition
| A SET OF ARCHITECTURAL DRAWINGS, FLOOR PLANS AND SPECIFICATIONS WHICH DETAIL THE OUTLINE AND NECESSARY REQUIREMENTS TO CONSTRUCT A BUILDING. APPRAISERS MUST HAVE A WORKING KNOWLEDGE OF HOW TO READ A SET OF BLUEPRINTS. |
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Term
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Definition
| REQUIREMENTS ESTABLISHED BY A MUNICIPALITY TO SET THE STANDARDS FOR BUILDING MATERIALS TO BE USED IN THE CONSTRUCTION OF A STRUCTURE OR ITS IMPROVEMENTS. |
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Term
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Definition
| THE BOUNDARIES FROM WHICH A STRUCTURE CANNOT PASS. BUILDING LINES ARE TYPICALLY SET AT THE FRONT AND SIDES OF THE BUILDING SITE. ON OCCASION, DEPENDING ON THE DEED RESTRICTIONS, OR COVENANTS, CODES AND RESTRICTIONS (CCR'S), A BUILDING LINE MAY BE ALLOCATED TO THE REAR OF THE SITE. |
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Term
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Definition
| THE PARCEL OF LAND ON WHICH A STRUCTURE WILL BE ERECTED. BUILDING SITES TYPICALLY HAVE OFFSET LINES, ALSO REFERRED TO AS BUILDING LINES, IN ADDITION TO HEIGHT AND BUILDING RESTRICTIONS AS ESTABLISHED BY ORDINANCE, OR COVENANTS, CODES AND RESTRICTIONS (CCR'S). |
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Term
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Definition
| THOSE LEGAL RIGHTS ASSOCIATED WITH THE OWNERSHIP OF REAL PROPERTY. INHERENT IN THESE RIGHTS ARE THE POWERS TO CONTROL, USE, ENJOY, POSSESS, DISPOSE AND OTHERWISE MORTGAGE, DEVISE AND LEAVE REAL PROPERTY. THESE RIGHTS ENCOMPASS THE LEGAL RIGHTS OF OWNERSHIP PROVIDED BY THE GOVERNMENT. |
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Term
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Definition
| THE ABILITY TO LOWER THE INTEREST RATE PAID UPON THE ORIGINATION OF THE LOAN. IT IS BASED ON THE CURRENT PRIME INTEREST RATE AND PAID FOR IN THE FORM OF DISCOUNT POINTS. FOR EXAMPLE; A BUYER WISHES TO OBTAIN A LOAN OF $100,000.00 AT THE PRIME RATE OF 10%. BASED ON A 30 YEAR AMORTIZATION, THE PAYMENT IS $877.57. AT THIS RATE, HOWEVER, THEY DO NOT QUALIFY FOR THE LOAN. TO FACILITATE THE TRANSACTION, THE BUYER PURCHASES FOUR POINTS TO BUY DOWN THE LOAN. THE LENDER'S YIELD, IN THIS EXAMPLE, IS EQUAL TO FOUR POINTS FOR EVERY ONE PERCENT OF INTEREST. IN OTHER WORDS, IT WILL COST FOUR POINTS TO LOWER THE INTEREST RATE FROM TEN TO NINE PERCENT. PURCHASING THE POINTS LOWERS THE INTEREST RATE FROM TEN TO NINE PERCENT, THEREBY REDUCING THE MONTHLY PAYMENT FROM $877.57 TO $804.62 AT WHICH POINT THE BUYER NOW QUALIFIES FOR THE LOAN. |
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Term
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Definition
| A MECHANISM- WEALTH, STOCKS OR CASH RESERVES. USED AS A COMPONENT WHICH, WHEN APPLIED TO A UNIT OF PRODUCTION, IS CAPABLE OF CREATING ADDITIONAL WEALTH. FOR EXAMPLE, REAL AND PERSONAL PROPERTY ALONG WITH RENTAL INCOME. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH, THE MATHEMATICAL PROCESS OF TRANSFORMING A CURRENT FLOW OF INCOME INTO A PRESENT INDICATION OR INDICATOR OF VALUE. |
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Term
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Definition
| ALSO KNOWN AS THE RATE OF RETURN AND OVERALL CAPITALIZATION RATE. AS USED IN THE INCOME APPROACH, THE PERCENTAGE RATE DERIVED FROM THE SALE OF AN INCOME-PRODUCING PROPERTY, OR THE RATE OF RETURN REQUIRED BY AN INVESTOR. CAPITALIZATION RATES MEASURE THE AMOUNT OF TIME REQUIRED TO RECAPTURE A SALES PRICE OR MARKET VALUE. CAPITALIZATION IS BASED ON FORECASTED ANNUAL INCOME VERSUS ACTUAL MONTHLY INCOME. COMPONENTS TO ESTABLISH A CAPITALIZATION RATE INCLUDE GROSS INCOME, VACANCY LOSS, FIXED AND VARIABLE EXPENSES ALONG WITH THE SALE PRICE OR MARKET VALUE. THERE ARE NUMEROUS METHODS AVAILABLE IN ESTIMATING A CAPITALIZATION RATE, DEPENDING ON HOW AN INVESTOR MEASURES THE VALUE OF INCOME. OTHER TYPES OF CAPITALIZATION INCLUDE: INTERNAL RATE OF RETURN; GROSS CAPITALIZATION; CASH ON CASH RETURN; OVERALL RATE OF RETURN; DIRECT CAPITALIZATION AND RECAPTURE RATE; BUILDING CAPITALIZATION; AND BAND OF INVESTMENT THEORY. |
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Term
| CASH EQUIVALENCY PROCEDURE |
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Definition
| (AS USED IN THE SALES COMPARISON APPROACH) A METHODOLOGY IN WHICH AN ADJUSTMENT IS MADE TO COMPENSATE FOR UNIQUE TYPES OF FINANCING. CAN ALSO DERIVE THE VALUE OF A PARTICULAR FORM OF FINANCING. THE ADJUSTMENT COMPENSATES FOR THE INFERIOR OR SUPERIOR FINANCING MECHANISM UTILIZED. THE DIFFERENCE IN THE RESULTING NET INDICATIONS OF VALUE DETERMINE THE DOLLAR ADJUSTMENT TO BE APPLIED IN THE MARKET GRID OF THE FORM REPORT. |
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Term
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Definition
| (AS USED IN THE INCOME APPROACH)THAT INCOME AVAILABLE FOR US AFTER EXTRACTING, FROM THE GENERATED INCOME OPERATION, ALL EXPENDITURES OF AN INCOME PROPERTY. |
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Term
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Definition
| LATIN FOR LET THE BUYER BEWARE. |
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Term
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Definition
| AS USED IN THE METROPOLITAN STATISTICAL AREA (MSA) - A DESIGNATED GEOGRAPHIC REGION AS DETERMINED BY THE BUREAU OF THE CENSUS. EACH CENSUS TRACT IS IN NUMERICAL SEQUENCE WHICH CAN BE EXPANDED BY SUB NUMBERS AND IS UTILIZED FOR STATISTICAL PURPOSES BY THE FEDERAL GOVERNMENT. |
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Term
| CENTRAL BUSINESS DISTRICT (CBD) |
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Definition
| THE CORE DOWNTOWN AREA OF A METROPOLITAN CITY OR TOWN. CONTAINED WITHIN THIS AREA ARE MAJOR BUSINESS AND GOVERNMENTAL OPERATIONS. |
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Term
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Definition
| AN AREA OF LAND AS USED IN THE RECTANGULAR SURVEY SYSTEM - 24 LINEAR MILES LONGITUDE AND 24 LINEAR MILES LATITUDE CONTAINING A TOTAL OF 576 SQUARE MILES, OR 25,090,560 ACRES. |
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Term
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Definition
| THOSE REGULATORY GUIDELINES ESTABLISHED BY THE GOVERNING MEMBERS OF PROFESSIONAL ORGANIZATIONS WHICH REGULATE THE MANNER ITS MEMBERS MUST CONDUCT THEMSELVES. IN REAL ESTATE PRACTICE, MAJOR ORGANIZATIONS SET CODES AND RULES OF STANDARD PROFESSIONAL PRACTICE BY WHICH THEY MUST ABIDE AND AGREE TO COMPLY WITH WHEN AFFILIATED WITH AN ORGANIZATION. |
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Term
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Definition
| AN AREA OF LAND OR SPACE WHICH IS MADE AVAILABLE FOR THE MUTUAL BENEFIT OF OTHERS. HALLWAYS, PARKS, PARKING LOTS, COMMUNITY POOLS, CLUBHOUSES, LODGING FOR CARETAKER, TENNIS COURTS AND MARINAS ARE ALL EXAMPLES OF COMMON AREAS. THEY ARE TYPICALLY SEEN IN CONDOMINIUM REGIMES, PLANNED UNIT DEVELOPMENTS AND TOWN HOME COMMUNITIES. MOST HOMEOWNER ASSOCIATIONS ALLOCATED A PERCENTAGE ("UNDIVIDED INTEREST") OF OWNERSHIP TO EACH OF THE RESIDENTS RESIDING IN A DEVELOPMENT. |
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Term
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Definition
| HUSBAND AND WIFE ARE THE DESIGNATED ENTITIES IN THE CO-OWNERSHIP OF REAL PROPERTY. COMMUNITY PROPERTY STATES THE HUSBAND AND WIFE BECOME EQUAL PARTNERS OF ALL REAL PROPERTY ACQUIRED DURING THE COURSE OF MARRIAGE UNLESS THE REAL PROPERTY IS ACQUIRED BY GIFT, WILL OR INHERITANCE. OREGON, WASHINGTON AND WISCONSIN ARE COMMUNITY PROPERTY STATES. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - A SIMILAR, RECENTLY-CLOSED TRANSACTION SALE HAVING SIMILAR LOCATION, COMPONENTS, DESIGN, AGE AND AMENITIES, ALL OF WHICH WILL BE USED TO EVALUATE THE MARKET'S INTERPRETATION OF VALUE OF A SUBJECT PROPERTY. |
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Term
| COMPARABLE SQUARE FOOT COST TECHNIQUE |
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Definition
| AS USED IN THE COST APPROACH - A THEORETICAL METHOD OF REBUILDING A COMPONENT OR STRUCTURE BASED ON BUILDER DATA, COST MANUALS, AND OTHER FACTUAL INFORMATION. THIS PROCEDURE IS THE EASIEST TO APPLY YET IS THE LEAST ACCURATE OF ALL THE COST ESTIMATING PROCEDURES. |
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Term
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Definition
| AS USED IN THE COST APPROACH - THE COST TO REPLACE A PARTICULAR COMPONENT OF A BUILDING OR STRUCTURE. COMPONENT COST MAY ALSO BE USED IN THE SUPPORT OF OR UTILIZATION OF AN ADJUSTMENT IN THE SALES COMPARISON APPROACH. |
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Term
| COMPONENTS OF COMPARISON (COC) |
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Definition
| THE PROCESS OF USING A COMPONENT OR COMPONENTS TO ESTIMATE THE VALUE OF REAL PROPERTY. IN ORDER FOR THE PROCEDURE TO BE UTILIZED, A CONSISTENT UNIT OF COMPARISON IS REQUIRED. |
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Term
| COMPONENTS OF COMPARISON ANALYSIS |
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Definition
| THE SUBJECTIVE INTERPRETATION OF AN APPRAISER TO DETERMINE THOSE COMPONENTS USED TO PINPOINT THE COMPONENTS WHICH MEASURE VALUE. FOR EXAMPLE, WHEN STARTING A SEARCH FOR SOLD COMPARABLES IN A SPECIFIC NEIGHBORHOOD, THE APPRAISER MAY HAVE A LARGE SALES BASE FROM WHICH TO CHOOSE. TO COMPLETE AN IN-DEPTH ANALYSIS OF EACH SALE IS TIME PROHIBITIVE. THEREFOR, THE APPRAISER SUBJECTIVELY DETERMINES KEY COMPONENTS, SUCH AS SIZE, AGE, CONDITION AND ROOM COUNT, SIMILAR TO THE SUBJECT, TO NARROW THE FIELD OF DATA. |
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Term
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Definition
| THE PROCESS, ACT OR PROCEDURE OF A MUNICIPALITY OR GOVERNMENTAL AGENCY TO ESTIMATE THE VALUE OF PRIVATELY-OWNED REAL PROPERTY, AND THEN ACQUIRE IT'S OWNERSHIP. TO TAKE PRIVATELY-OWNED REAL PROPERTY FOR THE BETTERMENT OF THE COMMON GOOD. THE AUTHORITY TO CONDEMN REAL PROPERTY IS GRANTED UNDER THE GOVERNMENTAL POWER OF EMINENT DOMAIN WHICH IS ONE OF FOUR PRIMARY GOVERNMENTAL POWERS. |
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Term
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Definition
| A METHOD OF OWNERSHIP OF REAL PROPERTY IN WHICH THE GRANTEE RECEIVES FEE TITLE TO A UNIT IN ADDITION TO AN UNDIVIDED EQUAL INTEREST IN THE COMMON ELEMENTS OF THE FACILITY. IN MOST INSTANCES, CONDOMINIUM OWNERSHIP INVOLVES THE AIR RIGHT OWNERSHIP OF A CUBIC BLOCK OF AIR. IN ADDITION TO A "PRO RATA" OWNERSHIP IN THE COMMON ELEMENTS OF A DEVELOPMENT. |
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Term
| CONFIRMATION OF SOLD DATA |
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Definition
| THE METHOD BY WHICH AN APPRAISER VERIFIES INFORMATION CONCERNING A COMPARABLE SALE. A MINIMUM OF AT LEAST TWO SOURCES SHOULD BE USED TO CONFIRM THE SALE OF REAL PROPERTY. THESE SOURCES INCLUDE, LISTOR, MLS DATA, BUYER, SELLER, BUILDER, TAXING AUTHORITY AND COURTHOUSE RECORDS. |
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Term
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Definition
| ALSO REFERRED TO AS SUBJECT TO - AS USED IN THE RECONCILIATION PROCESS, AN ESTIMATE OF VALUE SUBJECT TO A FUTURE EVENT. CONTINGENT UPON CAN INCLUDE THE COMPLETION OF REQUIRED REPAIRS OR INSPECTIONS WHICH ARE NOT WITHIN THE REALM OF EXPERTISE OF AN APPRAISER. |
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Term
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Definition
| ALSO KNOWN AS TOPOGRAPHY MAP OR TOPO MAP - A MAP SHOWING THE TOPOGRAPHY OF A TRACT OF LAND. TOPO MAPS ARE PREPARED BY SURVEYORS AND DETAIL THE ELEVATION AND CONTOUR LINES OF A TRACT OF LAND FROM A FIELD INSPECTION. |
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Term
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Definition
| ALSO REFERRED TO AS UNDER CONTRACT PRICE - THE AGREED-UPON PRICE BETWEEN A BUYER AND SELLER FOR THE PURCHASE OF REAL PROPERTY. |
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Term
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Definition
| ALSO KNOWN AS ACTUAL RENT - AS USED IN THE INCOME APPROACH - THE ACTUAL AGREED-UPON RENT WHICH IS WRITTEN IN A CONTRACTUAL LEASE AGREEMENT TO BE PAID BY A TENANT TO A LANDLORD. |
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Term
| CONTRIBUTION, PRINCIPLE OF |
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - THIS PRINCIPLE OF VALUE, SYNONYMOUS WITH UNEARNED INCREMENT AND INCREASING RETURNS, STATES THAT A PHYSICAL IMPROVEMENT WILL PROVIDE A CONTRIBUTORY INCREASE TO THE OVERALL VALUE OF THE IMPROVEMENTS REGARDLESS OF THE COST OF THE IMPROVEMENT. |
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Term
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Definition
| THE RECIPROCAL RELATIONSHIP BETWEEN TWO OR MORE VALUE APPROACHES TO DERIVE A FINAL VALUE ESTIMATE. |
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Term
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Definition
| THE AMOUNT PAID TO ACQUIRE SOMETHING OF VALUE. THE PRICE OF A COMPONENT. |
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Term
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Definition
| WHEN A MORTGAGE INSTRUMENT IS SIGNED, THE BORROWER, ACTING IN THE CAPACITY OF A TRUSTOR OR MORTGAGOR, BECOMES LIABLE FOR AN OUTSTANDING DEBT. IF A DEFAULT OCCURS, THE LENDER IS FORCED TO FORECLOSE AND SELL THE PROPERTY. IF, UPON COMPLETION OF THE SALE, THE DEBT IS NOT FULLY PAID, THE LENDER MAY FILE A JUDGEMENT LIEN TO FORCE THE BORROWER TO PAY WHATEVER MONIES ARE STILL OWED ON THE REAL PROPERTY. CONVERSELY, IF TE LENDER SELLS THE PROPERTY AND MONIES REMAIN, THE LENDER IS REQUIRED TO PAY THE REMAINDER TO THE BORROWER AFTER ALL EXPENSES HAVE BEEN PAID. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - THE REQUIREMENT, NECESSITY OR PREFERENCE OF A PRODUCT AND THE ABILITY TO PURCHASE A PRODUCT IN A MARKETPLACE. THE CAPACITY TO HOLD ALONG WITH THE DESIRE TO CONTROL OR OWN. IN APPRAISAL THEORY, DEMAND IS A CRITICAL INGREDIENT TO THE ESSENTIALS OF VALUE. |
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Term
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Definition
| THE STATISTICAL ANALYSIS OF POPULATION SHIFTS. THE COMPILATION OF DATA TO DETERMINE DENSITY, MASS AND DISTRIBUTION OF HUMAN POPULATION. APPRAISERS UTILIZE CENSUS TRACT MAP NUMBERS IN APPRAISAL REPORTS TO PINPOINT A SPECIFIC AREA OF POPULATION. THESE CENSUS TRACT NUMBER ARE A STANDARD FORM REQUIREMENT IN FNMA APPRAISAL ASSIGNMENTS. |
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Term
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Definition
| USED WITH HIGHEST AND BEST USE - TO DESTROY IN AN EFFORT TO REMOVE IMPROVEMENTS FROM REAL PROPERTY WHEN THE HIGHEST AND BEST USE OF THE SITE IS GREATER VACANT THAN THE VALUE OF THE SITE WITH IMPROVEMENTS. |
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Term
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Definition
| A LOSS, REDUCTION OR EFFECTIVENESS IN VALUE OF A COMPONENT OR ASSET. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - A LOSS IN THE VALUE OF A TANGIBLE OR INTANGIBLE COMPONENT OR ECONOMIC VARIABLE. IN APPRAISAL, DEPRECIATION IS A COMBINED LOSS IN VALUE DUE TO NUMEROUS ACTIONS INCLUDING PHYSICAL DETERIORATION AND FUNCTIONAL, ECONOMIC, ENVIRONMENTAL OR LOCATIONAL OBSOLESCENCE. DEPRECIATION IS CAPABLE OF BEING MEASURED BY ANY OF THE THREE APPROACHES TO VALUE. IN APPRAISAL THEORY, DEPRECIATION IS MEASURED BY THE FORECASTED ECONOMIC LIFE SPAN OF THE IMPROVEMENTS BASED ON THE EFFECTIVE AGE OF THE IMPROVEMENTS. DEPRECIATION CAN EITHER BE CURABLE OR INCURABLE, SUPER ADEQUATE, OR UNDER ADEQUATE. |
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Term
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Definition
| THE PROCESS OF TRANSFERRING REAL PROPERTY RIGHTS BY INHERITANCE THROUGH THE LEGAL PROBATED PROCESS WHEN NO WILL EXISTS. |
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Term
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Definition
| A PERSON WHO DISCOVERS, PURCHASES, FACILITATES AND SECURES FINANCING OF A REAL ESTATE VENTURE. DEVELOPERS ORCHESTRATE DEVELOPMENTS FROM BEGINNING TO END, OVERSEEING EVERY STEP FROM THE GROUND BREAKING TO THE GRAND OPENING. |
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Term
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Definition
| TO REDUCE OR LOWER FROM THE ORIGINAL PRICE, AND TO REDUCE AN INTEREST RATE THROUGH THE PURCHASE OF DISCOUNT POINTS. |
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Term
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Definition
| THE COST OF PURCHASING OR "BUYING DOWN" A CURRENT RATE OF INTEREST IN ORDER TO QUALIFY FOR A LOAN OR REDUCE THE PAYMENT IN A LOAN. ONE DISCOUNT POINT EQUALS ONE PERCENT OF THE AMOUNT OF MONEY TO BE FINANCED. IN APPRAISAL, ADJUSTMENT MAY BE REQUIRED FOR THE EXCESSIVE PURCHASE OF DISCOUNT POINTS AND POTENTIAL INFLUENCE ON THE PRICE OF A GIVEN COMPARABLE SALE. |
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Term
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Definition
| THE RATE OF INTEREST CHARGED BY THE FEDERAL RESERVE BANK TO COMMERCIAL LENDING INSTITUTIONS. THE PRIME RATE IS THE RATE OF INTEREST COMMERCIAL LENDERS CHARGE TO THE GENERAL PUBLIC. THE DIFFERENCE BETWEEN THESE TWO RATES IS THE LENDERS YIELD ON THE LOAN. |
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Term
| DISCOUNTED CASH FLOW ANALYSIS (DCF) |
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Definition
| AS USED IN THE INCOME APPROACH - A MATHEMATICAL PROCEDURE TO ESTIMATE A RATE OF RETURN DETERMINED BY AN INVESTOR. TO ESTABLISH THE PRESENT VALUE OF AN ASSET OR INCOME-PRODUCING PROPERTY BASED ON A CURRENT AND FUTURE STREAM OF INCOME THE ASSET PRODUCES AND THE BENEFITS GAINED WHEN THE ASSET IS RESOLD. |
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Term
DOMINANT ESTATE
(SEE EASEMENT APPURTENANT) |
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Definition
| EASEMENT APPURTENANT - THE PROCESS OF DOMINATING OR CONTROLLING THE USE OF REAL PROPERTY OWNED BY ANOTHER PERSON. DOMINANT ESTATE, OR DOMINANT TENEMENT, IS THE TERM USED TO DESCRIBE THE PARTY IN CONTROL OF AN EASEMENT APPURTENANT ON REAL PROPERTY. THE PARTY GRANTING THE USE OF THE PROPERTY IS CALLED THE SERVANT ESTATE AS THE "SERVE" THE NEED OF THE OTHER. |
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Term
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Definition
| AS USED IN REAL PROPERTY NOTES AND DEEDS OF TRUST, THE STATEMENT DETAILING TO AN OWNER THAT IN THE EVENT OF DEFAULT OR TRANSFER OF THE PROPERTY, THE ENTIRE BALANCE OF THE NOTE BECOMES DUE AND PAYABLE. |
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Term
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Definition
| PROPERLY AND SUITABLY: IN A PROPER, CORRECT, OR SUITABLE WAY, ACCORDING TO CUSTOM. |
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Term
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Definition
| A DWELLING CONTAINING TWO ATTACHED UNITS. TYPICALLY, AN INVESTOR WILL PURCHASE A DUPLEX AND PRODUCE INCOME BY RENTING EACH OF THE UNITS. OTHERS WILL PURCHASE A DUPLEX AND BECOME AN OWNER-OCCUPANT, LIVING IN ONE SIDE AND RENTING THE OTHER SIDE TO A TENANT. THE OWNER WILL USE THE RENT FROM THE ADJACENT UNIT TO OFFSET THE MONTHLY NOTE PAYMENT THEREBY CREATING A LOWER OPERATING COST WHILE AT THE SAME TIME TAKING ADVANTAGE OF THE RIGHT OF HOME OWNERSHIP. |
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Term
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Definition
| THE RIGHT ACQUIRED BY AN INDIVIDUAL, ENTITY OR MUNICIPALITY TO USE OR HAVE ACCESS TO THE LAND OF ANOTHER. EASEMENTS, TO SATISFY THE STATUTE OF FRAUDS, MUST BE IN WRITING SINCE AN INTEREST IN THE REAL PROPERTY IS BEING GRANTED. |
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Term
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Definition
| THE PROCESS OF DOMINATING OR CONTROLLING THE USE OF REAL PROPERTY OWNED BY ANOTHER PERSON. DOMINANT ESTATE, OR DOMINANT TENEMENT, IS THE TERM USED TO DESCRIBE THE PARTY IN CONTROL OF AN EASEMENT APPURTENANT ON REAL PROPERTY. THE PARTY GRANTING THE USE OF THE PROPERTY IS CALLED THE SERVANT ESTATE AS THE "SERVE" THE NEED OF THE OTHER. |
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Term
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Definition
| A FORM OF EASEMENT GRANTED TO ALLOW THE NECESSARY EGRESS AN INGRESS REQUIRED WHEN THE OWNER OF REAL PROPERTY IS LANDLOCKED AND UNABLE TO GAN ACCESS TO HIS REAL PROPERTY. |
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Term
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Definition
| ASSOCIATED WITH ADVERSE POSSESSION - TO ACQUIRE REAL PROPERTY UNFAVORABLY. A MALICIOUS METHOD OF ACQUIRING REAL PROPERTY RIGHTS OR TITLE TO REAL PROPERTY FROM ANOTHER THROUGH UNAUTHORIZED, MALICIOUS AND PROLONGED USE. THE STATUTORY TIME PERIODS ARE WHAT GIVES RISE TO THE LANGUAGE PRESCRIPTION. ADVERSE POSSESSION CAN OCCUR THROUGH A THREE-, FIVE-, TEN -OR - TWENTY-FIVE YEAR STATUTE. THE TERM ADVERSE POSSESSION IS DERIVED FROM SQUATTERS RIGHTS, A DATED TERM RARELY USED. |
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Term
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Definition
| THE RIGHT OF ONE PERSON OR ENTITY TO USE ANOTHER'S REAL PROPERTY. IT IS USED MOST OFTEN BY MUNICIPALITIES OR UTILITIES WHEN NEEDING EASEMENTS FOR POWER LINES AND OTHER PUBLIC SERVICES. |
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Term
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Definition
| AS USED IN THE COST APPROACH - TO PROJECT OR FORECAST THE LIFE SPAN OF AN IMPROVEMENT BASED ON ITS ABILITY TO MAINTAIN VALUE. TO ESTIMATE THE TOTAL LIFE SPAN AND CURRENT EFFECTIVE AGE BASED ON THE IMPROVEMENT'S PROJECTED LIFE. FOR EXAMPLE, THE ESTIMATED ECONOMIC LIFE SPAN OF AN IMPROVEMENT IS 50 YEARS. THE PURPOSE FOR DERIVING THE ECONOMIC LIFE SPAN IS TO ALLOW THE APPRAISER THE ABILITY TO ESTIMATE THE ANNUAL DOLLAR AMOUNT OF DEPRECIATION ATTRIBUTABLE TO THE IMPROVEMENTS. IF THE PROPERTY HAS 50 YEARS OF ECONOMIC LIFE, THEN THE ANNUAL ESTIMATED DEPRECIATION IS TWO PERCENT PER YEAR. AT THE END OF THE ECONOMIC LIFE SPAN, THE IMPROVEMENT, IN THEORY, WILL HAVE NO REMAINING LIFE. ALSO SEE STRAIGHT LINE DEPRECIATION. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - A NEGATIVE CONTRIBUTORY LOSS IN VALUE DUE TO ECONOMIC VARIABLES, SUCH AS SUPPLY, DEMAND, MONEY SUPPLY AND FISCAL POLICIES WHICH WILL NEGATIVELY INFLUENCE THE VALUE OF THE REAL PROPERTY. IN THEORY, THE REAL PROPERTY IS SURROUNDED BY AN INVISIBLE VEIL AT IT'S BORDERS. ECONOMIC OBSOLESCENCE IS NOT CURABLE BY THE OWNER OF THE REAL PROPERTY. FACTORS OUTSIDE THE REAL PROPERTY, HOWEVER, CAN BE LIFTED OR ELIMINATED THEREBY RELEASING THE NEGATIVE INFLUENCE. |
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Term
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Definition
| AS USED IN THE COST APPROACH - THE RENT THAT AN IMPROVEMENT MAY PRODUCE IN THE OPEN MARKETPLACE AS OF A SPECIFIC EFFECTIVE DATE, IF AVAILABLE AND READY FOR OCCUPANCY. ECONOMIC RENT AND CONTRACT RENT AR NOT THE SAME. |
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Term
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Definition
| THE SUBJECTIVE INTERPRETATION OF THE AGE OF AN IMPROVEMENT WITHOUT REGARD TO ITS ACTUAL AGE. EFFECTIVE AGE IS THE APPRAISER'S OPINION AS TO THE AGE OF THE IMPROVEMENTS BASED ON ITS CURRENT CONDITION, MARKETABILITY AND FUNCTIONAL USE. EFFECTIVE AGE IS DETERMINED VIA PAIRED-SALE EXTRACTION AND CAN BE GREATER THAN OR LESS THAN THE ACTUAL AGE. THIS AGE DERIVATION IS A CRITICAL STEP IN THE APPRAISAL PROCESS AS IT DETERMINES THE APPROPRIATE AGE RANGE FOR THE SUBJECT AND COMPARABLE. |
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Term
| EFFECTIVE AGE LIFE METHOD OF DEPRECIATION |
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Definition
| AS USED IN THE COST APPROACH - THE PROCESS OF ESTIMATING ALL CAUSES OF DEPRECIATION, REFERRED TO AS ACCRUED DEPRECIATION, ESTABLISHING AN EFFECTIVE AGE, AND CALCULATING A FIXED AMOUNT OF ANNUAL DEPRECIATION ATTRIBUTABLE TO A COMPONENT OR IMPROVEMENT. |
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Term
EFFECTIVE GROSS INCOME
(EGI) |
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Definition
| AS USED IN THE COST APPROACH - THAT EXPECTED INCOME REMAINING AFTER DEDUCTING THE ESTIMATED LOSS OF VACANCY INCOME AND UN-COLLECTABLE INCOME HAS BEEN DEDUCTED FROM THE FORECASTED GROSS OPERATING INCOME FOR AN INCOME-PRODUCING PROPERTY. |
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Term
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Definition
| THE PROCESS OR METHOD OF LEAVING. THE MARKETABILITY OF REAL PROPERTY IS INFLUENCED BY PHYSICAL ACCESSIBILITY - TYPICALLY, VIA ROADWAYS. |
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Term
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Definition
| AGRICULTURAL CROPS ASSOCIATED WITH REAL PROPERTY. A TYPE OF CROP WHICH HAS VALUE, KNOWN AS FRUCTUS INDUSTRIALES (FRUITS OF THE INDUSTRY), WHICH CONTRIBUTES TO THE VALUE OF REAL PROPERTY ALLOWING A LESSEE TO REMOVE THOSE CROPS SUCH AS FRUITS AND VEGETABLES, THESE CROPS ARE SOLD, THUS CREATING AN INCOME STREAM WHICH MUST BE INCLUDED IN THE VALUATION OF THE PROPERTY. |
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Term
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Definition
| THAT POWER OR RIGHT MAINTAINED BY FEDERAL, STATE, CITY OR MUNICIPAL ENTITIES TO ACQUIRE PRIVATELY-OWNED PROPERTY FOR THE BENEFIT OR WELFARE OF THE GENERAL PUBLIC. |
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Term
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Definition
| THE INVASION OR TRESPASSING OF A FIXTURE ONTO THE REAL PROPERTY OWNED BY ANOTHER; TO INTRUDE. COMMON EXAMPLES OF ENCROACHMENTS INCLUDE FENCES AND UNDERGROUND SPRINKLER SYSTEMS. |
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Term
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Definition
| A CLAIM OR CHARGE IN REAL PROPERTY DEFINED BY ANY NUMBER VARIABLES, SOME OF WHICH INCLUDE EASEMENTS, LIENS, MORTGAGES, DEEDS OF TRUST IN OREGON, AND ENCROACHMENTS WHICH IMPAIR OR DIMINISH THE MARKETABILITY OR VALUE OF THE REAL PROPERTY RIGHTS UNDER APPRAISERS MUST OCCASIONALLY COMPENSATE FOR AN ENCUMBRANCE WHICH IMPACTS THE PROPERTY OR, WHEN ANALYZING A COMPARABLE, MUST KNOW IF THERE IS ANY ENCUMBRANCE WHICH MAY NEGATE THE USE OF THE COMPARABLE. ENCUMBRANCES AFFECT BOTH THE PHYSICAL PROPERTY AND THE TITLE TO THE PROPERTY. |
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Term
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Definition
| THE FORMAL LETTER EMPLOYING OR BINDING THE APPRAISER TO PROCEED WITH AN APPRAISAL ASSIGNMENT. THE LETTER SOLIDIFIES THE TERMS INCLUDING THE LEGAL DESCRIPTION OF THE SUBJECT, FEE AND TURN AROUND TIME. MOST ENGAGEMENT LETTERS ALSO SPECIFY THAT SHOULD THE REPORT NOT BE COMPLETED AS OF A SPECIFIED DATE, A DOLLAR PENALTY WILL BE APPLIED ON A DAILY BASIS UNTIL THE REPORT IS DELIVERED. |
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Term
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Definition
| ONE OF THREE PRIMARY METHODS FOR ESTIMATING MARKET VALUE - THE PROCEDURAL ANALYSIS OF ESTIMATING THE COST OF CONSTRUCTION FOR IMPROVEMENTS OR STRUCTURES LESS DEPRECIATION PLUS A LAND VALUE ESTIMATE WHICH IS DERIVED BY THE MARKET DATA OR ABSTRACTION METHOD. |
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Term
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Definition
| A LOT AT THE END OF A STREET WHICH DEAD-ENDS WITH A CIRCULAR TURNAROUND ROADWAY. CUL-DE-SACS ARE USED PRIMARILY IN PLANNED UNIT DEVELOPMENTS AND SINGLE FAMILY RESIDENTIAL NEIGHBORHOODS. |
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Term
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Definition
| A TYPE OF GOVERNMENTAL OR PRIVATE DRAINAGE APPARATUS, TYPICALLY FOR SEWERS INLAID TO THE GROUND, PROVIDING EGRESS OF WATER TO ANOTHER LOCATION. CULVERTS ARE TYPICALLY LOCATED UNDER ROADWAYS AND PARKING LOTS. |
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Term
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Definition
| AS USED IN THE COST APPROACH - AN APPRAISAL THEORY STATING THAT A WORN COMPONENT CAN BE RENEWED OR REPLACED, AND THAT THE MONIES USED TO CURE THE COMPONENT CAN BE RECAPTURED. FOR EXAMPLE, REPLACING WORN OUT CARPET. |
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Term
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Definition
| THE PRESENT USE OF A STRUCTURE OR IMPROVEMENTS. THE CURRENT USE OF IMPROVEMENTS IS TYPICALLY THE HIGHEST AND BEST USE UNLESS THE LAND VALUE, LESS DEMOLITION COST OF THE IMPROVEMENTS, IS GREATER THAN THE VALUE OF THE LAND AND STRUCTURES COMBINED. |
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Term
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Definition
| AN AREA OF GROUND SURFACE WHICH ENVELOPS THE CURRENT IMPROVEMENTS, TYPICALLY THE LAWN OR YARDS. |
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Term
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Definition
| OF, OR RELATING TO, CONTINUOUS SEQUENCES OF AN ECONOMIC SYSTEM. INCLUDES THE CYCLES OF NEIGHBORHOOD GENERATION AS WELL AS NATIONAL ECONOMIC PATTERNS OF PROSPERITY, RECESSION, DEPRESSION, GROWTH, STABILIZATION, DECLINE AND RENEWAL. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - THE ACCUMULATION, FORMATION OR DELIBERATE DEVELOPMENT OF INFORMATION NEEDED TO PREPARE AN APPRAISAL. ALSO SEE GENERAL DATA, SPECIFIC DATA AND TARGET DATA. |
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Term
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Definition
| A SURFACE LINE OR POINT FROM WHICH SOMETHING IS MEASURED. THE HORIZONTAL SURFACE POINT ON A PLANE AS USED IN GEOGRAPHIC MAPPING, ARCHITECTURAL ENGINEERING, SURVEYING AND THE PREPARATION OF CONTOUR MAPS. |
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Term
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Definition
| AS USED IN THE SALES COMPARISON APPROACH - THE DAYS A LISTED PROPERTY REMAINS ON THE MARKET UNTIL PENDING, AND THE DAYS A PROPERTY REMAINS ON THE MARKET UNTIL CLOSING. |
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Term
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Definition
| THE AMOUNT OF MONEY OWED ON A LOAN OR NOTE. A LIABILITY FOR SERVICES PROVIDED SUCH AS THE LOAN OF MONIES OR GOODS. |
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Term
| DEBT COVERAGE RATIO (DCR) |
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Definition
| AS USED IN THE INCOME APPROACH - THE RELATIONSHIP, EXPRESSED AS A PERCENTAGE, OF NET ANNUAL OPERATING INCOME (NOI) TO ANNUAL DEBT SERVICE. IT IS DERIVED BY DIVIDING THE NOI BY THE ANNUAL DEBT SERVICE. THIS PROCEDURE IS UTILIZED BY LENDING INSTITUTIONS WHICH ANALYZE THE VIABILITY OF THE TRANSACTION PRIOR TO COMMITTING TO A LOAN. |
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Term
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Definition
| THE COST TO OPERATE THE IMPROVEMENT(S). THE DEBT SERVICE OF AN IMPROVEMENT CAN INCLUDE THE PRINCIPLE, INTEREST, TAXES AND INSURANCE (PITI), OR ALL OPERATING EXPENSES ASSOCIATED WITH THE IMPROVEMENTS. IT CAN BE IN THE TERM OF PERIODIC PAYMENTS MADE ON A NOTE OR ANY OTHER FORM OF CONTRACTUAL RELATIONSHIP. ALSO SEE OPERATING INCOME STATEMENT. |
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Term
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Definition
| THE PERSON DESIGNATED AS THE BORROWER. IN A MORTGAGE, THE DEBTOR IS THE MORTGAGOR. IN OREGON, THE DEBTOR IN A DEED OF TRUST IS THE TRUSTOR. |
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Term
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Definition
| THE ACT OR PROCESS OF VOLUNTARILY PLEDGING REAL PROPERTY FOR SOME PUBLIC USE. FOR EXAMPLE, A DEDICATION OF LAND TO A UNIVERSITY OR TO A CITY FOR A PUBLIC PARK. |
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Term
|
Definition
| THAT LEGAL INSTRUMENT USED TO TRANSFER, CONVEY OR TO COMMUNICATE THROUGH A WRITTEN FORM AN INTEREST OR TITLE FROM ONE PERSON OR ENTITY TO ANOTHER. THE TYPES OF DEED USED IN OREGON INCLUDE: GENERAL WARRANTY DEED; SPECIAL WARRANTY DEED; QUITCLAIM DEED; TRUSTORS DEED; AND SHERIFF'S DEED. CONVERSELY, A DEED OF TRUST IS A FORM OF MORTGAGE. |
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Term
|
Definition
| A WRITTEN INSTRUMENT, WHICH COLLATERALIZES REAL PROPERTY IN EXCHANGE FOR A PROMISE OF A LOAN. DEEDS OF TRUST ALLOW FOR NON-JUDICIAL FORECLOSURE. PARTIES TO A DEED OF TRUST INCLUDE THE LENDER (BENEFICIARY), BORROWER (TRUSTOR) AND TRUSTEE. THE TRUSTEE IS THE PARTY APPOINTED TO LIQUIDATE THE ASSET IN THE EVENT OF DEFAULT OR THE RELEASE OF THE LIEN, WHICHEVER COMES FIRST. THE TRUSTEE HOLDS NAKED TITLE. |
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Term
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Definition
| IN A CONTRACT, IT IS THE DIFFERENCE BETWEEN WHAT A PROPERTY ACTUALLY SELLS FOR AND WHAT WAS OWED WHEN THE FORECLOSURE OCCURRED. IN RELATION TO A STRUCTURE, IT IS A MISSING COMPONENT WHICH IS NECESSARY TO THE OVERALL FUNCTIONAL UTILITY OF AN IMPROVEMENT. FOR EXAMPLE, IF A TWO-STORY HOME DOES NOT HAVE A STAIRCASE TO GAIN ACCESS TO THE SECOND FLOOR, IT IS DEFICIENT. ALSO SEE FUNCTIONAL OBSOLESCENCE. |
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Term
|
Definition
| AS USED IN SALES COMPARISON AND INCOME APPROACHES - THE BUYER'S RISK AND POTENTIAL GAIN IDENTIFIED WITH A BUSINESS VENTURE. FOR EXAMPLE, A BUYER IS INTERESTED IN PURCHASING A DUPLEX WHICH IS VACANT. THE DUPLEX IS IN NEED OF MANY REPAIRS BEFORE IT CAN BE LEASED. THE BUYER, NOT KNOWING WHAT THE ACTUAL REPAIRS WILL COST, WILL INFLATE THE ESTIMATED COST TO CURE THE DEFECT, IN ADDITION TO ALLOCATING A PRICE FOR TIME, EFFORT AND RISK. THE DOLLAR AMOUNT ALLOCATED FOR THE REPAIRS IS DISCOUNTED FROM THE VALUE OF THE PROPERTY. AFTER COMPLETING THE PHYSICAL REPAIRS, THE DIFFERENCE BETWEEN THE ANTICIPATED COST AND THE ACTUAL COST IS THE ENTREPRENEURIAL PROFIT. |
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Term
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Definition
| EQUITY IS TYPICALLY BASED ON THE MONETARY VALUE ASSOCIATED WITH THE REAL PROPERTY. THE DIFFERENCE BETWEEN ANY LIENS, DEBTS OR NOTES AND THE CURRENT MARKET VALUE OF THE REAL PROPERTY. |
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Term
|
Definition
| THE POTENTIAL SUCCESSION OF MONETARY GAIN DERIVED WHICH DEPENDS ON THE TYPE OF REPAYMENT PLAN. WHEN THE PRINCIPAL BALANCE OF A DEBT IS STEADILY DECLINING AND MARKET VALUE IS APPRECIATING, THE RESULTING GAIN IS REFERRED TO AS EQUITY GAIN. |
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Term
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Definition
| THE DESTRUCTION, LOSS OR GRADUAL ELIMINATION OF SURFACE SOIL AS A RESULT OF NATURAL ABRASIONS FROM NATURAL FORCES. |
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Term
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Definition
| THE REVERSION OF REAL PROPERTY TO THE STATE WHEN A PERSON WITHOUT ANY HEIRS DIES WITHOUT A WILL, AS PROVIDED BY STATE LAWS. |
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Term
|
Definition
| SOMETHING OF VALUE, MONETARY OR OTHERWISE, TO BE HELD BY A INDEPENDENT THIRD PARTY PENDING THE COMPLETION OF SPECIFIC TERMS OR ACTS BY PARTIES TO A TRANSACTION. UPON COMPLETION OF THE SPECIFIED TERMS, THE MONIES WILL BE ALLOCATED TO THE APPROPRIATE PARTY, TYPICALLY AT A CLOSING. |
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Term
|
Definition
| THE USEFULLNESS, QUALITY OR FUNCTIONAL UTILITY OF A PRODUCT WHICH CREATES VALUE. CONTRIBUTING ELEMENTS INCLUDE; PHYSICAL COMPONENTS, SOCIAL IMPACT, ECONOMIC VARIABLES, POLITICAL FORCES AND ENVIRONMENTAL FORCES. |
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Term
|
Definition
| THAT BENEFIT, INTEREST, CLAIM OR RIGHT ONE HAS IN REAL PROPERTY. |
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Term
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Definition
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Term
|
Definition
|
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Term
|
Definition
|
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Term
|
Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - THOSE INDEPENDENT, OUTSIDE FORCES, SUCH AS SUPPLY, DEMAND, FISCAL POLICY, ENVIRONMENTAL FORCES AND MONEY SUPPLY, WHICH WILL ENTER FROM THE OUTSIDE BOUNDARIES OF THE REAL PROPERTY, AND IMPAIR OR IMPROVE THE VALUE OF REAL PROPERTY. |
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Term
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Definition
| TO ESTIMATE THE PRESENT VALUE OF A COMPONENT BY INSERTING KNOWN CURRENT MARKET DATA INTO A FUTURE DATE. THE PROCESS ASSUMES CERTAIN VARIABLES WILL REMAIN CONSTANT FOR THE FUTURE PROJECTION. |
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Term
|
Definition
| THE INSTRUMENT USED TO PASS TITLE OF REAL AND PERSONAL PROPERTY OF A DECEDENT. THE TESTATOR, OR TESTATRIX, IS THE PARTY WHO MAKES THE WILL. THE PARTY RECEIVING ASSETS IF A WILL IS THE DEVISEE. THE PARTY DISBURSING THE ASSETS OF A WILL ARE CLASSIFIED AS THE EXECUTOR OR EXECUTRIX. WILLS IN THE DECEDENT''S HANDWRITING ARE CALLED HOLOGRAPHIC WILLS AND ARE ACCEPTABLE IN OREGON SO LONG AS THE ENTIRE DOCUMENT IS IN THE DECEDENT'S OWN HANDWRITING AND NOT ALTERED IN ANY WAY. ALTERING THE WILL BY ANY MEANS OTHER THAN THE DECEDENT'S OWN WRITING GIVES RISE TO THE INVALIDATION OF THE DOCUMENT. |
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Term
|
Definition
| THE RESULT OF THE CONTINUOUS USE OF PHYSICAL IMPROVEMENTS, EITHER BY PEOPLE OR THE NATURAL ELEMENTS, WHICH OVER THE COURSE OF TIME WILL CONTINUE TO DETERIORATE UNTIL THE COMPONENT IS NO LONGER FUNCTIONAL. |
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Term
|
Definition
| THAT PASSAGEWAY OR VIEW CHANNEL UPON WHICH NO BUILDING MAY ENCROACH. VIEW CORRIDORS ARE ESTABLISHED BY CITY ORDINANCES WHICH IMPOSE HEIGHT RESTRICTIONS SO THAT NO STRUCTURES BLOCK A CITY VIEW AMENITY. |
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Term
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Definition
| THAT PARTY IN A LAND SALES CONTRACT OR CONTRACT FOR SALE, WHO IS SELLING REAL PROPERTY. |
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Term
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Definition
| THE PARTY IN A LAND SALES CONTRACT OR CONTRACT FOR SALE, PURCHASING REAL PROPERTY. |
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Term
|
Definition
| A DEPARTURE FROM THE CURRENTLY ACCEPTED ZONING CLASSIFICATION. VARIANCES ARE GRANTED BY THE LOCAL MUNICIPALITY OR CITY ZONING OFFICE WHICH ALLOW THE USER TO CONSTRUCT A BUILDING OR STRUCTURES THAT WOULD OTHERWISE BE A VIOLATION OF THE CURRENT ZONING REQUIREMENTS. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - THOSE VARIABLE OPERATIONAL COSTS WHICH REMAIN INCONSISTENT IN THE OPERATION OF AN INCOME-PRODUCING PROPERTY. VARIABLE EXPENSES ARE USED IN CONJUNCTION WITH AN OPERATING INCOME STATEMENT, AN ESSENTIAL DOCUMENT IN THE APPRAISAL OF RESIDENTIAL INCOME-PRODUCING PROPERTIES. |
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Term
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Definition
| THE OBJECTIVE OR SUBJECTIVE INTERPRETATION OF VALUE OF A GIVEN PRODUCT BY THE INTERPRETATION OF VALUE BY ONE USER ONLY. THIS TYPE OF VALUE INTERPRETATION IS NOT USED BY APPRAISERS DUE TO THE POSSIBLE ERROR OF VALUE JUDGEMENT BY THE USER ALONG WITH THOSE EMOTIONAL VARIABLES WHICH ARE LIKELY TO INFLUENCE VALUE. |
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Term
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Definition
| THE OBJECTIVE INTERPRETATION OF VALUE OF A GIVE PRODUCT CALCULATED THROUGH FORMAL ANALYSIS BASED ON THE INTERPRETATION OF VALUE BY ALL SEGMENTS OF THE GENERAL PUBLIC. VALUE IN EXCHANGE IS THE PRIMARY METHODOLOGY UTILIZED BY APPRAISERS TO CALCULATE THE VALUE OF REAL PROPERTY AND REAL PROPERTY COMPONENTS. |
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Term
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Definition
| AS USED IN APPRAISAL THEORY - THE EQUIVALENT MONETARY OR MATERIAL WORTH, EITHER SUBJECTIVE OR OBJECTIVE, OF A GIVEN OBJECT OR COMPONENT OF REAL PROPERTY. VALUE IS MADE UP OF FOUR PRINCIPAL INGREDIENTS INCLUDING, BUT NOT LIMITED TO, MARKETABILITY, USEFUL FUNCTION, SCARCITY AND EFFECTIVE DEMAND. |
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Term
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Definition
| THE PARTY EMPOWERED WITH DETERMINING THE VIABILITY OF A LOAN. FUNCTIONS OF THE UNDERWRITER INCLUDE DETERMINING THE LEVEL OF RISK, CONSIDERING THE FINANCIAL CREDIBILITY OF THE BORROWER AND WEIGHING THE APPRAISAL REPORT AS IT RELATES TO THE ASSET BEING PURCHASED. |
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Term
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Definition
| THE OWNERSHIP INTEREST ACQUIRED, TYPICALLY AS A PRO RATA SHARE, IN THE COMMON ELEMENTS OF A CONDOMINIUM OR PLANNED UNIT DEVELOPMENT. THE OWNERS HAVE FULL USE OF THE COMMON ELEMENTS BUT CANNOT BORDER THEIR INTEREST FROM ANY OTHER OWNER OF THE SAME DEVELOPMENT, UNDIVIDED INTEREST CARRIES WITH IT THE RESPONSIBILITY OF MAINTAINING A HOMEOWNERS ASSOCIATION ALONG WITH SOME FORM OF MONTHLY DUES OR ASSESSMENTS. |
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Term
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Definition
| THE OPPOSITE OF ECONOMIC, LOCATIONAL OR ENVIRONMENTAL OBSOLESCENCE. AN ACCUMULATION OR GAIN IN REAL PROPERTY VALUE OUTSIDE THE IMAGINARY LINES OF THE REAL PROPERTY BORDERS FROM WHICH THE OWNER HAS NO CONTROL. AS WITH ECONOMIC OBSOLESCENCE, THE OWNER CANNOT CONTROL THE ACTIONS SURROUNDING HIS ENVIRONMENT, CONSEQUENTLY, WHEN INCREASES IN POPULATION, SCARCITY OF HOUSING AND NATIONAL FISCAL POLICIES CHANGE, THE OWNER OF THE PROPERTY MAY OBTAIN AN UNEARNED INCREMENT IN VALUE. |
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Term
UNIFORM RESIDENTIAL APPRAISAL REPORT
(URAR) |
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Definition
| FORM REPORT 1004 AS REQUIRED BY THE FEDERAL NATIONAL MORTGAGE ASSOCIATION IS A REPORT USED IN THE APPRAISAL OF SINGLE FAMILY HOMES. IT IS A CONCISE FORMAT CONTAINING SIMILAR INFORMATION FOUND IN A NARRATIVE APPRAISAL REPORT. IT IS DESIGNED TO ACCELERATE THE TIME REQUIRED TO APPRAISE A RESIDENCE WHILE PROVIDING THE SAME BASIC INFORMATION AS THE NARRATIVE REPORT. |
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Term
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Definition
| LAND OR REAL PROPERTY WHICH, HAVING NO OFFSITE IMPROVEMENTS, IS AVAILABLE FOR PRIMARY USE OR CONSTRUCTION. |
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Term
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Definition
| AS USED IN THE COST APPROACH - ONE OF THE PRIMARY METHODS OF ESTIMATING THE COST OF CONSTRUCTION OF IMPROVEMENTS AS IF NEW. THIS SYSTEM OF COST ESTIMATING IS THE SECOND MOST COMPREHENSIVE METHOD OF THE COST ESTIMATING METHODS UTILIZED. AS ITS NAME IMPLIES, ITS APPLICATION INVOLVES REBUILDING A STRUCTURE ON PAPER BY ITS VARIOUS UNITS OR COMPONENTS. FOR EXAMPLE, IN IMPLEMENTING THIS COST ESTIMATING PROCEDURE, THE APPRAISER WILL SEPARATE THE MAJOR UNITS OF THE STRUCTURE SUCH AS THE FOUNDATION, LOAD BEARING WALLS, ROOF SYSTEM, ELECTRICAL AND MECHANICAL SYSTEMS AND COST EACH ON SEPARATELY. UPON COMPLETION, THE APPRAISER WILL COMBINE THE COMPONENT PARTS TO DERIVE AN ESTIMATED CONSTRUCTION COST. |
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Term
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Definition
| THE RATE, NUMBER OR PERCENTAGE OF UNOCCUPIED UNITS IN A RESIDENTIAL DEVELOPMENT SUCH AS AN APARTMENT BUILDING BASED ON THE TOTAL NUMBER OF UNITS AVAILABLE FOR LEASE OR AS USED IN AN OPERATING INCOME STATEMENT, THE FORECASTED VACANCY LOSS ALLOCATED TO A DEVELOPMENT INDICATING THE DOLLAR LOSS EXPECTED IN THE NEXT TWELVE MONTHS OF OPERATION. |
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Term
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Definition
| A FORM OF CO-OWNERSHIP, HAVING NO RELATIONSHIP TO A LEASE AGREEMENT, OF REAL PROPERTY IN WHICH THE JOINT TENANTS SHARE THE OWNERSHIP OF REAL PROPERTY. UPON THE DEATH OF ONE OF THE JOINT TENANTS, THE UNDIVIDED EQUAL INTEREST OF OWNERSHIP IN THE TENANCY IN COMMON PASSES TO THE HEIRS OF THE DECEDENT. THE SURVIVING JOINT TENANTS RECEIVE NO RIGHTS IN THE REAL PROPERTY. |
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Term
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Definition
| A LESSEE. ONE WHO HAS THE AUTHORITY TO USE, POSSES AND ENJOY CERTAIN REAL PROPERTY RIGHTS BY AGREEMENT AND EXECUTION OF A LEASE AGREEMENT. |
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Term
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Definition
| THE DIFFERENCE IN TIME BETWEEN THE EFFECTIVE DATE OF THE APPRAISAL AND THE CONTRACT DATE OF EACH OF THE SOLD COMPARABLES. |
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Term
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Definition
| OWNERSHIP OF ALL THE EQUITABLE INTEREST OR BUNDLE OF RIGHTS OF REAL PROPERTY. THE OWNERSHIP INTEREST ONE HAS IN REAL PROPERTY. |
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Term
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Definition
| THAT POLICY PURCHASED BY A TRUSTOR OR MORTGAGOR WHICH INDEMNIFIES THE HOLDER FROM FINANCIAL LOSS OR HARM STEMMING FROM DEFECTS IN THE TITLE TO REAL PROPERTY. A POLICY OF TITLE INSURANCE DOES NOT CONVEY TITLE, RATHER, IT PROTECTS AN OWNER FROM DEFECTS IN THE TITLE NOT DISCOVERED IN A TITLE SEARCH, ABSTRACT OF TITLE OR CHAIN OF TITLE. |
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Term
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Definition
| THAT THEORY STATING THE BORROWER, WHILE COLLATERALIZING A DEBT INSTRUMENT, WILL NOT POSSESS TITLE IN THE REAL PROPERTY OWNERSHIP RIGHTS UNTIL THE DEBT BORROWED IS PAID IN FULL. ALTHOUGH THE MORTGAGOR OR TRUSTOR POSSESS AN AQUITABLE TITLE, THEY ARE NOT CONSIDERED TO HAVE TITLE UNTIL THE LIEN FOR THE DEBT HAS BEEN REMOVED. THE LENDOR, ACTING AS EITHER A MORTGAGEE OR BENEFICIARY, HAS A LIEN AGAINST THE REAL PROPERTY AND WILL RETAIN THE TITLE WHILE THE DEBT IS BEING PAID. |
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Term
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Definition
| ALSO REFERRED TO AS A TOPO MAP OR CONTOUR MAP - A REPRODUCTION ON PAPER OF THE PHYSICAL ELEVATIONS AND CONTOURS OF REAL PROPERTY FOR SOME FUTURE USE. |
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Term
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Definition
| THE ESTIMATED SQUARE FOOTAGE OF A STRUCTURE BASED ON THE TYPE OF REAL PROPERTY OWNERSHIP INVOLVED; CONDOMINIUM, SINGLE FAMILY RESIDENCE, ETC. TOTAL LIVING AREA IS MEASURED ACCORDING THE HEATED AND COOLED SPACE OF THE STRUCTURE, NOT ITS PHYSICALLY USABLE AREA. |
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Term
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Definition
| AS USED IN THE RECTANGULAR SURVEY SYSTEM - AN AREA OF LAND SIX MILES SQUARE CONTAINING 1,568,160 SQUARE ACRES OF LAND MORE COMMONLY DESCRIBED AS 36 SECTIONS, EACH SECTION IS ONE SQUARE MILE AND EACH CONTAINS 640 ACRES OF LAND. EACH TOWNSHIP IS NUMERICALLY SEQUENCED AS ARE ITS INTERIOR SECTIONS. STARTING WITH SECTION 1 IN THE N.E. CORNER. |
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Term
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Definition
| THE FIXTURES CONNECTED WITH THE OPERATION OF A BUSINESS WHICH ARE INSTALLED BY A TENANT TO SUSTAIN THE OPERATION. UPON TERMINATION OF THE LEASE, THE TENANT IS ALLOWED TO REMOVE THE FIXTURES INSTALLED FOR BUSINESS PURPOSES. ANY RESULTING DAMAGE CAUSED FROM THE REMOVING OF SUCH FIXTURES IS A LIABILITY TO THE TENANT. |
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Term
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Definition
| THE PARTY NAMED IN THE DEED OF TRUST INSTRUMENT TO COLLATERALIZE REAL PROPERTY FOR THE REPAYMENT OF A DEBT. THE TRUSTEE HAS TWO FUNCTIONS INCLUDING RELEASE OF THE LIEN UPON FINAL LIQUIDATION OF THE DEBT OR FORECLOSURE OF THE REAL PROPERTY, WHICHEVER COMES FIRST. |
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Term
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Definition
| THE BORROWER IN A DEED OF TRUST INSTRUMENT WHO COLLATERALIZES REAL PROPERTY FOR THE REPAYMENT OF A DEBT. |
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Term
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FANNIE MAC) |
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Definition
| A PROVIDER OF LIQUIDITY FOR COMMERCIAL BANKS AND SAVINGS AND LOANS WHICH WILL SELL PACKAGED NOTES INTO THE SECONDARY MONEY MARKET. |
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Term
FEDERAL HOUSING ADMINISTRATION
(FHA) |
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Definition
| A FEDERAL AGENCY WHICH CREATES FINANCING PROGRAMS FOR THE GENERAL PUBLIC, ASSISTING BUYERS IN OBTAINING FINANCING. FHA HAS NUMEROUS PROGRAMS, INCLUDING THE 203K PROGRAM WHICH ALLOWS A BUYER TO BORROW FUNDS TO RENOVATE THE REAL PROPERTY. FHA FINANCING IS ONE OF THE MOST COMMON FORMS OF FINANCING USED IN THE COUNTRY. |
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Term
FEDERAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT
(FIRREA) |
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Definition
| A FEDERAL REGULATORY ACT, CREATED IN 1989, WHICH ESTABLISHED THAT APPRAISERS MUST EITHER BE STATE LICENSED OR STATE CERTIFIED BY DECEMBER 31, 1992, WHEN APPRAISING REAL PROPERTY IN WHICH FEDERAL MONIES ARE INVOLVED. ANY BANK WHICH INVOLVES ITSELF WITH FEDERAL MONIES IS REQUIRED TO USE A LICENSED OR CERTIFIED APPRAISER. APPRAISERS ARE NOT REQUIRED TO BECOME STATE LICENSED OR CERTIFIED. AN APPRAISER WHO IS NOT STATE LICENSED OR STATE CERTIFIED WILL, HOWEVER, HAVE A NARROW MARKET IN WHICH TO WORK. |
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Term
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) (FANNIE MAE) |
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Definition
| AN AGENCY, PARTIALLY REGULATED BY THE FEDERAL GOVERNMENT, WHICH PROVIDES LIQUIDITY TO THE SECONDARY MONEY MARKET TO PURCHASE EXISTING MORTGAGES FROM BOND GENERATED MONIES. |
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Term
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Definition
| A GOVERNMENTAL AGENCY WHICH LENDS MONEY TO BANKS. THERE ARE 12 BRANCHES OF THE FEDERAL RESERVE SYSTEM CALLED DISTRICT BANKS. THE DISTRICT BANKS ESTABLISH THE DISCOUNT RATE THAT IS CHARGED TO BANKS FOR THE USE OF THE MONIES. THE DISCOUNT RATE THUS HAS AN INFLUENCE ON THE PRIME LENDING RATE CHARGED TO CUSTOMERS WHO BORROW MONEY. FOR EXAMPLE, IF THE DISCOUNT RATE IS 6%, BANKS MUST CHARGE A MINIMUM OF 6%. TO CREATE A RETURN ON THE MONEY, LENDERS MUST CHARGE A HIGHER PERCENTAGE THAN THE DISCOUNT RATE. THE FEDERAL RESERVE HAS A SUBSTANTIAL IMPACT ON DISCOUNT POINTS AND INTEREST RATES. |
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Term
FEE
(ALSO KNOWN AS FEE SIMPLE AND FEE
SIMPLE ABSOLUTE) |
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Definition
| THE OWNERSHIP OF ALL OF THE IRREVOCABLE BUNDLE OF LEGAL RIGHTS ASSOCIATED WITH THE OWNERSHIP OF REAL PROPERTY. ONLY THE GRANTOR CAN VOLUNTARILY ALIENATE HIMSELF FROM ONE OF THESE RIGHTS A DEED PROVISION. IT INCLUDES THE POWERS OF POSSESSION, CONTROL, DISPOSAL AND QUIET ENJOYMENT. IT IS SAID THAT FEE SIMPLE ABSOLUTE CAN NEVER EXIST BECAUSE OF THE GOVERNMENTAL CONTROLS WHICH EXIST ON REAL PROPERTY. |
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Term
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Definition
| AN INDEPENDENT INDIVIDUAL WHO CONTRACTS ON A FEE BASIS TO PREPARE AN APPRAISAL. |
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Term
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Definition
| THE VALUE DERIVED AFTER ALL THREE APPROACHES HAVE BEEN APPLIED. THE RECONCILIATION PROCESS IS WEIGHING MECHANISM AFFECTING THE FINAL VALUE ESTIMATE. TYPICALLY, A SIGNIFICANT EMPHASIS IS PLACED ON ONE OR MORE APPROACHES DEPENDING ON THE TYPE OF PROPERTY UNDER APPRAISAL. |
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Term
| FINANCIAL FEASIBILITY STUDY |
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Definition
| THE FINANCIAL PREREQUISITES TO ACCOMPLISH A PROJECT AS DETERMINED BY A BUYER OR SELLER OF A PROJECT. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - A STEADY OPERATION COST WHICH REMAINS CONSTANT IN THE OPERATION OF AN INCOME-PRODUCING PROPERTY, REGARDLESS OF THE LEVEL OF OCCUPANCY. FIXED EXPENSES ARE USED IN CONJUNCTION WITH AN INCOME STATEMENT. |
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Term
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Definition
| SOMETHING THAT IS PERMANENT OR STATIONARY IN ITS LOCATION. FIXITY REFERENCES THE IMMOVABLE NATURE ASSOCIATED WITH REAL PROPERTY. THE PHYSICAL MAKEUP OF REAL PROPERTY MAY CHANGE. ITS LOCATION, HOWEVER IS IMMUTABLE. |
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Term
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Definition
| AN ITEM OF PERSONAL PROPERTY, WHICH ONCE CONVERTED, BECOMES REAL PROPERTY. THERE ARE CRITERIA WHICH MUST BE MET BEFORE A PERSONAL PROPERTY ITEM BECOMES A FIXTURE. FOR EXAMPLE, A SINGLE FAMILY HOME, BEFORE CONSTRUCTED, IS MADE UP OF THOUSANDS OF COMPONENT PARTS WHICH ARE PERSONAL PROPERTY. WHEN PERMANENTLY ATTACHED TO A FOUNDATION THEY BECOME A FIXTURE AND THUS, PART OF THE REAL PROPERTY. |
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Term
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Definition
| THAT ZONE, WHICH WHEN ENTERED, SUBJECTS THE REAL PROPERTY TO POTENTIAL FLOODING. FLOOD PLAIN MAPS ARE OBTAINED FROM THE FEDERAL EMERGENCY MANAGEMENT (FEMA). FEMA PROVIDES RELIEF FROM CATASTROPHIC FLOODS AND PROVIDES DATA WHICH SHOWS THE LOCATIONS OF FLOOD ZONES IN RELATIONSHIP TO ALL CITIES, TOWNS AND RURAL AREAS THROUGHOUT THE UNITED STATES., BROKERS AND APPRAISERS MAINTAIN COPIES OF FLOOD PLAIN MAPS ALLOWING THEM TO ESTIMATE THE LOCATION OF THE NEAREST FLOOD PLAIN AS IT RELATES TO A SUBJECT PROPERTY. COPIES ARE AVAILABLE THROUGH THE FEDERAL NATIONAL MORTGAGE ASSOCIATION. |
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Term
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Definition
| A SET OF TECHNICAL DRAWINGS WHICH DETAIL THE REQUIRED PROCEDURES TO CONSTRUCT AN IMPROVEMENT. ARCHITECTS AND BUILDERS WORK IN UNISON TO PREPARE WORKING PLANS WHICH ARE PROVIDED TO THE MANY CONTRACTORS CONNECTED IN THE CONSTRUCTION OF A HOME. |
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Term
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Definition
| THE RIGHT ASSOCIATED WITH A DEED OF TRUST INSTRUMENT ALLOWING FOR THE LEGAL NON-JUDICIAL SEIZING OF REAL PROPERTY DURING A DEFAULT. DEFAULT MAY BE A RESULT OF NONPAYMENT OF THE LOAN OR OTHER TERMS. AFTER FORECLOSURE, THE BENEFICIARY WILL LIQUIDATE THE ASSET AND IF A SHORTAGE REMAINS, THE TRUSTOR BECOMES LIABLE FOR THE OUTSTANDING BALANCE. |
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Term
| FORMAL VALUATION PROCEDURE |
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Definition
| THE SYSTEMATIC PROCESS OF PREPARING AN APPRAISAL BY USING THE SALES COMPARISON, INCOME AND COST APPROACHES TO MARKET VALUE. |
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Term
|
Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - THE PREPARATION OF AN APPRAISAL ON A PRE-PRINTED FORM. MOST FORMS ARE PREPARED ON THE FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) FORM AND FACILITATE THE APPRAISAL PROCESS BY ELIMINATING THE NEED TO PREPARE A FULL NARRATIVE REPORT. THE FORM REPORT, ALONG WITH OTHER PAGES ASSOCIATED WITH THE REPORT, MAY RANGE FROM 10 PAGES TO 40 PAGES OR MORE. |
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Term
|
Definition
| ALSO KNOWN AS FRONTAGE - THIS IS THE LINEAR DIMENSION OF THE LOT IN WHICH THE VALUE IS FOUNDED. FOR EXAMPLE, A WATERFRONT LOT MAY HAVE ITS WATERFRONT AT THE REAR OF THE SITE, BECAUSE OF THE PERCEIVED VALUE ASSOCIATED TO THE WATER, THE REAR LINEAR DIMENSION BECOMES THE FRONTAGE FROM WHICH THE VALUE IS FOUNDED. FRONTAGE IS ALSO THE FIRST DIMENSION GIVEN OF THE LOT. FOR EXAMPLE, IF THE LOT DIMENSIONS ARE 100 FEET X 175 FEET, 100 REPRESENTS THE FRONT FOOTAGE. |
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Term
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Definition
| AS USED IN THE SALES COMPARISON AND INCOME APPROACHES - A NEGATIVE CONTRIBUTORY LOSS IN VALUE TO THE IMPROVEMENT DUE TO CHANGES IN CONSTRUCTION METHOD OR CHANGES IN USE BY THE PUBLIC. FUNCTIONAL OBSOLESCENCE MAY BE CAUSED BY SIMPLE ITEMS SUCH AS COLOR PATTERN TRENDS AND CAN BE AS COMPLEX AS DESIGN SCHEMES INSIDE HOMES. EXAMPLE 1) DURING THE 1970'S, DARK PANELED WALLS, BRIGHTLY COLORED KITCHEN COUNTER TOPS AND SHAG CARPETING WITH MULTIPLE COLORS WAS THE TREND. TODAY, THESE PATTERNS AND COLORS ARE CONSIDERED ANTIQUATED AND OBSOLETE. 2) A HOME WITH FIVE BEDROOMS AND ONE BATHROOM IS FUNCTIONALLY OBSOLETE SINCE MOST BUYERS LOOKING TO BUY A FIVE BEDROOM HOME NEED MORE THAN ONE BATHROOM. THE ONE BATHROOM CREATES A LOSS IN VALUE WHICH MAY OR MAY NOT BE CURABLE. FUNCTIONAL OBSOLESCENCE CAN BE CURABLE OR INCURABLE, BASED ON THE COST TO CURE AND THE PERCEPTION OF VALUE AS FORMED INT HE MARKETPLACE. |
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Term
|
Definition
| A COMPONENT OR COMBINATION OF COMPONENTS, WHICH WHEN APPLIED EFFECTIVELY, WILL PROVIDE A USEFUL FUNCTION TO THE ENJOYMENT OR BENEFIT OF REAL PROPERTY. |
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Term
|
Definition
| THE ACHIEVEMENT OF ACQUIRING, EARNING OR TO BUILD-UP. TO DERIVE A PROFIT FROM THE SALE OF REAL PROPERTY. AS USED IN APPRAISAL THEORY, THE ACQUIRED PROFIT FROM THE SALE OF REAL PROPERTY ASSETS. |
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Term
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Definition
| THE REJUVENATION OF URBAN AREAS OF A CITY EXPERIENCING SUBSTANTIAL DECLINE. THE MOST COMMON APPROACH INVOLVES THE PURCHASE OF MANY SMALL PARCELS LOCATED IN ONE AREA OF A CITY BY DEVELOPERS AND LARGE LANDOWNERS TO EITHER TEAR DOWN AND REBUILD OR COMPLETELY RESTORE THE HOUSES AND COMMERCIAL BUILDINGS WHICH HAVE REACHED THE END OF THEIR ECONOMIC LIVES. |
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Term
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) |
|
Definition
| ALSO KNOWN AS "GINNIE MAE" - A FEDERAL AGENCY WORKING IN TANDEM WITH THE FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA). GNMA PURCHASES LOAN PORTFOLIOS FROM LENDING INSTITUTIONS AND SELL THEM IN THE SECONDARY MONEY MARKET. |
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Term
|
Definition
| THE GRADE, PITCH, INCLINE OR SLOPE OF REAL PROPERTY. GRADATION OR GRADIENT CAN BE MEASURED AND IS APPLICABLE WHEN ENGINEERING A FOUNDATION SYSTEM OR ESTIMATING THE PROBABILITY OF POTENTIAL FLOOD HAZARDS. |
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Term
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Definition
| THE RECIPIENT OF THE REAL PROPERTY AS A RESULT OF A CONVEYANCE INSTRUMENT SUCH AS A GENERAL WARRANTY DEED OR SPECIAL WARRANTY DEED. |
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Term
|
Definition
| AS USED IN GENERAL WARRANTY DEEDS, SPECIAL WARRANTY DEEDS, QUIT CLAIM DEEDS AND SHERIFF'S DEEDS - THE PARTY WHO CONVEYS OR GIVES REAL PROPERTY TO A GRANTEE. IN MOST INSTANCES, THE GRANTOR WILL VOLUNTARILY ALIENATE HIMSELF FROM THE REAL PROPERTY OWNERSHIP BY USE OF A DEED. |
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Term
|
Definition
| AS USED IN THE INCOME APPROACH - THE CUMULATIVE INCOME THAT A PROPERTY GENERATES. GROSS INCOME IS USED IN GROSS INCOME CAPITALIZATION PROCEDURES, OPERATING INCOME STATEMENTS AND GROSS RENT MULTIPLIERS. |
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Term
|
Definition
| AS USED IN THE INCOME APPROACH - A LEASE AGREEMENT BETWEEN THE LANDLORD (LESSOR) AND THE TENANT (LESSEE), WHEREBY THE LESSEE TYPICALLY PAYS A FIXED AMOUNT OF RENT PER MONTH FOR THE DURATION OF A RENTAL AGREEMENT. THE EXPENSES ASSOCIATED WITH THE REAL PROPERTY ARE AN EXPENSE TO THE LESSOR. GROSS LEASES ARE MOST COMMON IN SMALL RESIDENTIAL INCOME PROPERTIES AND APARTMENTS. |
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Term
| GROSS RENT MULTIPLIER (GRM) |
|
Definition
| THE PROCESS OF TRANSFORMING A STREAM OF INCOME INTO A PRESENT WORTH OR INDICATOR OF VALUE. THE PROCEDURE INVOLVES DETERMINING THE SALES PRICE OF LIKE SALES AND DIVIDING EACH OF THE SALE PRICES BY THE INCOME (GOI OR NOI - DEPENDING ON THE INVESTOR AND CRITERIA) OF EACH SALE. IN A MARKET WHERE RENTS ARE RAPIDLY CHANGING, THE GROSS RENT MULTIPLIER IS MORE ACCURATE THAN THE CAPITALIZATION PROCESS AS IT IS BASED ON THE RENTAL INCOME THE PROPERTY IS PROCURING AS OF AN EFFECTIVE DATE, THEREBY PRODUCING A RELIABLE REPRESENTATION OF VALUE. THERE IS ONE PRIMARY DIFFERENCE BETWEEN USING A GRM AND USING A CAPITALIZATION RATE. GRM'S ARE BASED ON ONE MONTH'S INCOME WHEREAS CAP RATES ARE BASED ON ONE YEAR'S NET INCOME. |
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Term
|
Definition
| THE RECIPIENT WHO ACQUIRES REAL PROPERTY AS A RESULT OF A RECEIVER'S FINDINGS IN A PROBATE WHEN A PERSON DIES IN TESTATE. NOT TO BE ASSOCIATED WITH DEVISOR AND DEVISEE, THE PARTIES' LEGAL DESIGNATIONS OF A VALID WILL. |
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Term
|
Definition
| AN ITEM OF PERSONAL OR REAL PROPERTY THAT IS CAPABLE OF BEING INHERITED INCLUDING NOT ONLY ALL PHYSICAL COMPONENTS BUT THE LEGAL RIGHTS THERETO. |
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Term
|
Definition
| AS USED IN THE COST APPROACH - THAT USE OF REAL PROPERTY, WHICH IF EMPLOYED TO ITS MOST EFFECTIVE HIGHEST USE, WILL RESULT IN A HIGHER SALE PRICE. IN APPRAISAL PRACTICE, THIS CAN BECOME ONE OF THE MOST INTRICATE ASPECTS OF AN APPRAISAL REPORT. TESTS TO ESTABLISH THE HIGHEST AND BEST USE INCLUDE ANALYZING THE PHYSICAL USE OF THE PROPERTY, LEGAL USE OF THE PROPERTY, ECONOMIC FEASIBILITY AND THE ANTICIPATED FUTURE USE OF THE PROPERTY. |
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Term
|
Definition
| A WILL MADE COMPLETELY FROM THE HAND WRITING OF THE DECEDENT. HOLOGRAPHIC WILLS ARE LEGAL INSTRUMENTS WHICH PROVIDE FOR THE DISBURSEMENT OF AN ESTATE. IN OREGON, HOLOGRAPHIC WILLS ARE ACCEPTED AND NEED TO BE WITNESSED TO BE ENFORCEABLE. THE WILL MUST BE COMPLETELY HANDWRITTEN. ANY CHANGE NOT IN THE HANDWRITING OF THE DECEDENT CAN NULLIFY THE INSTRUMENT. |
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Term
|
Definition
| AN ENTITY, MADE UP OF THE CURRENT OWNERS OF A PLANNED UNIT DEVELOPMENT OR CONDOMINIUM REGIME, WHICH COLLECTS FEES TO OPERATE THE COMMON ELEMENTS OF AN ASSOCIATION. THE FEES COLLECTED OPERATE CLUBHOUSES, TENNIS COURTS, PARKS AND SWIMMING POOLS. THESE FEES VARY FROM PROJECT TO PROJECT AND APPRAISERS MUST OCCASIONALLY ADJUST FOR THE DIFFERENCES IF THE FEES ARE EXCESSIVE. HOMEOWNERS ASSOCIATIONS CAN MANDATE PAYMENT OF "SPECIAL ASSESSMENTS" IN THE EVENT OF NATURAL DISASTERS, AND TYPICALLY RESERVE THE POWER OF FORECLOSURE ON A HOMEOWNER IF ANY NATURAL DISASTER FEES ARE NOT PAID. |
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Term
|
Definition
| REAL PROPERTY AND SPECIFICALLY THE IMPROVEMENTS ATTACHED THERETO, OWNED BY AN ENTITY IS PROTECTED FROM FORCED SALE AS THE RESULT OF NONPAYMENT OF CLAIM OR LIEN AGAINST THE REAL PROPERTY FILED BY A CONTRACTOR. THE TWO DESIGNATIONS AVAILABLE FOR HOMESTEAD PROPERTY ARE: RURAL HOMESTEAD WHICH INCLUDES A PRIMARY RESIDENCE AND TWO HUNDRED ACRES OF LAND; AND URBAN HOMESTEAD INCLUDING A PRIMARY RESIDENCE AND UP TO ONE ACRE OF LAND. HOMESTEAD LAWS, CONTRARY TO POPULAR BELIEF, DO NOT PREVENT FORECLOSURE IN THE EVENT OF DEFAULT OR SEIZURE FOR THE NONPAYMENT OF TAXES. |
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Term
|
Definition
| USED WITH THE PRINCIPLE OF CONFORMITY -AS USED IN APPRAISAL THEORY - THE CORRESPONDING PARALLEL OF HOMES IN A NEIGHBORHOOD. WHEN HOMES IN A NEIGHBORHOOD ARE SIMILAR IN CONDITION, DESIGN, APPEAL AND SIZE, THEY ARE SAID TO HAVE HOMOGENEITY. THE UNIFORM CONSISTENCY OF A NEIGHBORHOOD MAY PROVIDE AN ATTRIBUTABLE GAIN TO THE VALUE OF ALL THE HOMES IN A NEIGHBORHOOD. |
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|
Term
|
Definition
| AN OWNER OR TENANT OF REAL PROPERTY, WHO UNDER CERTAIN ADVERSE CONDITIONS SUCH AS FORECLOSURE OR EVICTION, REFUSES THE APPRAISER ACCESS TO THE REAL PROPERTY. |
|
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Term
|
Definition
| AS USED IN APPRAISAL PRACTICE - ALL THOSE STRUCTURES CONSTRUCTED BY PEOPLE WHICH BECOME PERMANENT FIXTURES TO THE REAL PROPERTY. THESE IMPROVEMENTS MAY OR MAY NOT ADD VALUE TO THE PROPERTY. |
|
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Term
|
Definition
| ONE OF THREE PRIMARY METHODS FOR ESTIMATING MARKET VALUE - THE PROCEDURAL ANALYSIS OF ESTIMATING THE VALUE OF REAL PROPERTY BY TRANSFORMING A CURRENT FLOW OF INCOME INTO AN INDICATION OF VALUE. THE THREE CRITICAL COMPONENTS OF THE INCOME APPROACH INCLUDE THE POTENTIAL GROSS ANNUAL INCOME, THE ANNUAL EXPENSES AND THE CAPITALIZATION RATE DERIVED FROM COMPETING SALES. THE INCOME APPROACH CAN BE APPLIED VIA THE INTERNAL RATE OF RETURN, GROSS CAPITALIZATION, CASH-ON-CASH RETURN, OVERALL RATE OF RETURN, DIRECTION CAPITALIZATION AND BAND OF INVESTMENT THEORY. |
|
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Term
|
Definition
| A RESIDENTIAL PROPERTY PURCHASED FOR THE INCOME FLOW IT PRODUCES. |
|
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Term
|
Definition
| THAT REVENUE PRODUCED BY AN INCOME PRODUCING PROPERTY. THE INCOME STREAM CAN BE MEASURED AS GROSS, EFFECTIVE, OR NET. |
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Term
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Definition
| THAT COST THEREIN ASSOCIATED WITH THE CONSTRUCTION OF IMPROVEMENTS. FOR EXAMPLE, WHEN CONSTRUCTING A SINGLE FAMILY STRUCTURE, INDIRECT COST WOULD INCLUDE THE PRICE OR THE SURVEY, BUILDING PERMITS, FINANCE CHARGES, ENGINEERING FEES, ARCHITECTURAL FEES AND ANY ADDITIONAL OVERHEAD COSTS. |
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Term
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Definition
| THE CASUAL INTERPRETATION OF VALUE OF AN ITEM. THE PROCESS OF FORMULATING AN OPINION OF VALUE BY SOMETHING OTHER THAN THE FORMAL APPRAISAL PROCESS. THAT VALUE DETERMINED BY BUYERS AND SELLERS THROUGH CASUAL OBSERVATION AND PERSONAL INTERPRETATION. |
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Term
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Definition
| THE PROCESS OR METHOD OF ENTERING REAL PROPERTY. THE METHOD OF ACCESSING REAL PROPERTY, WHETHER BY LAND OR WATER. THE MARKETABILITY OF REAL PROPERTY IS GREATLY INFLUENCED BY ITS PHYSICAL ACCESSIBILITY. |
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Term
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Definition
| THE NAME GIVEN TO A WRITTEN LEGAL DOCUMENT WHICH ACCOMPLISHES A SPECIFIC ACT OR ACTS. EXAMPLES OF INSTRUMENTS INCLUDE DEEDS, MORTGAGES, LIENS AND CONTRACTS |
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Term
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Definition
| A RIGHT OR VALUE ASSOCIATED WITH REAL PROPERTY WHICH IS NOT AN IMPROVEMENT BUT A CONCEPT. FOR EXAMPLE, A LONG-TIME COMPANY WITH A WELL-RECOGNIZED COMPANY NAME ATTACHED TO A BUILDING IN A SPECIFIC LOCATION. THE NAME ATTRIBUTED TO THAT LOCATION MAY ADD VALUE TO THE OVERALL VALUE OF THE REAL PROPERTY. OTHER INTANGIBLE PROPERTY RIGHTS INCLUDE THOSE ABSTRACT RIGHTS ASSOCIATED WITH OWNERSHIP OF PROPERTY. |
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Term
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Definition
| THE MONEY ACQUIRED ON A LOAN. THAT RATE CHARGED BY ONE PARTY TO THE USERS OF MONEY. INTEREST IS THE RATE A LENDING INSTITUTION WILL CHARGE FOR THE USE OF ITS MONEY. THE RATE CON BE EXPRESSED BY NUMEROUS METHODS. |
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Term
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Definition
| THE RATE OF INTEREST CHARGED BY THE FEDERAL RESERVE BANKS, SAVINGS AND LOANS, INDIVIDUALS AND COMMERCIAL LENDING INSTITUTIONS. |
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Term
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Definition
| A SHORT-TERM FINANCING ARRANGEMENT. THE MOST COMMON EXAMPLE IS THAT BETWEEN A LENDING INSTITUTION AND A DEVELOPER OR BUILDER. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - THE CONVERSION OF A CURRENT STREAM OF INCOME ALONG WITH A FUTURE STREAM OF INCOME INTO A DISCOUNTED PRESENT VALUE. THE INTERNAL RATE OF RETURN IS A VALUE INTERPRETATION IN WHICH THE PRESENT VALUE OF THE FUTURE INCOME STREAM IS EQUAL TO THE OPENING INVESTMENT. INTERNAL RATES OF RETURN PROVIDE A UNIQUE INSIGHT AS TO THE CURRENT VALUE OF REAL PROPERTY. ONE DRAWBACK HOWEVER IS THAT FUTURE INCOMES ARE EXTRAPOLATED BASED ON PRESENT INCOME STREAMS. THIS FORECASTED INCOME STREAM IS THUS SUBJECT TO MANY VARIABLES WITHIN THE MARKETPLACE AND IS NOT ESTIMATED ON ACTUAL FUTURE MARKET DATA. |
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Term
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Definition
| AS USED IN AL THREE APPROACHES TO VALUE - WITHIN THE APPRAISAL PROCESS, INTERPOLATION INVOLVES DERIVING A VALUE ESTIMATE FROM THE THREE APPROACHES TO MARKET VALUE, OR OTHER FORMS OF DATA, BY INSERTING INFORMATION FROM EACH OF THE APPROACHES REACHING A NEW CONCLUSION. FOR EXAMPLE, IN THE APPRAISAL OF A SMALL DUPLEX, THE COST APPROACH DERIVES A VALUE ESTIMATE OF $80,000. BASED ON THIS INFORMATION, IT APPEARS THAT THE VALUE RANGE IS $80,000. IN THE APPRAISAL PROCESS HOWEVER, IF DURING THE APPRAISAL PROCESS IT IS DISCOVERED THAT INVESTORS DETERMINE VALUE BY THE INCOME STREAM ONLY, THUS POSITIONING THE INCOME APPROACH AS THE FUNDAMENTAL APPROACH FROM WHICH THE VALUE WILL BE DERIVED, THE COST AND SALES COMPARISON APPROACHES TO VALUE MAY CONTRIBUTE LITTLE TO THE VALUE OF INTERPRETATION. IF, IN THIS EXAMPLE, THE INCOME APPROACH PROVIDES A VALUE ESTIMATE OF $70,000, THE INFUSION OF THIS INFORMATION INTO THE RECONCILIATION PROCESS WILL PRODUCE A LOWER FINAL VALUE ESTIMATE THAN WOULD OTHERWISE HAVE BEEN EXPECTED. |
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Term
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Definition
| A FORM OF CO-OWNERSHIP, HAVING NO RELATIONSHIP TO A LEASE AGREEMENT, OF REAL PROPERTY IN WHICH THE JOINT TENANTS SHARE THE OWNERSHIP OF REAL PROPERTY. UPON THE DEATH OF ONE OF THE TENANTS, THE DESCENDANTS' UNDIVIDED EQUAL INTEREST OF OWNERSHIP IN THE JOINT TENANCY PASSES TO THE SURVIVING JOINT TENANT OR TENANTS. THE HEIRS OF THE DECEDENT RECEIVE NO RIGHTS IN THE REAL PROPERTY. THIS FORM OF CO-OWNERSHIP IS NO LONGER RECOGNIZED IN OREGON. YOU CREATE THIS TYPE OF TENANCY BY STATING NOT AS TENANCY IN COMMON BUT WITH THE RIGHT OF SURVIVORSHIP. |
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Term
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Definition
| THE JOINING TOGETHER OF A GROUP OF INDIVIDUALS TO PRODUCE A PRODUCT, DEVELOP REAL ESTATE OR PARTICIPATE IN A BUSINESS ENDEAVOR. JOINT VENTURES ARE FROMED BY BRINGING TOGETHER OF A WIDE RANGE OF TALENTS TO CULMINATE A PROJECT. JOINT VENTURES ARE USED TO DEVELOP RETAIL CNETERS, COMMERCIAL OFFICE BUILDINGS, REGIONAL MALLS AND RESIDENTIAL DEVELOPMENTS. THEY INVOLVE DEVELOPERS, ARCHITECTS, FINANCE SPECIALISTS, CONSTRUCTION EXPERTS, ACCOUNTANTS, ATTORNEYS, MARKETING CONSULTANTS, SALESPEOPLE AND MANY OTHERS. |
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Term
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Definition
| THE FINAL RESULT OF A LAWSUIT. JUDGEMENT LIENS ARE FILED IN THE COUNTY COURTHOUSE WHEN TWO PARTIES ARE IN CONFLICT. THE FUNCTION OF THE JUDGEMENT IS TO FORCE A DECISION BY A COURT WHICH MAY RESULT IN THE LIQUIDATION OF REAL PROPERTY ASSETS. JUDGEMENT IS ALSO THE ABILITY OF AN APPRAISER TO DERIVE A CONCLUSION OR FINAL DETERMINATION. THE ABILITY TO DISCRIMINATINGLY ESTIMATE THE VALUE OF REAL PROPERTY; TO APPRAISE. |
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Term
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Definition
| THE PAYMENT RECEIVED BY A PRIVATE PROPERTY LANDOWNER WHOSE REAL PROPERTY HAS BEEN ACQUIRED THROUGH THE PROCESS OF CONDEMNATION. CONDEMNATION IS THE RESULT OF THE GOVERNMENTAL AUTHORITY TO TAKE PRIVATELY-OWNED PROPERTY FOR PUBLIC USE THROUGH THE POWER OF EMINENT DOMAIN. |
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Term
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Definition
| AS DEFINED IN ALL THREE APPROACHES TO VALUE. |
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Term
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Definition
| WHEN A PIECE OF REAL PROPERTY IS TRAPPED OR STRANDED BETWEEN OTHER TRACTS PREVENTING THE OWNER FROM GAINING ACCESS TO THE PROPERTY. IN OREGON, COURTS RULE THAT A PERSON SEEKING ACCESS TO HIS REAL PROPERTY MUST BE GRANTED A FORM OF EASEMENT; EITHER THROUGH AN EASEMENT APPURTENANT OR BY AN EASEMENT BY NECESSITY FROM ONE OF THE ADJACENT LANDOWNERS SO ACCESS CAN BE ACHIEVED. |
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Term
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Definition
| AN EXISTING PHYSICAL DEFECT WHICH IS NOT EASILY RECOGNIZED OR READILY VISIBLE; A HIDDEN DEFECT THAT MAY OR MAY NOT BE ACTIVE AT THE CURRENT TIME. FOR EXAMPLE, A THRESHOLD CRACK FOUND IN THE SLAB MAY BE THE RESULT OF SIMPLE SETTLEMENT OF THE FOUNDATION. IT MAY ALSO BE A INDICATION OF A LARGER PROBLEM YET TO BE VISIBLE. |
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Term
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Definition
| AN AGREEMENT BETWEEN A LANDLORD (LESSOR) AND TENANT (LESSEE) TO OCCUPY REAL PROPERTY FOR A SPECIFIC TIME PERIOD. LEASES FOR LESS THAN ONE YEAR ARE NOT REQUIRED TO BE IN WRITING. LEASE AGREEMENTS LONGER THAN ONE YEAR, HOWEVER, MUST BE IN WRITING TO FULFILL THE STATUTE OF FRAUDS. |
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Term
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Definition
| THE LEGAL RIGHTS ASSOCIATED WITH A LEASE. A LEASEHOLD IS SOMETHING LESS THAN A FEE, OR FEE SIMPLE TITLE AND IS LIMITED IN DURATION. THE MAJORITY OF LEASEHOLDS MAINTAIN THAT THE LESSEE RETAINS A NUMBER OF THE BUNDLE OF LEGAL RIGHTS, BUT NOT ALL RIGHTS. THE LESSOR RETAINS CONTROLS SUCH AS DISPOSAL AND EXCLUSION. |
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Term
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Definition
| THOSE IMPROVEMENTS OR ADDITIONS ADDED TO REAL PROPERTY UNDER A LEASE. APPRAISERS MUST BE AWARE OF THE IMPLICATIONS OF WHICH ITEMS, IF ANY, COULD BE EASILY REMOVED AND HOW THE REMOVAL OF SUCH ITEMS WOULD INFLUENCE THE FINAL VALUATION ESTIMATE. APPRAISERS MUST ALSO BE AWARE OF WHICH ITEMS BECOME FIXTURES AND CANNOT BE REMOVED. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE AND IN GENERAL REAL ESTATE DICTION - USES COINCIDING WITH THE APPLICABLE ZONING REGULATIONS RELEVANT TO THE REAL PROPERTY. |
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Term
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Definition
| 1) A METHOD OF IDENTIFYING AND PLOTTING A TRACT OF LAND PREPARED BY SURVEYORS AND OR CIVIL ENGINEERS AND UTILIZED BY SALESPEOPLE, BROKERS AND APPRAISERS. ALL THREE METHODS ARE FORMULATED ON THE METES AND BOUNDS SYSTEM OF LEGAL DESCRIPTIONS WHICH USES, AMONG OTHER THINGS, BENCHMARKS AND PINS TO LOCATE AND DETERMINE THE SIZE OF A TRACT OF LAND. 2) AN IDENTIFICATION OF REAL PROPERTY WHICH IS ACCEPTABLE IN A COURT OF LAW THAT CLEARLY IDENTIFIES THE UNIQUE LOCATION OF REAL PROPERTY. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - THE USE OF REAL PROPERTY COINCIDING WITH PREVIOUS ZONING REQUIREMENTS. FOR EXAMPLE, HOUSTON MAY SOON HAVE ZONING FOR THE FIRST TIME IN ITS HISTORY. PRIOR TO THE IMPLEMENTATION OF ZONING RESTRICTIONS, NO CONTROLS EXISTED AND ANY TYPE OF STRUCTURE COULD BE BUILT. CERTAIN USES TO REAL PROPERTY ARE NO LONGER LEGALLY PERMISSIBLE; HOWEVER, BECAUSE THEY EXISTED PRIOR TO ZONING CHANGES THEY ARE CLASSIFIED AS A LEGAL NON-CONFORMING USE. IN MOST INSTANCES, NON-CONFORMING USE IS LEGALLY PERMITTED UNTIL SUCH TIME THAT AN OWNER WANTS TO ALTER THE USE OR BUILD A NEW STRUCTURE. WHEN THIS OCCURS, THE OWNER WILL BE REQUIRED TO COMPLY IWTH NEW ZONING RESTRICTIONS. |
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Term
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Definition
| AN OWNER OF REAL PROPERTY, COMMERCIAL BANK OR MORTGAGE COMPANY WHICH FURNISHES FUNDS ALLOWING A BUYER TO PURCHASE REAL PROPERTY. IN EXCHANGE FOR THE USE OF THE FUNDS, THE BUYER AGREES TO REPAY A DEBT IN ADDITION TO AN AGREED-UPON INTEREST RATE WHICH WILL BE CHARGED ON THE DEBT. |
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Term
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Definition
| THE TENANT OF A RENTAL PROPERTY UNDER A LEASE AGREEMENT IS REFERRED TO AS A LESSEE. |
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Term
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Definition
| THE LANDLORD OF A RENTAL PROPERTY UNDER A LEASE AGREEMENT IS THE LESSOR. |
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Term
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Definition
| A BRIEF DOCUMENT DETAILING THE FINDINGS OF AN APPRAISER IN REPORTING A VALUE ESTIMATE. LETTER REPORTS ARE SELDOM USED DUE TO THE LIMITED ACCURACY AND MINIMAL DOCUMENTATION PROVIDED. FOR EXAMPLE, OCCASIONALLY, APPRAISERS ARE ASKED TO APPRAISE A PROPERTY WHICH IS SOON TO BE FORECLOSED. THE OWNER MAY REFUSE THE APPRAISER ACCESS TO PROPERTY THEREBY PREVENTING THE APPRAISER FROM COMPLETING THE ASSIGNMENT IN FULL. IN THIS INSTANCE, THE LENDER WILL, IN MOST CASES, ACCEPT A LETTER APPRAISAL REPORT UNTIL THE PROPERTY IS VACATED. |
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Term
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Definition
| A LETTER SUBMITTED WITH THE APPRAISAL REPORT WHICH CONTAINS A SYNOPSIS OF THE FINDINGS BY THE APPRAISER. CONTAINED WITHIN THIS LETTER ARE THE LEGAL DESCRIPTION, ANY LIMITING CONDITIONS, EFFECTIVE DATE, FINAL VALUE ESTIMATE AND THE SIGNATURE OF THE APPRAISER. |
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Term
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Definition
| ANY NUMBER OF FINANCIAL DEVICES UTILIZED TO INFLUENCE THE REPAYMENT OF BORROWED FUNDS. LEVERAGE TECHNIQUES ARE CHARACTERIZED BY REARRANGING THE REPAYMENT OF A DEBT IN A WAY WHICH MINIMIZE THE INITIAL CASH INVESTMENT. FOR EXAMPLE; A BUYER WANTS TO PURCHASE AN $80,000.00 HOME. THE BUYER NEGOTIATES A ZERO DOWN PAYMENT THEREBY CREATING THE MOST HIGHLY LEVERAGED LOAN CONCEIVABLE. THE BUYER, IN EFFECT, HAS PURCHASED THE USE OF $80,000.00 WITH NO CASH EXPENDITURE. |
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Term
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Definition
| THE AUTHORITY GRANTED TO AN INDIVIDUAL OR ENTITY TO ACT IN A CAPACITY ALLOWED BY ANOTHER INDIVIDUAL, MUNICIPALITY, STATE OR FEDERAL GOVERNMENT AGENCY. LICENSEE IS THE TITLE HELD BY A PERSON AUTHORIZED TO ACT IN A SPECIFIC LEGAL CAPACITY. |
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Term
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Definition
| ANY IMPOSITION, LEVY, CHARGE OR CLAIM AGAINST REAL PROPERTY WHICH CREATES A NEGATIVE INFLUENCE ON THE MARKETABILITY OR TRANSFERABILITY. LIENS ARE CREATED BY RECORDING THE NECESSARY DOCUMENTS IN THE COUNTY COURTHOUSE CREATING A LIEN AGAINST THE OWNER BUT NOT THE REAL PROPERTY. FAILURE TO RECORD A LIEN GIVES RISE TO NO ACTION BY THE PERSON WHO FILED THE LIEN. |
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Term
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Definition
| OREGON IS A LIEN THEORY STATE. IN OREGON, THE LENDER, ACTING AS EITHER A MORTGAGEE OR BENEFICIARY, HAS A LIEN AGAINST THE REAL PROPERTY, BUT THE BORROWER, ALSO KNOWN AS THE MORTGAGOR OR TRUSTOR, HAS EQUITABLE TITLE IN THE REAL PROPERTY. LIEN THEORY SPECIFIES THAT THE MORTGAGEE (LENDOR), WHEN LENDING MONEY COLLATERALIZED BY A MORTGAGE, WILL FILE A LIEN AGAINST THE REAL PROPERTY IN THE EVENT OF DEFAULT BY THE MORTGAGOR (BORROWER). |
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Term
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Definition
| THE REAL PROPERTY RIGHTS GRANTED TO AN INDIVIDUAL BY A DECEASED PERSON. THE RECIPIENT OF A LIFE ESTATE IS CALLED A LIFE TENANT AND IS ENTITLED TO USE AND MAINTAIN ALL THE PRIVILEGES ASSOCIATED WITH THE ESTATE. THREE ESSENTIAL ELEMENTS EXIST. THEY ARE: 1) THE LIFE TENANT CANNOT DISPOSE OR SELL THE ESTATE. 2) THE TIME OF OWNERSHIP IS CONTROLLED BY EITHER THE LIFE OF THE LIFE TENANT OR THE LIFE OF ANOTHER PERSON. 3) UPON THE DEATH OF THE PARTY WHOSE LIFE DETERMINED THE DURATION OF THE ESTATE, THE ESTATE PASSES TO ANOTHER PERSON. THIS PERSON IS NAMED THE REMAINDERMAN AND IS ENTITLED TO THE OWNERSHIP RIGHTS UPON THE COMPLETION OF THE LIFE ESTATE. |
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Term
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Definition
| REFERENCING THE STATUTE OF LIMITATION AS RELATING TO ADVERSE POSSESSION. WHEN ACQUIRING REAL PROPERTY THROUGH SUSTAINED AND UNAPPROVED USAGE, THE POSSESSOR MUST MEET THE PRESCRIPTIVE TIME REQUIREMENTS AS ESTABLISHED BY LAW. IN OREGON, THE STATUTE OF LIMITATIONS INCLUDES PRESCRIPTIVE TIME REQUIREMENT 10. |
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Term
| LINEAR REGRESSION PROCEDURE |
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Definition
| THE APPRAISAL PROCESS USED TO ESTABLISH DOLLAR ADJUSTMENTS FOR A NUMBER OF VARIABLES. LINEAR RELATES TO STRAIGHT LINES WHEREAS REGRESSION RELATES TO THE DIFFERENCE OF ONE OR MORE VARIABLES TO DRAW A CONCLUSION IN A STATISTICAL PROBLEM. THEREFORE, LINEAR REGRESSION IS A PROCESS OF ANALYZING DATA TO CREATE A DESIRED RESULT FOR A STATISTICAL PROBLEM. |
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Term
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Definition
| THE PROCESS OF CONVERTING AN ASSET INTO CASH. THE LIQUIDATED VALUE OF AN ASSET IS INFLUENCED BY TIME SINCE THE AMOUNT OF TIME ALLOCATED TO SELL AN ASSET WILL INFLUENCE ITS FINAL SALES PRICE. |
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Term
| LINEAR REGRESSION PROCEDURE |
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Definition
| THE APPRAISAL PROCESS USED TO ESTABLISH DOLLAR ADJUSTMENTS FOR A NUMBER OF VARIABLES. LINEAR RELATES TO STRAIGHT LINES WHEREAS REGRESSION RELATES TO THE DIFFERENCES OF ONE OR MORE VARIABLES TO DRAW A CONCLUSION IN A STATISTICAL PROBLEM. THEREFORE, LINEAR REGRESSION IS A PROCESS OF ANALYZING DATA TO CREATE A DESIRED RESULT FOR A STATISTICAL PROBLEM. |
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Term
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Definition
| THE PRICE AT WHICH A SELLER AGREES TO SELL REAL PROPERTY. MOTIVATION OF THE SELLER, TIME ALLOTMENT AND THE CONDITIONS OF THE MARKETPLACE WILL INFLUENCE THE LIST PRICE. THERE IS MINIMAL CORRELATION BETWEEN LIST PRICE AND SALES PRICE. |
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Term
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Definition
| THE PERSON DESIGNATED BY A SELLER TO SELL REAL PROPERTY. WITHIN THE INDUSTRY, THE LISTOR IS AN INDIVIDUAL WHO IS RESPONSIBLE FOR THE LISTING, MARKETING, NEGOTIATING AND SELLING OF REAL PROPERTY. |
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Term
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Definition
| WATER RIGHTS ASSOCIATED WITH THE OWNERSHIP OF LAND ON OCEANFRONT OR COASTAL REGIONS. LITTORAL RIGHTS ARE ASSOCIATED WITH THOSE RIGHTS ON LARGE BODIES OF WATER. LITTORAL RIGHTS, AS WITH RIPARIAN WATER RIGHTS, ARE LIMITED TYPICALLY BY ENDING AT THE MEAN VEGETATION LINE. LITTORAL OWNERS MAY ENJOY THE USE OF THE WATER AS LONG AS IT DOES NOT INTERFERE WITH THE OWNERSHIP OF OTHER OWNERS' WATER RIGHTS AND DOES NOT IMPAIR OR ALTER THE COURSE OR FLOW OF WATER. GOVERNMENTAL POWERS ARE IN PLACE WHICH RESTRICT THE USE OF LITTORAL RIGHTS AND BROKERS AND APPRAISERS MUST BE AWARE HOW THESE LIMITATIONS INFLUENCE VALUE ESTIMATES. |
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Term
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Definition
| IN THE PURCHASE OF REAL PROPERTY, THE TOTAL AMOUNT BEING BORROWED. |
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Term
| LOAN-TO-VALUE RATIO (LTV) |
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Definition
| THIS IS THE DIFFERENCE BETWEEN THE AMOUNT OF THE CONTRACT PRICE AND THE AMOUNT THE LENDER IS WILLING TO LEND. THE APPRAISER WILL PROVIDE AN ESTIMATE OF VALUE WHICH WILL DETERMINE THE AMOUNT OF MONEY THE LENDER IS WILLING TO LEND BASED ON THE LENDER'S LOAN-TO-VALUE RATIOS. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - A NEGATIVE CONTRIBUTORY LOSS IN VALUE DUE TO LOCATIONAL VARIABLES. IN THEORY, REAL PROPERTY IS SURROUNDED BY AN INVISIBLE CURTAIN. LOCATIONAL OBSOLESCENCE OCCURS WHEN SOMETHING OUTSIDE THIS VEIL PIERCES AND IMPACTS THE VALUE OF PROPERTY, SUCH AS EXCESSIVE NOISE POLLUTION OR A NEGATIVE PERCEPTION OF SURROUNDING AREAS. THIS TYPE OF OBSOLESCENCE IS NOT CURABLE BY THE OWNER OF REAL PROPERTY. FACTORS OUTSIDE REAL PROPERTY, HOWEVER, CAN BE LIFTED OR ELIMINATED OVER TIME THEREBY RELEASING THE NEGATIVE INFLUENCE. FOR EXAMPLE, A RESIDENCE IN CLOSE PROXIMITY TO AN AIRPORT MAY CAUSE LOCATIONAL OBSOLESCENCE BECAUSE OF NOISE POLLUTION CREATED BY COMMERCIAL AIRLINERS. HOWEVER, IF THE AIRPORT IS CLOSED OR MOVED, THE LOCATIONAL OBSOLESCENCE, AND NEGATIVE VALUE ATTACHED, IS LIFTED. BUILDING NEW HOMES NEXT TO A CHEMICAL TEST PLANT WOULD LIKELY ALSO CREATE LOCATIONAL OBSOLESCENCE. |
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Term
| LOT, BLOCK, TRACT DESCRIPTION |
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Definition
| ONE OF THREE PRIMARY METHODS UTILIZED IN IDENTIFYING THE LOCATION OF REAL PROPERTY. THIS FORM OF LEGAL DESCRIPTION IS THE PRIMARY DESCRIPTION IS THE PRIMARY DESCRIPTION USED IN SINGLE FAMILY RESIDENTIAL DEVELOPMENTS AND CREATES A UNIQUE AND ACCURATE SYSTEM OF IDENTIFICATION. ALTHOUGH MANY SUBDIVISIONS WILL HAVE SIMILAR LOT AND BLOCK NUMBERS, ALL WILL HAVE DIFFERENT NAMES AND ALL BE LOCATED IN DIFFERENT COUNTIES. IN ORDER FOR THIS FORM OF DESCRIPTION TO BE LEGAL, IT MUST BE RECORDED IN THE COUNTY COURTHOUSE WHEREIN THE REAL PROPERTY IS LOCATED. |
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Term
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Definition
| AS USED IN OPERATING INCOME STATEMENTS - THOSE FEES CHARGED BY PROPERTY MANAGERS WHO DIRECTLY OVERSEE AND ADMINISTER INCOME-PRODUCING PROPERTIES. |
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Term
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Definition
| APPLIES TO BOTH REAL PROPERTY AND THE IMPROVEMENTS ATTACHED TO IT WHICH BARELY JUSTIFIES ITS CONTINUED EXISTENCE. IT MAY BE CLASSIFIED AS A FORM OF FUNCTIONAL OR PHYSICAL OBSOLESCENCE AND CAN BE CURABLE OR INCURABLE. |
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Term
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Definition
| AS APPLIED TO APPRAISAL THEORY - A GEOGRAPHIC LOCATION IN WHICH REAL PROPERTY IS BOUGHT AND SOLD IN A OPEN AND COMPETITIVE ATMOSPHERE. |
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Term
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Definition
| THE SYSTEMATIC INVESTIGATION OF THE DATA SUBMITTED FROM THE MARKETPLACE. |
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Term
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Definition
| AS USED IN THE MARKET DATA ANALYSIS - THE GRID USED TO DETERMINE THE DIFFERENTIALS BETWEEN THE SUBJECT AND EACH OF THE COMPARABLES ALONG WITH THE NECESSARY ADJUSTMENTS TO DERIVE A NET VALUE INDICATOR FOR EACH OF THE SALES COMPARABLES BEING UTILIZED. AS USED IN THE SALES COMPARISON APPROACH - THE GRID UTILIZED TO COMPENSATE FOR THE DIFFERENTIALS BETWEEN EACH OF THE COMPARABLES AND THE SUBJECT PROPERTY. |
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Term
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Definition
| THE FEASIBLE PRICE FOR REAL PROPERTY IN A MARKETPLACE, IN TERMS OF DOLLAR CURRENCY OR THE EQUIVALENCY THEREOF, THAT A PRUDENT AND KNOWLEDGEABLE BUYER WILL PAY FOR AND AN PRUDENT AND KNOWLEDGEABLE SELLER WILL SELL - NEITHER ACTING UNDER ANY FORM OF COERCION OR CONSTRAINTS, AND EACH, PERFORMING FROM OPPOSING SIDES IN THE TRANSACTION, ACTING IN THEIR OWN BEST INTEREST. |
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Term
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Definition
| A GEOGRAPHIC LOCATION TARGETED WITHIN AN AREA IN WHICH REAL PROPERTY IS BOUGHT AND SOLD. AS APPLIED TO THE APPRAISAL PRACTICE, THE SPECIFIC AREA FROM WHICH COMPARABLES ARE CONSIDERED. AND ANALYZED, WHETHER IN THE NEIGHBORHOOD OR A MEASURED DISTANCE OUTSIDE THE NEIGHBORHOOD. TYPICALLY, NO COMPARABLES ARE CONSIDERED BEYOND THIS BORDER DUE TO THE DISTORTION EFFECT CREATED AS A RESULT OF LOCATIONAL DIFFERENCES. |
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Term
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Definition
| THE MEASURED ABILITY, WITHIN A GIVEN MARKET, OF HAVING REAL PROPERTY WHICH MAY BE EASILY CONVEYED, SOLD OR LEASED. |
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Term
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Definition
| THE PROCESS OF APPRAISING A SIZABLE NUMBER OF PROPERTIES AT THE SAME TIME. IN RESIDENTIAL APPRAISAL PRACTICE, MASS CAN BE DEFINED AS A MULTITUDE OF HOMES UNDER APPRAISAL. WHAT CONSTITUTES THE NUMBER AT WHICH POINT THE REPORT BECOMES MASS IS SUBJECTIVE AND INTERPRETED BY AN APPRAISER. |
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Term
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Definition
| THE COMPILATION OF A SET OF NUMBERS AND STANDARD THE PRODUCE. FOR EXAMPLE, THE STANDARD NUMBER OF 1, 2, 3, 4, 5 IS 1+2+3+4+5=15. 15/5 (NUMBER OF COMPONENTS IN THE EQUATION) =3 (MEAN). 1232+1634+1242+1896+89,999 =96,003. 96,003/5=19,200.60 (MEAN) |
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Term
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Definition
| ALSO REFERRED TO AS AN CONSTRUCTION LIEN - A LIEN FILED BY A CONTRACTOR WHEN IMPROVEMENTS ARE MADE TO REAL PROPERTY. THE FILING OF THE LIEN SERVES TWO PURPOSES: 1) IT SERVES AS A NOTICE TO THE OWNER THAT A PAYMENT IS DUE UPON THE COMPLETION OF THE WORK; AND 2) SHOULD THE OWNER REFUSE TO PAY, THE LIEN PREVENTS THE OWNER FROM SELLING THE REAL PROPERTY WITHOUT FIRST RELEASING THE LIEN, EITHER THROUGH THE PAYMENT OF MONIES OWED OR A RESULTING COURT ACTION. |
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Term
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Definition
| THE COMPILATION OF A SET OF NUMBERS OF WHICH THE MIDPOINT NUMBER IS THE MEDIAN. FOR EXAMPLE, (1,2,3,4,5) THE MIDPOINT NUMBER IS (3). |
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Term
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Definition
| A CLUSTER OR SERIES OF DENSELY-POPULATED TOWNS WHICH, BECAUSE OF THEIR GEOGRAPHIC PROXIMITY, BECOME PART OF A LARGER METROPOLITAN COMPLEX. FOR EXAMPLE, THE GREATER HOUSTON AREA IS MADE UP OF SMALLER POPULATED AREAS, SUCH AS ALIEF, SUGARLAND, KATE, JERSEY CITY, ALDINE AND MANY OTHERS |
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Term
| METES AND BOUNDS LEGAL DESCRIPTION |
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Definition
| ONE OF THREE PRIMARY METHODS OF IDENTIFYING REAL PROPERTY. METES AND BOUNDS IS THE FUNDAMENTAL FORM OF LEGAL DESCRIPTION USED. BOTH THE LOT, BLOCK, TRACT DESCRIPTION, AND THE RECTANGULAR SURVEY SYSTEM ARE BASED ON METES AND BOUNDS (METES BEING A BOUNDARY LINE AND BOUNDS BEING THE PROCESS OF SETTING THE BOUNDARY LINES). THIS FORM OF LEGAL DESCRIPTION USES A SERIES OF POINTS CALLED PINS WHICH FACILITATE THE PROCESS OF LAND IDENTIFICATION. |
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Term
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Definition
| A DISTANCE OF LAND WITH LINEAR DIMENSIONS RUNNING 5,280 FEET. ONE SQUARE MILE CONTAINS 27,878,400 SQUARE FEET. ONE ACRE CONTAINS 43,560 SQUARE FEET. 27,878,400 / 43,560 =640 ACRES. THIS IS THE NUMBER OF ACRES CONTAINED IN ONE SECTION OF LAND. |
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Term
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Definition
| THE MOST CONSISTENT OR FREQUENT COMPONENT OF A SET OF NUMBERS. FOR EXAMPLE, 1,1,1,1,2,3,4,5 THE MODE IS (1). 1,2,3,4,5,5,5,5 THE MODE IS (5). |
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Term
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Definition
| 1) TO SUSPEND THE ACTION OF AN EVENT IN PROGRESS RELATING TO ZONING LAWS OR SOME FORM OF GOVERNMENTAL INTERVENTION. USED TO RESTRICT BUILDING PERMITS PENDING FURTHER STUDY OF A SITUATION OR ZONING PROBLEM. 2) TO TEMPORARILY INTERRUPT THE PAYMENTS ON A FINANCIAL INSTRUMENT WHEN A TROUBLED BORROWER IS EXPERIENCING FINANCIAL SETBACKS. THIS CAN ONLY BE ACCOMPLISHED BY AN AGREEMENT OF PARTIES. |
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Term
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Definition
| THE LEGAL DOCUMENT WHICH GRANTS THE BORROWER THE TITLE OF THE REAL PROPERTY BEING PURCHASED AS COLLATERAL. THIS DOCUMENT IS USED WHEN THE BORROWER HAS INSUFFICIENT COLLATERAL FOR THE NEEDED FUNDS. THE LENDER WILL NOT LOAN MONEY THAT IS NOT FULLY SECURED BY SOME FORM OF COLLATERAL. TO INSURE THAT THE BORROWER WILL COMPLETE THE TERMS OF THE NOTE OR LOAN INSTRUMENT, THE LENDER REQUIRES THE BORROWER TO USE THE REAL PROPERTY AS THE COLLATERAL TO SECURE THE REPAYMENT OF THE DEBT. IN OREGON, THE VAST MAJORITY OF MORTGAGE INSTRUMENTS USED IN COLLATERALIZING REAL PROPERTY IS THE DEED OF TRUST INSTRUMENT, A FORM OF MORTGAGE WHICH DIFFERENTIATES FROM A MORTGAGE IN THAT THE LENDER HAS THE POWER OF NON-JUDICIAL FORECLOSURE. IN OTHER WORDS, SHOULD THE BORROWER DEFAULT, THE LENDER IS NOT REQUIRED TO SUE THE BORROWER TO ACQUIRE THE REAL PROPERTY. THE LENDER, FOLLOWING A PRESCRIBED SEQUENCE OF EVENTS, CAN SIMPLY EXERCISE ITS POWER OF FORECLOSURE. MORTGAGES AND DEEDS OF TRUSTS ARE NOT THE SAME. |
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Term
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Definition
| IN RELATIONSHIP TO A LOAN, THE PARTY WHO HAS ACCEPTED REAL PROPERTY AS COLLATERAL IN EXCHANGE FOR A LOAN - THE LENDER. |
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Term
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Definition
| IN RELATION TO A LOAN, THE PARTY WHO HAS COLLATERALIZED AND PLEDGED REAL PROPERTY IN EXCHANGE FOR A LOAN - THE BORROWER. |
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Term
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Definition
| A STRUCTURE OR SERIES OF STRUCTURES BUILT WITH THE INTENT OF HOUSING TWO OR MORE FAMILY UNITS. |
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Term
| MULTIPLE LISTING SERVICE (MLS) |
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Definition
| AN ORGANIZATION WHOSE PRIMARY FUNCTION IS TO PROVIDE A METHOD OF DISTRIBUTION AND CIRCULATION OF INFORMATION ON HOMES FOR SALE BY ITS MEMBERSHIP. THE SERVICE INCLUDES A CONTINUAL LIST OF HOMES FOR SALE, EDUCATIONAL COURSES, COMMUNITY REVITALIZATION PROGRAMS, MEDIATION SERVICES AND MANY OTHERS. APPRAISERS UTILIZE MULTIPLE LISTING SERVICES TO ACQUIRE THE VAST AMOUNTS OF SOLD AND STATISTICAL DATA DERIVED BY ITS SUBSCRIBERS. |
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Term
| NARRATIVE APPRAISAL REPORT |
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Definition
| A METHOD OF REPORTING THE FINAL VALUE ESTIMATE. TO PROVIDE AN ESTIMATE OF MARKET VALUE VIA A CHRONICLED REPORT. NARRATIVE REPORTS ARE RARELY USED IN THE REPORTING OF VALUE OF A RESIDENTIAL PROPERTY. THEY ARE MOST FREQUENTLY USED IN THE APPRAISAL OF COMMERCIAL REAL PROPERTY. |
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Term
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Definition
| FINANCIAL INSTRUMENT THAT ALLOWS BORROWERS TO FINANCE MORE THAN THEY MIGHT OTHERWISE BE ABLE TO BORROW. NEGATIVE AMORTIZATION FOLLOWS THE SAME PROCEDURE AS REGULAR AMORTIZATION WITH ONE DISTINCTION, THAT OF DEFERRING INTEREST DUE BY ADDING THE DEFERRED INTEREST TO THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN FOR THE FIRST SEVERAL YEARS . |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - THE NET RESULT OF AN INCOME PRODUCING PROPERTY WHICH HAS HIGHER EXPENDITURES, TAXES, INSURANCE, MAINTENANCE AND DEBT SERVICE THAN INCOME FROM ALL SOURCES. APPRAISERS APPLY THIS INFORMATION WHEN PREPARING AN OPERATING INCOME STATEMENT. |
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Term
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Definition
| A GROUP OF RESIDENTIAL DWELLINGS WHICH ARE CLASSIFIED AND JOINED TOGETHER BY A SERIES OF BORDERS. THESE BORDERS ARE DELINEATED AS THE NEIGHBORHOOD BOUNDARIES. IN URBAN AREAS, THE BORDERS ARE TYPICALLY DETERMINED BY THOROUGHFARES AND NATURAL BOUNDARIES. THE HOMES WITHIN A NEIGHBORHOOD CAN HAVE HOMOGENOUS DETAIL OR CAN HAVE A WIDE ARRAY OF CONSTRUCTION AND AMENITY DIFFERENTIALS. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - A PROCEDURE COMBINING INFORMATION FROM AN OPERATING INCOME STATEMENT AND SOLD MARKET DATA WHICH, WHEN APPLIED TO A NET STREAM OF MONTHLY INCOME, CREATES A MULTIPLIER FOR SOLD COMPARABLES. TO ESTABLISH THE MULTIPLIER, DIVIDE THE NET MONTHLY INCOME BY THE SALES PRICE OF THE COMPARABLE. FOR EXAMPLE, A COMPARABLE SALE HAS GROSS MONTHLY INCOME OF $2,000.00. THE EXPENSES FOR THE MONTH ARE $1,400.00 ($2,000.00 -$1,400.00 = $600.00 NET MONTHLY INCOME.) NEXT DIVIDE THE SALE PRICE OF $50,000.00 BY THE MONTHLY INCOME ($600.00). THIS PROVIDES THE NET INCOME MULTIPLIER OF 83.33 |
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Term
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Definition
| A NET LISTING IS USED WHEN THE SELLER OF REAL PROPERTY WISHES TO NET A CERTAIN DOLLAR AMOUNT WHEN SELLING REAL PROPERTY. TO CREATE A STRONG MOTIVATION ON THE LISTOR'S PART, THE SELLER AGREES THAT THE LISTOR WILL RECEIVE THE DIFFERENCE BETWEEN THE AGREED UPON PRICE AND WHAT THE LISTOR ACTUALLY SELLS THE PROPERTY FOR. ALTHOUGH LEGAL IN OREGON, NET LISTINGS ARE NOT ENCOURAGED. ONE SCHOOL OF THOUGHT PREVAILS STATING SIMPLY THAT INSTANCES WILL ARISE WHERE THE SELLER MAY NOT KNOW THE MARKET VALUE OF THE PROPERTY. LEGALLY, THE LISTOR HAS THE FIDUCIARY RESPONSIBILITY TO PUT THE INTEREST OF THE SELLER ABOVE HIS OWN, AND, AS A RESULT, NET LISTINGS HAVE THE POTENTIAL OF CREATING A BREACH OF THE FIDUCIARY RESPONSIBILITIES TO A SELLER. |
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Term
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Definition
| ALSO KNOWN AS A NET LEASE - AS USED IN THE INCOME APPROACH - A FORM OF LEASE AGREEMENT WHICH PRIMARILY MANDATES THAT THE TENANT PAY NOT ONLY A BASE MONTHLY RENT, BUT THE TAXES, INSURANCE AND MAINTENANCE OF THE PROPERTY. |
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Term
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Definition
| ALSO REFERRED TO AS NOI - AS USED IN THE INCOME APPROACH - AS USED IN AN OPERATING INCOME STATEMENT, THE PROCESS OF SUBTRACTING FROM THE POTENTIAL GROSS OPERATING INCOME THE VACANCY LOSS, VARIABLE EXPENSES, FIXED EXPENSES AND THE REVERSES FOR REPLACEMENT. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - THE REVENUES REMAINING AFTER ALL EXPENSES HAVE BEEN SETTLED. |
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Term
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Definition
| NEVER HAVING EXISTED UNTIL NOW. NOT YET USED. IN THEORY, ONE SCHOOL OF THOUGHT STATES THAT IN RELATIONSHIP TO IMPROVEMENTS ON LAND, THERE IS NO SUCH THING AS "NEW" SINCE EACH COMPONENT OF HOMES, SUCH AS LUMBER, FIXTURES, SHINGLES, ETC... HAS FIRST ALREADY BEEN EXPOSED TO NATURAL FORCES (THE ELEMENTS), AND NATURAL FORCES CAUSE DEPRECIATION. BECAUSE THE IMPROVEMENTS HAVE BEEN EXPOSED, THEY ARE SAID TO SUFFER FROM DEPRECIATION, REGARDLESS OF THE AMOUNT OF DEPRECIATION DETECTABLE. IN APPRAISAL THEORY, APPRAISERS WILL OFTEN REFER TO THE IMPROVEMENTS AS A "RECENTLY CONSTRUCTED DWELLING OR STRUCTURE" VERSUS A NEW HOME FOR ACCURACY AND TO NOT MISLEAD THE PRINCIPALS AS THE TRUE NATURE AND STATE OF THE IMPROVEMENTS. |
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Term
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Definition
| THE LEGAL INSTRUMENT, BETWEEN A LENDER AND A BORROWER, WHICH INSURES THE BORROWER WILL REPAY A SPECIFIC MONETARY DEBT IN PAYMENTS OF BOTH PRINCIPAL AND INTEREST FOR A PRESCRIBED PERIOD OF TIME AS SPECIFIED IN A CONTRACT. NOTE INSTRUMENTS AND MORTGAGE INSTRUMENTS, IN MAY INSTANCES, ARE COMBINED WITHIN THE SAME DOCUMENT. |
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Term
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Definition
| THE PROCESS OF EXCHANGING ONE AGREEMENT FOR ANOTHER. NOVATION, IN SIMPLE TERMS, REPLACES ONE OBLIGEE (BORROWER OR TENANT) IN EXCHANGE FOR ANOTHER. A COMMON EXAMPLE OF A NOVATION OCCURS WHEN THE TENANT UNDER A LEASE AGREEMENT WILL REPLACE HIMSELF, WITH THE LANDLORD'S PERMISSION, WITH ANOTHER PERSON WHO WILL COMPLETE THE TERMS OF THE ORIGINAL AGREEMENT. THE ORIGINAL OBLIGEE IS RELEASED AND IS NO LONGER LIABLE TO THE LANDLORD IN THE EVENT OF DEFAULT BY THE NEW TENANT. |
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Term
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Definition
| NEVER TO HAVE LEGALLY EXISTED. AN AGREEMENT WHICH CANNOT BE ENFORCED BY THE PARTIES TO THE CONTRACT. |
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Term
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Definition
| THE PARTY WHO RECEIVES A FEE, MONIES OR BENEFITS FROM THE ACTIONS OR PERFORMANCE OF AN OBLIGATION. |
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Term
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Definition
| THE PARTY WHO AGREES TO PAY A FEE, MONIES OR BENEFITS AS A RESULT OF THE ACTIONS OF AN OBLIGATION. |
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Term
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Definition
| THIS IS A FORM OF DEPRECIATION NOTED BY DETERIORATION OR ANTIQUATED FEATURES. |
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Term
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Definition
| AS USED IN THE INCOME APPROACH - 1) THE ACTUAL RATE OR PERCENTAGE OF OCCUPANCY OF AN INCOME PRODUCING PROPERTY. THE OCCUPANCY RATE CAN BE EXPRESSED AS A PERCENTAGE OR NUMBER. 2) THE FORECASTED RATE OF OCCUPANCY OF AN INCOME PROPERTY. FOR EXAMPLE, AN APARTMENT COMMUNITY WITH AN OCCUPANCY RATE OVER 100 PERCENT HAS AN ACTUAL OCCUPANCY OF 100 PERCENT PLUS A WAITING LIST OF PROSPECTIVE TENANTS WHO HAVE AGREED TO LEASE THE FIRST AVAILABLE UNITS. |
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Term
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Definition
| A PHYSICAL IMPROVEMENT NOT DIRECTLY ATTACHED TO THE REAL PROPERTY - FOR EXAMPLE, THOROUGHFARES, CURBS, ETC... |
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Term
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Definition
| A TYPE OF LISTING AGREEMENT WHICH GRANTS ANY NUMBER OF SALESPEOPLE OR BROKERS THE AUTHORITY TO SELL THE REAL PROPERTY AT THE SAME TIME. OPEN LISTINGS GIVE NO PROTECTION TO SALESPEOPLE SOLICITING THE PROPERTY AND THE FIRST ONE TO PRESENT A READY, WILLING AND COMPETENT BUYER WILL BE THE ONLY PARTY TO RECEIVE A COMMISSION. |
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Term
| OPERATING INCOME STATEMENT |
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Definition
| AS USED IN THE INCOME APPROACH - THE PROCEDURAL ANALYSIS OF PREPARING A FINANCIAL STATEMENT ESTIMATING GROSS INCOME, VACANCY LOSS, COMBINED EXPENSES, NET OPERATING INCOME, DEBT SERVICE AND NUMEROUS RATIOS AS THEY RELATE TO AN INCOME STREAM. THE RESULTS OF THIS STATEMENT DETERMINE THE FEASIBILITY OF A DEVELOPMENT AND ARE USED BY LENDERS, INVESTORS AND APPRAISERS. |
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Term
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Definition
| THE PROCESS OF SECURING REAL PROPERTY FOR AN ANTICIPATED FUTURE USE. THE OPTION IS TO THE BENEFIT OF THE BORROWER WHO SECURES THE REAL PROPERTY WITH A DEPOSIT PREVENTING THE OWNER FROM SELLING THE REAL PROPERTY UNTIL THE OPTION HAS TERMINATED. THE BUYER WILL HAVE A SPECIFIC TIME PERIOD IN WHICH TO BUY THE PROPERTY. SHOULD THE TIME LAPSE, THE BUYER LOSES HIS OPTION MONEY AND THE SELLER IS THEN ABLE TO SELL TO ANYONE WHO WANTS TO PURCHASE THE PROPERTY. OPTIONS ARE PRIMARILY USED IN COMMERCIAL DEVELOPMENT TRANSACTIONS BETWEEN THE OWNER AND A DEVELOPER. |
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Term
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Definition
| THE PARTY WHO HAS PURCHASED THE OPTION TO BUY REAL PROPERTY. |
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Term
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Definition
| THE PARTY WHO HAS SOLD THE OPTION TO SELL REAL PROPERTY. |
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Term
| OREGON ASSOCIATION OF REALTORS (OAR) |
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Definition
| THE OREGON BRANCH OF THE NATIONAL ASSOCIATION OF REALTORS (NAR) LOCATED IN CHICAGO, ILLINOIS. MEMBERS OF THIS ASSOCIATION ADHERE TO A STRICT CODE OF ETHICS AND MAY EARN THE TITLE REALTOR. THE OREGON ASSOCIATION OF REALTORS OFFERS MANY ADVANCED COURSES OF STUDY AND AWARDS THE GRADUATE, REALTORS INSTITUTE (GRI) DESIGNATION TO THOSE CANDIDATES WHICH, IN ADDITION TO EXPERIENCE REQUIREMENTS, SUCCESSFULLY COMPLETE A COMPREHENSIVE SERIES OF REAL ESTATE COURSES. |
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Term
OREGON REAL ESTATE AGENCY
(OREA) |
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Definition
| OREGON PASSED THE FIRST EFFECTIVE REAL ESTATE LICENSE LAW IN THE UNITED STATES ON FEBRUARY 14, 1919. THE LAW REQUIRED BROKERS TO PAY A $5 LICENSING FEE ANNUALLY, FURNISH A $1000 BOND AND SUBMIT RECOMMENDATIONS SIGNED BY TEN FREEHOLDERS CERTIFYING THAT THE APPLICANT WAS "HONEST, TRUTHFUL, AND OF GOOD CHARACTER." THE INSURANCE DEPARTMENT WAS INITIALLY RESPONSIBLE FOR THE LICENSING OF REAL ESTATE AGENTS. THE REAL ESTATE DEPARTMENT WAS LATER ORGANIZED WITHIN THE INSURANCE DEPARTMENT. IN 1939, THE REAL ESTATE DEPARTMENT WAS GIVEN INDEPENDENT STATUS BY THE LEGISLATURE. IN 1963, IT BECAME THE REAL ESTATE DIVISION WITHIN THE DEPARTMENT OF COMMERCE. IN 1987, THE DEPARTMENT OF COMMERCE WAS DISSOLVED, AND THE REAL ESTATE DIVISION WAS RENAMED THE OREGON REAL ESTATE AGENCY, AND REMAINS SO TODAY. |
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Term
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Definition
| ALL THOSE STRUCTURES NOT DIRECTLY ATTACHED TO THE MAIN STRUCTURE - DETACHED GARAGE, STORAGE BUILDING, GREEN HOUSES, ETC... |
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Term
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Definition
| ALSO REFERRED TO AS A YIELD CAPITALIZATION AND GENERAL CAPITALIZATION - AS USED IN THE INCOME APPROACH - THE CAPITALIZATION RATE OF AN INCOME STREAM DETERMINED BY DIVIDING THE ANNUAL NET OPERATING INCOME BY THE SALES PRICE OF A COMPARABLE SALE. |
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Term
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Definition
| THAT REAL PROPERTY ACQUIRED AS A RESULT OF A FORECLOSURE FOR THE NONPAYMENT OF THE DEBT BY THE BORROWER OR DEBTOR. |
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Term
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Definition
| ALSO REFERRED TO AS A PACKAGE MORTGAGE - A RARELY-USED NOTE INSTRUMENT WHICH GRANTS THE BORROWER THE ABILITY TO FINANCE NOT ONLY THE REAL PROPERTY, BUT CERTAIN PERSONAL PROPERTY ITEMS SUCH AS MAJOR APPLIANCES. PACKAGE MORTGAGES AND THEIR METHOD OF REPAYMENT VARY ACCORDING TO THE PRINCIPALS IN THE TRANSACTION AND THE METHOD OF FINANCING. |
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Term
| PAIRED-SALE EXTRACTION PROCEDURE |
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Definition
| AS USED IN ALL THREE APPROACHES TO MARKET VALUE (WITH EMPHASIS IN THE SALES COMPARISON APPROACH) - A SYSTEMATIC PROCESS OF ESTIMATING THE VALUE OF ANY ONE SINGLE COMPONENT OF REAL PROPERTY OR THE IMPROVEMENTS THEREON. PAIRED SALES CREATE A DOLLAR AMOUNT FOR THE COMPONENT WHICH MAY BE POSITIVE OR NEGATIVE. PAIRED SALES ARE UNIQUE IN THAT THEY MEASURE THE VALUE OF ITEMS BASED ON THE PERCEPTION OF VALUE AS FOUND FROM BUYERS AND SELLERS WITHOUT REGARD TO COST OF CONSTRUCTION. THIS PROCESS IS THE BASIS OF THE SALES COMPARISON APPROACH. |
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Term
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Definition
| A METHOD OF FINANCING OF DEBT OVER AN EXTENDED PERIOD OF TIME. PERMANENT LOANS TYPICALLY REPLACE AN INTERIM LOAN IN THE CONSTRUCTION OF A RESIDENCE. |
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Term
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Definition
| ALSO REFERRED TO AS PERSONALITY - THAT WHICH IS CAPABLE OF BEING MOVED. NOT PERMANENTLY FIXED IN ITS LOCATION. - BOATS, CARS, CLOTHING, FURNITURE, ETC... |
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Term
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Definition
| THE TRUE AGE OF IMPROVEMENTS ATTACHED TO REAL PROPERTY BASED ON THE TIME IN WHICH THE IMPROVEMENTS WERE ACTUALLY CONSTRUCTED. |
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Term
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Definition
| THE RESULT OF ACTUAL WEAR AND TEAR ON IMPROVEMENTS FROM USAGE BY PEOPLE AND DETERIORATION AS A RESULT OF NATURAL FORCES SUCH AS WEATHER, GROUND MOVEMENT AND PHYSICAL USE. PHYSICAL DETERIORATION CAN BE FURTHER CLASSIFIED AS CURABLE OR INCURABLE. |
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Term
| PLANNED UNIT DEVELOPMENT (PUD) |
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Definition
| A TYPE OF ZONING CLASSIFICATION WHICH ALLOWS FOR CLUSTER CONSTRUCTION ALONG WITH COMMON AREAS INCLUDING PARKS, CLUBHOUSES AND OTHER AMENITIES. MANY PUD'S CREATE A HOMEOWNERS ASSOCIATION SIMILAR TO A CONDOMINIUM REGIME. THE ASSOCIATION MAY ALLOCATE A MONTHLY SERVICE FEE TO MAINTAIN THE COMMON GROUNDS AND RECREATIONAL FACILITIES. |
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Term
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Definition
| A LOCATIONAL MAP OF A SECTION OF A NEIGHBORHOOD SHOWING THE LOTS, DIMENSIONS OF THE LOTS, LOCATION OF STREETS, EASEMENTS AND BUILDING SET BACK LINES ALONG WITH OTHER DATA. PLAT MAPS ARE AN IMPORTANT TOOL USED BY APPRAISERS AND COPIES OF THESE MAPS ARE INCLUDED IN THE APPRAISAL REPORT FOR ADDITIONAL CLARIFICATION OF THE REAL PROPERTY UNDER APPRAISAL. |
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Term
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Definition
| THE COMBINING OF TWO OR MORE CONTIGUOUS PIECES OF REAL PROPERTY WHICH, AS A RESULT OF THEIR JOINING, CREATES A POTENTIAL INCREMENTAL INCREASE IN VALUE. |
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Term
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Definition
| THE FEE CHARGED TO A BUYER BASED ON A PERCENTAGE OF THE LOAN AMOUNT. A POINT EQUALS ONE PERCENT OF THE LOAN AMOUNT AND IS IN EFFECT, PREPAID INTEREST. POINTS ARE USED TO BUY-DOWN THE PRIME INTEREST RATE OF A LOAN FROM THE CURRENT PRIME LENDING RATE. THE AMOUNT OF POINTS REQUIRED TO BUY-DOWN ONE PERCENT OF THE INTEREST RATE VARIES FROM INSTITUTION TO INSTITUTION. FOR EXAMPLE, IN BUYING A $75,000.00 HOME, THE LENDER WILL FINANCE A LOAN OF $70,000.00. THE CURRENT INTEREST RATE IS 12 PERCENT. AT THIS RATE, BASED ON A 30-YEAR AMORTIZATION, THE PRINCIPAL AND INTEREST PAYMENT EQUALS $720.03. IN ORDER TO QUALIFY FOR THE LOAN, THE BUYERS MUST LOWER THEIR MONTHLY PAYMENT TO $665.00 PER MONTH, SO THEY PURCHASE FOUR POINTS AT A COST OF $2,800.00. THEY HAVE LOWERED THE INTEREST RATE FROM 12 TO 11 PERCENT. IN THIS EXAMPLE, EACH POINT LOWERS THE INTEREST RATE ONE FOURTH OF ONE PERCENT. |
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Term
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Definition
| ONE OF FOUR GOVERNMENTAL POWERS ASSOCIATED WITH OWNERSHIP OF REAL PROPERTY. POLICE POWER IS THE AUTHORITY OF A GOVERNING BODY TO REGULATE THE USE OF REAL PROPERTY IN AN EFFORT TO DEFEND, PROTECT, BENEFIT AND BETTER SERVE THE GENERAL PUBLIC. THE COMMON FORM OF POLICING POWER INCLUDES THE AUTHORITY OF A MUNICIPALITY OR GOVERNMENTAL BODY TO ENACT ZONING REGULATIONS. |
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Term
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Definition
| AS USED IN THE MARKET GRID OF THE SALES COMPARISON APPROACH - THE DEVIATION IN SALE PRICE BETWEEN THE LOWEST-PRICED AND HIGHEST PRICED COMPARABLE SALE AFTER APPLYING ALL THE NECESSARY ADJUSTMENTS AND DERIVING THE NET INDICATIONS OF VALUE. |
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Term
POTENTIAL GROSS OPERATING
INCOME
(PGOI) |
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Definition
| THE INCOME DERIVED FROM FIELD RESEARCH AND ANALYSIS THAT A PROPERTY SHOULD EARN BASED ON ITS CURRENT CONDITION AND MARKETABILITY IF IT IS 100-PERCENT OCCUPIED AS OF THE EFFECTIVE DATE OF THE APPRAISAL. |
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Term
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Definition
| A FEE OR PENALTY CHARGED FOR THE PREMATURE PAYOFF OF A DEBT. A LENDER MAY CHARGE A PREPAYMENT PENALTY IN ORDER TO RECAPTURE A PORTION OF THE INTEREST LOST DUE TO EARLY PAYOFF OF A NOTE. |
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Term
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Definition
| THE CLAUSE IN A NOTE INSTRUMENT WHICH ALLOWS FOR THE EARLY PAYOFF OF A DEBT THROUGH PERIODIC PAYMENTS OF PRINCIPAL. THE PREPAYMENT CLAUSE MAY OR MAY NOT ALLOW FOR A DOLLAR PENALTY. |
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Term
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Definition
| AS USED IN THE MARKET GRID OF THE SALES COMPARISON APPROACH - THE DEVIATION IN SALES PRICE BETWEEN THE LOWEST AND HIGHEST PRICED COMPARABLE SALES PRIOR TO MAKING ANY ADJUSTMENTS. |
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Term
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Definition
| THE RATE OF INTEREST BEING CHARGED TO PRINCIPAL BORROWERS OF FUNDS. |
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Term
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Definition
| 1) ONE OF THE PARTICIPANTS WHO WILL OWN OR UTILIZE THE REAL PROPERTY OR A PARTY WHO EMPLOYS THE SERVICES OF A SALESMAN OR REAL ESTATE BROKER. 2) THE AMOUNT OF MONEY WHICH IS BEING BORROWED ONTO WHICH INTEREST WILL BE CHARGED. |
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Term
PRINCIPAL, INTEREST, TAXES AND INSURANCE
(PITI) |
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Definition
| THE MAJOR COMPONENTS OF A RESIDENTIAL NOTE INSTRUMENT. THE PAYMENT MADE AS A RESULT OF THE LOAN REPAYMENT PLAN ALON WITH AN ALLOTTED MONTHLY PAYMENT FOR TAXES AND INSURANCE. |
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Term
| PRINCIPLE OF INCREASING AND DECREASING RETURNS |
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Definition
| THE ADDITION OR SUBTRACTION TO A VALUE OF A COMPONENT. WHEN IMPROVEMENTS ARE MADE TO REAL PROPERTY WHICH INCREASE THE VALUE OF THE OVERALL PROPERTY, THEN THE PRINCIPLE OF INCREASING RETURNS IS IN EFFECT. WHEN IMPROVEMENTS ARE MADE TO REAL PROPERTY WHICH DECREASE THE OVERALL VALUE OF THE IMPROVEMENTS, THEN THE PRINCIPLE OF DECREASING RETURNS IS IN EFFECT. |
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Term
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Definition
| ALSO REFERRED TO AS GUIDE MERIDIANS - THE NORTH-SOUTH IMAGINARY LINES WHICH ENCIRCLE THE GLOBE AS USED IN THE RECTANGULAR SURVEY SYSTEM LEGAL DESCRIPTION. THE PRINCIPAL MERIDIAN WHICH RUNS THROUGH GREENWICH, ENGLAND, IS REFERRED TO AS THE PRIME MERIDIAN. |
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Term
PRIVATE MORTGAGE INSURANCE
(PMI) |
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Definition
| ALSO REFERRED TO AS MORTGAGE INSURANCE PREMIUM (MIP) - THE FEE CHARGED BY A LENDING INSTITUTION TO GIVE INSURANCE TO THE LENDER FOR THE DIFFERENCE BETWEEN THE LOAN AMOUNT AND THE APPRAISED VALUE OR SALES PRICE OF REAL PROPERTY, WHICHEVER IS LOWER. |
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Term
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Definition
| A FINANCIAL PROJECTION PREPARED PRIOR TO THE PURCHASE OF REAL PROPERTY WHICH THEORIZES ON THE ANTICIPATED PRICE OF THE REAL PROPERTY, THE COST OF FINANCING, COST OF EXPENSES AND THEN REPORTS THE FORECASTED GROSS AND NET INCOME OF THE VENTURED RISK. |
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Term
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Definition
| THE PARTY WHO ACQUIRES THE BUYER FOR THE PURCHASE OF REAL PROPERTY. THE PROCURING CAUSE STATEMENT IS CONTAINED WITHIN THE LISTING AGREEMENT WHICH SETS UP THE PAYMENT OF A COMMISSION EVEN IF THE TRANSACTION DOES NOT CLOSE. |
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Term
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Definition
| 1) THOSE FAVORABLE RETURNS, REVENUES OR GAINS FROM THE SALE OF REAL PROPERTY AFTER TAKING AWAY ALL DEBTS AND OPERATING EXPENSES. 2) THAT GAIN OR BENEFIT FOUND IN THE OWNERSHIP OF REAL PROPERTY NOT ASSOCIATED WITH FINANCIAL GAINS. A SUBJECTIVE PROFIT OF WHICH A DOLLAR AMOUNT CANNOT BE ATTRIBUTED. |
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Term
|
Definition
| AS USED IN THE APPRAISAL THEORY - THAT PRINCIPLE STATING THAT HOMES WITH SUPERIOR AMENITIES TEND TO MOVE OR PULL HOMES WITH INFERIOR AMENITIES UPWARD IN VALUE. FOR EXAMPLE, A 1,200 SQ. FT. HOME LOCATED IN A NEIGHBORHOOD OF 1,500 SQ. FT. HOMES WILL SELL FOR MORE PER SQ. FT. THAN A COMPARABLE 1,200 SQ. FT. HOME LOCATED IN AN EQUAL NEIGHBORHOOD OF 1,200 SQ. FT. HOMES. |
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Term
| QUANTITY SURVEY TECHNIQUE |
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Definition
| AS USED IN THE COST APPROACH - ONE OF THE PRIMARY METHODS FOR ESTIMATING THE COST OF CONSTRUCTION OF IMPROVEMENTS AS IF NEW. THIS SYSTEM OF COST ESTIMATING IS THE MOST COMPREHENSIVE OF THE COST ESTIMATING METHODS. IT IS USED BY APPRAISERS WHEN APPRAISING DISTINCTIVE HOMES WITH UNIQUE CONSTRUCTION DETAIL AND AMENITIES NOT TYPICALLY FOUND IN HOMES. IT REQUIRES USE OF FLOOR PLANS AND SPECIFICATIONS ALONG WITH AN EXTENSIVE UNDERSTANDING OF CONSTRUCTION TECHNIQUES. |
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Term
|
Definition
| A LEGAL INSTRUMENT WHICH, ONCE EXECUTED, CONVEYS THE LEGAL RIGHTS AND EQUITABLE TITLE FROM ONE PERSON TO ANOTHER. A UNIQUE FEATURE OF THE QUITCLAIM DOES NOT WARRANT THE TITLE IN ANY WAY. MORE IMPORTANTLY, ONE WHO CONVEYS HIS TITLE UNDER QUITCLAIM DOES SO WITHOUT WARRANTY. THIS IS TO CONVEY HIS OWNERSHIP INTEREST IN THE COMMUNITY PROPERTY TO THE OTHER. A QUITCLAIM DEED IS THE INSTRUMENT USED TO REMOVE THE NAME OF THE SPOUSE CONVEYING TITLE. |
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Term
|
Definition
| AS USED IN THE RECTANGULAR SURVEY SYSTEM - THE NORTH- SOUTH LINES LOCATED BETWEEN PRINCIPAL MERIDIANS AND GUIDE MERIDIANS. RANGE LINES ARE LOCATED SIX MILES APART AND FORM THE LINES WHICH INTERSECT TOWNSHIPS. |
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Term
|
Definition
| THE HIGHEST FORM OF LAND OWNERSHIP AVAILABLE. REAL PROPERTY OWNERSHIP RIGHTS HAVE THE SAME FEATURES AS THOSE FOUND IN REAL ESTATE. REAL PROPERTY, HOWEVER, ALSO INCLUDES THOSE EQUITABLE INTANGIBLE RIGHTS INCLUDING THE POWER OF POSSESSION, CONTROL DISPOSAL, EXCLUSION AND ENJOYMENT. |
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Term
|
Definition
| THE FINAL STEP IN THE PREPARATION OF AN APPRAISAL - THE SYSTEMATIC COMPLEMENTARY PROCESS OF CONSIDERING AND WEIGHING EACH OF THE THREE VALUE CONCLUSIONS TO DERIVE A FINAL VALUE ESTIMATE. THE RECONCILIATION PROCESS IS BOTH SUBJECTIVE AND OBJECTIVE. IT SUBJECTIVELY IS BASED ON THE TYPE OF PROPERTY BEING APPRAISED ALONG WITH THE USE OF THE PROPERTY. THE APPRAISER MUST SUBJECTIVELY DETERMINE WHICH APPROACH OR APPROACHES WILL RECEIVE THE MOST WEIGHT. ITS OBJECTIVITY STEMS FROM THE FACTS GATHERED AND PREVENTS THE APPRAISER FROM VENTURING OUTSIDE THE GIVEN RANGE OF VALUE. |
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Term
|
Definition
| THE PROCEDURE OF ENTERING DEEDS, LIENS, MORTGAGES AND OTHER INSTRUMENTS INTO THE PUBLIC RECORDS IN THE COUNTY COURTHOUSE IN THE COUNTY WHERE THE REAL PROPERTY IS LOCATED. ONE FUNCTION OF RECORDATION ALLOWS ABSTRACTORS TO PREPARE THE CHAIN OF TITLE OR ABSTRACT OF TITLE DOCUMENTS WHEN A BUYER IS PURCHASING A POLICY OF TITLE INSURANCE. |
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Term
| RECTANGULAR SURVEY SYSTEM |
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Definition
| A METHOD OF IDENTIFYING REAL PROPERTY USING SECTIONS, TOWNSHIPS, LATITUDE AND LONGITUDE LINES. |
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Term
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Definition
| WHEN A PROPERTY IS FORECLOSED UPON AS THE RESULT OF NONPAYMENT OF COUNTY PROPERTY TAXES, OR MORTGAGE THE COUNTY OR COURT MAY ORDER THE PROPERTY TO BE SOLD THROUGH A SHERIFF'S DEED. IN THE SHERIFF'S DEED, THE FORECLOSED-UPON LANDOWNER WILL HAVE A TWO-YEAR RIGHT OF REDEMPTION FOR REAL PROPERTY TAXES AND 180 DAYS FOR A MORTGAGE TO REGAIN THE OWNERSHIP OF THE REAL PROPERTY. REDEMPTIONARY PERIODS DO NOT EXIST FOR REAL PROPERTY SECURED BY A DEED OF TRUST. |
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Term
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Definition
| A COMBINATION OF A LARGE NUMBER OF RETAIL STORES ALONG WITH SEVERAL ANCHOR TENANTS WHICH COMBINE ALL OF THEIR SERVICES IN ONE LOCATION. THIS ALLIANCE OF RETAILERS CREATES A FINAL DESTINATION POINT TO SELL PRODUCTS TO THE GENERAL PUBLIC. |
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Term
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Definition
| AS USED IN THE APPRAISAL THEORY - THE PRINCIPLE STATING THAT HOMES WITH INFERIOR AMENITIES TEND TO MOVE OR PULL HOMES WITH SUPERIOR AMENITIES DOWNWARD IN VALUE. FOR EXAMPLE, A 1,500 SQUARE FOOT HOME LOCATED IN A NEIGHBORHOOD OF 1,200 SQUARE FOOT HOMES WILL SELL FOR LESS PER SQUARE FOOT THAN A COMPARABLE 1,200 SQUARE FOOT HOME LOCATED IN AN EQUAL NEIGHBORHOOD OF 1,500 SQUARE FOOT HOMES. |
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Term
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Definition
| THE STEADY RECESSION OR DECREASE OF A STREAM, RIVER OR LAKE ON REAL PROPERTY, WHICH LEAVES THE LAND CLEAR AND DRY. USED IN CONJUNCTION WITH LITTORAL AND RIPARIAN WATER RIGHTS. |
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Term
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Definition
| AS USED IN THE COST APPROACH - IN APPRAISAL THEORY, AN ASSUMPTION THAT THE LIFE SPAN OF ANY GIVEN PHYSICAL PRODUCT CAN BE CALCULATED. IN APPRAISAL PRACTICE, THE ECONOMIC LIFE OF A MAJOR IMPROVEMENT ENDS WHEN THE LAND VALUE UNACCOMPANIED WITH ANY IMPROVEMENTS IS EQUAL TO OR GREATER THAN THE VALUE OF THE REAL PROPERTY WITH IMPROVEMENTS. FOR EXAMPLE, IN APPRAISING A RESIDENCE, IT IS DISCOVERED THAT THE HOME WAS BUILT 75 YEARS AGO AND HAS SIGNIFICANT DETERIORATION. THE VALUE OF VACANT LOTS SURROUNDING THE SUBJECT ARE $35,000.00. THE VALUE OF THE SUBJECT LOT WITH THE IMPROVEMENTS IS CURRENTLY $35,000.00. SINCE THE VALUE OF BOTH THE LAND AND IMPROVEMENTS IS EQUAL TO THE VALUE OF VACANT LOTS IN THE AREA, IT MAY BE SAID THAT THE IMPROVEMENTS NO LONGER ATTRIBUTE VALUE TO THE OVERALL VALUE OF THE REAL PROPERTY. THUS, THE IMPROVEMENTS ARE SAID TO HAVE REACHED THE END OF THEIR USEFUL ECONOMIC LIFE. |
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Term
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Definition
| THE TANGIBLE LIFE SPAN THAT AN IMPROVEMENT SHOULD HAVE REMAINING GIVEN ITS CURRENT EFFECTIVE AGE AND CONSIDERING ITS PHYSICAL DETERIORATION ALONG WITH ORDINARY MAINTENANCE. |
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Term
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Definition
| THE REINSTATEMENT OF IMPROVEMENTS TO A PREVIOUS CONDITION OR TO RENEW THROUGH REPAIRS AND RECONDITIONING. |
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Term
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Definition
| THOSE MONIES CHARGED BY A LANDLORD TO A TENANT TO LET REAL PROPERTY FOR A CERTAIN DURATION OF TIME. RENT IS ONE OF THE ESSENTIAL ELEMENTS OF THE WRITTEN CONTRACTUAL AGREEMENT AND SERVES AS THE CONSIDERATION IN A LEASE AGREEMENT. |
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Term
| REPLACEMENT COST PROCEDURE |
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Definition
| AS USED IN THE COST APPROACH - THE PROCESS OF REBUILDING SIMILAR OR COMPARABLE IMPROVEMENTS ON PAPER USING TODAY'S CONSTRUCTION METHODS AND MATERIALS. TO BUILD A LIKE STRUCTURE AS IF NEW. |
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Term
| REPRODUCTION COST PROCEDURE |
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Definition
| AS USED IN THE COST APPROACH - THE PROCESS OR REBUILDING IDENTICAL OR DUPLICATE IMPROVEMENTS ON PAPER TO DETERMINE THE COST OF THE DUPLICATED IMPROVEMENTS AS IF NEW. THIS PROCEDURE DUPLICATES THE STRUCTURE INCLUDING ANY PHYSICAL OR FUNCTIONAL INADEQUACIES THE STRUCTURE MAY CONTAIN. REPLACEMENT COST AND REPRODUCTION COST ESTIMATING PROCEDURES ARE USED AT DIFFERENT TIMES DEPENDING ON THE TYPE OF IMPROVEMENT BEING CONSTRUCTED. WHEN APPRAISING A HOME OF STANDARD CONSTRUCTION, AN APPRAISER MAY UTILIZE THE REPLACEMENT COST DUE TO ITS EASE OF OPERATION. WHEN APPRAISING A UNIQUE PROPERTY, HOWEVER, SUCH AS AN HISTORICAL RESIDENCE OR E RESIDENCE WITH DISTINCTIVE AND UNCOMMON FEATURES, THE REPRODUCTION COST PROCEDURE WOULD BE REQUIRED AS THIS PROCEDURE WILL PROVIDE A MORE RELIABLE COST ESTIMATE. |
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Term
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Definition
| AS USED IN THE OPERATING INCOME STATEMENT FOR THE INCOME APPROACH - THE FUNDS ALLOCATED IN A SPECIAL ACCOUNT SPECIFICALLY EARMARKED FOR THE PURPOSE OF REPLACING MAJOR PHYSICAL, MECHANICAL AND ELECTRICAL COMPONENTS WHICH, OVER TIME WILL CEASE TO OPERATE. THIS RESERVE ACCOUNT MAY BE MAINTAINED BY THE OWNER OR THE LENDER WHO, HAVING A VESTED INTEREST IN ASSURING THE PROPERTY IS EFFECTIVELY SUSTAINED, MAY REQUIRE THAT A SPECIAL ESCROW ACCOUNT BE MAINTAINED FOR THESE REPAIRS. |
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Term
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Definition
| RELATING TO THE REMAINDER OF INCOME AFTER ALL EXPENSES HAVE BEEN SUBTRACTED FROM THE GROSS INCOME THAT A PROPERTY SHOULD PRODUCE. USED IN OPERATING INCOME STATEMENTS, REFLECTING NUMEROUS RESIDUAL INCOMES INCLUDING NET OPERATING INCOME (NOI) AND CASH FLOW AFTER TAXES (CFAT). |
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Term
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Definition
| THE VALUE OF A PHYSICAL COMPONENT SUCH AS THE LAND OR IMPROVEMENTS, AFTER DEDUCTING THE VALUE OF THE OTHER COMPONENT FROM THE TOTAL VALUE OF THE REAL PROPERTY. USED IN CAPITALIZATION AND MARKET DATA PROCEDURES TO ESTIMATE VALUE AS WELL AS LAND AND BUILDING CAPITALIZATION TECHNIQUES. |
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Term
RESOLUTION TRUST
CORPORATION (RTC) |
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Definition
| THE FEDERAL REGULATORY AGENCY CREATED TO LIQUIDATE AND SELL SAVINGS AND LOANS ACROSS THE NATION WHICH ARE DEFUNCT AS A RESULT OF POOR LENDING PRACTICES, UNSTABLE MARKETS, FAULTY APPRAISALS AND MASSIVE SPECULATION WITHIN THE REAL ESTATE INDUSTRY. |
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Term
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Definition
| 1) TO LIMIT, CONFINE OR REGULATE THE USE OF REAL PROPERTY AS DETERMINED BY PUBLIC RESTRICTIONS KNOWN AS ZONING REGULATIONS OR POLICE POWER. 2) TO LIMIT, RESTRAIN OR SUPERVISE, WITHIN CERTAIN LIMITS, THE USE OF REAL PROPERTY THROUGH PRIVATE RESTRICTIONS CALLED DEED RESTRICTIONS OR CCR'S. |
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Term
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Definition
| THAT PARTY, EITHER WITHIN A PRIVATE COMPANY OR LENDING INSTITUTIONS, WHO IS REQUIRED TO EXAMINE AND EVALUATE THE ANALYSES, LOGIC, EFFECTIVENESS AND CONCLUSIONS DRAWN BY THE PRINCIPAL APPRAISER. |
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Term
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Definition
| THOSE WATER RIGHTS ASSOCIATED WITH THE OWNERSHIP OF LAND ON A RIVER, STREAM OR LAKE. RIPARIAN WATER RIGHTS ARE UNIQUE SINCE IN CERTAIN CASES, THE OWNER OF THE REAL PROPERTY OWNS ALL THE LAND TO THE CENTER OF A STREAM, LAKE OR RIVER SO LONG AS THE WATER COURSE IS CLASSIFIED AS NON-NAVIGABLE. GOVERNMENTAL POWERS ARE IN PLACE WHICH RESTRICT THE USE OF RIPARIAN RIGHTS AND APPRAISERS MUST BE KNOWLEDGEABLE OF HOW THESE LIMITATIONS MAY INFLUENCE THE VALUE ESTIMATE. |
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Term
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Definition
| THE LEVEL OF JEOPARDY OR SPECULATION IN AN UNDERTAKING DUE TO THE UNCERTAINTY OF EVENTS WHICH HAVE YET TO OCCUR. THE POTENTIAL OF FINANCIAL HARM OR LOSS IN AN INVESTMENT. |
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Term
| SALE PRICE PER SQUARE FOOT |
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Definition
| THE PRICE PER SQUARE FOOT OF A SOLD COMPARABLE BASED ON ITS TOTAL LIVING SQUARE FOOTAGE. FOR EXAMPLE, THE SALE PRICE OF A COMPARABLE IS $175,000.00 AND THE COMPARABLES SIZE IS 3,182 SQUARE FEET. ($175,000.00 DIVIDED BY 3,182 SQ. FT. = $55.00 PER SQ. FT.) |
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Term
| SALES COMPARISON APPROACH |
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Definition
| ONE OF THREE PRIMARY METHODS FOR ESTIMATING MARKET VALUE - THE PROCEDURAL ANALYSIS OF ESTIMATING THE VALUE OF REAL PROPERTY BY COMPARING RECENTLY SOLD COMPARABLES TO THE SUBJECT. THE STEPS TO THIS APPROACH INCLUDE: 1) COLLECTING A MINIMUM OF THREE SOLD COMPARABLES; 2) EXTRACTING THE VALUE FOR THE VARIOUS DIFFERENCES OF THE COMPARABLES; 3) APPLYING THE RESULTING ADJUSTMENTS IN A MARKET GRID AND COMPARING EACH OF THE COMPARABLES TO THE SUBJECT PROPERTY UNDER APPRAISAL. IN THE APPRAISAL OF SINGLE FAMILY RESIDENCES, THIS APPROACH IS OFTEN CONSIDERED THE MOST RELIABLE METHOD OF ESTIMATING VALUE AND IS TYPICALLY GIVEN THE MOST WEIGHT OF THE THREE APPROACHES UTILIZED. |
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Term
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Definition
| A SMALL RETAIL OUTLET LOCATED IN A REGIONAL MALL OR STRIP CENTER WHICH RELIES ON LARGER ANCHOR TENANTS TO ATTRACT BUSINESS. |
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Term
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Definition
| AS USED IN APPRAISAL PRACTICE - THE RESULT OF AN INSUFFICIENT, FINITE SHORTAGE OF AVAILABLE HOUSING FOR A GIVEN MARKET. SCARCITY CAN INCREASE DEMAND THUS IMPACTING PROPERTY VALUES. |
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Term
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Definition
| THE DETAILED OUTLINE OF THOSE METHODS, ANALYSES AND PROCEDURES USED IN DERIVING AN ESTIMATE OF VALUE. AN APPRAISAL WHICH IS LESS THAN, OR LIMITED TO, WHAT IS STANDARD WITHIN THE INDUSTRY MUST BE CLARIFIED BY THE APPRAISER. HE MUST EXPLAIN WHY A DEPARTURE WAS MADE FROM THE NORMAL SCOPE OF THE REPORT. |
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Term
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Definition
| THE SECTOR OF THE REAL ESTATE MARKET WHICH PURCHASES LARGE PORTFOLIOS OF PRIMARY MORTGAGES FROM COMMERCIAL BANKS FOR THE INCOME STREAM THEY PRODUCE. THE INCOME STREAM CONSISTS OF THE FUTURE INTEREST EARNINGS ON THE NOTES AND THE PURCHASE OF THESE LOANS CREATES LIQUIDITY TO COMMERCIAL BANKS TO ORIGINATE NEW LOANS. PURCHASERS WITHIN THE SECONDARY MONEY MARKET INCLUDE INVESTORS, THE FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA), GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) AND THE FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC). |
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Term
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Definition
| AS USED IN THE RECTANGULAR SURVEY SYSTEM - AN AREA OF LAND ONE LINEAR MILE BY ONE LINEAR MILE CONTAINING 640 ACRES OR 27,878,400 SQUARE FEET. |
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Term
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Definition
| THE CONCEPT OF OWNERSHIP WHICH PURPORTS THE OWNERSHIP OF A FREEHOLD ESTATE. A RESULT OF FEUDAL RIGHTS, SEIZEN TODAY IS GENERALLY ACCEPTED AS BEING SYNONYMOUS WITH OWNERSHIP OF REAL PROPERTY. |
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Term
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Definition
| ALL THAT REAL PROPERTY ACQUIRED PRIOR TO MARRIAGE AND AFTER MARRIAGE. ALL REAL PROPERTY ACQUIRED BY EITHER SPOUSE DURING THE MARRIAGE EITHER BY GIFT, WILL OR PROBATE IS ALSO CLASSIFIED AS SEPARATE PROPERTY. |
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Term
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Definition
| ALSO REFERRED TO AS SERVIENT TENEMENT - AS USED IN EASEMENT APPURTENANT - THE PARTY GRANTING THE AUTHORITY TO ANOTHER PERSON TO USE THEIR REAL PROPERTY. THE SERVIENT ESTATE IS THUS NAMED AS IT SERVES THE NEEDS OF THE PARTY IN POSSESSION OF THE EASEMENT. |
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Term
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Definition
| THE DISTANCE FROM A PROPERTY LINE THAT MUST BE MAINTAINED BEYOND WHICH A STRUCTURE CANNOT EXTEND. A TYPE OF GOVERNMENTAL OR PRIVATE RESTRICTION. |
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Term
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Definition
| THE AMOUNT OF INTEREST PAID ON A PRINCIPAL LOAN AMOUNT. SIMPLE INTEREST IS NEITHER COMPOUNDED NOR PAID ON THE UNPAID MONTHLY PRINCIPAL BALANCE OF THE LOAN. FOR EXAMPLE, A $50,000.00 LOAN FOR THREE YEARS REQUIRES A SIMPLE INTEREST RATE OF 12 PERCENT. THEREFORE, $50,000.00 X 12 = $60,000.00; $6,000.00X3 YEARS = $18,000.00. $50,000.00 PLUS $18,000.00 = $68,000.00 DIVIDED BY 36 MONTHS = $1,888.89 PER MONTH FOR THREE YEARS. |
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Term
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Definition
| THAT REAL PROPERTY WHICH IS AVAILABLE FOR DEVELOPMENT. |
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Term
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Definition
| THE PHYSICAL LOCATION OF TANGIBLE REAL PROPERTY. THE LOCALITY OF REAL PROPERTY CANNOT BE ALTERED, THUS, THE SITUS OF THE REAL PROPERTY IS ITS LOCATION AS IT RELATES TO THE LOCATION OF OTHER REAL PROPERTY. |
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Term
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Definition
| AS USED IN THE APPRAISAL PROCESS - THE REAL PROPERTY UNDER APPRAISAL. |
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Term
| PRINCIPAL OF SUBSTITUTION |
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - THE APPRAISAL PRINCIPLE WHICH MAINTAINS THAT NO ONE PERSON IS WILLING TO PAY MORE FOR A GIVEN PROPERTY THAN IT COSTS TO PURCHASE OR ACQUIRE AN EQUALLY SUITABLE PROPERTY. INHERENT IN THIS DEFINITION IS THE BELIEF THAT BUYERS AND SELLERS OF REAL PROPERTY ARE BUYING AND SELLING REAL PROPERTY WITH NO INCENTIVE TO PAY MORE FOR A GIVEN PRODUCT WHEN THAT SAME PRODUCT CAN BE PURCHASED FOR LESS THROUGH ANOTHER SOURCE. |
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Term
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - THE CLOSING PROCESS WHICH ADDS COMPONENTS TOGETHER TO DETERMINE THE FINAL INDICATIONS WITHIN. FOR EXAMPLE, IN THE SALES COMPARISON APPROACH, THE APPRAISER WILL DETERMINE THE NET DOLLAR ADJUSTMENT TO OBTAIN THE NET INDICATION OF VALUE OF A COMPARABLE SALE. |
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Term
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Definition
| THE COMPONENTS WHICH ARE ACCESSIBLE FOR PURCHASE OR USE AS OF A SPECIFIC TIME AND PLACE. AS USED IN APPRAISAL, THE QUANTITY, PORTION OR NUMBER OF AVAILABLE LOTS OR RESIDENCES AVAILABLE FOR USE OR PURCHASE AT A GIVEN TIME WITHIN A GIVEN MARKET. |
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Term
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Definition
| A FORM OF OBSOLESCENCE IN WHICH AN IMPROVEMENT OF REAL PROPERTY IS RENDERED USELESS DUE TO ITS HIGHER-THAN-NECESSARY USE OR FUNCTION AND FOR WHICH ITS COST WILL BE GREATER THAN ITS PERCEIVED MARKET VALUE. FOR EXAMPLE, AN OWNER OF REAL PROPERTY HAS A HOME WITH THREE BEDROOMS AND THREE BATHROOMS VALUED AT $100,000.00. TO ENHANCE THE MARKETABILITY, THE OWNER INSTALLS THREE NEW BATHROOMS AT THE REAR OF THE HOUSE AT A COST OF $12,000.00 CREATING A SIX-BATHROOM RESIDENCE. THE RESULT IS A SUPERADEQUATE HOME IN WHICH THE OWNER WILL NOT RECAPTURE THE COST OF THE RENOVATIONS. |
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Term
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Definition
| THE MANNER BY WHICH REAL PROPERTY BOUNDARIES ARE ESTABLISHED BY SURVEYORS USING THE METES AND BOUNDS METHOD OF LEGAL DESCRIPTION. SURVEYS INCLUDE THE LINEAR DIMENSIONS, PROXIMITY TO ROADS, EASEMENTS, SETBACKS, A LOCATIONAL MAP, DIRECTION OF THE LOT, ITS LOCATION, SHAPE AND MEASUREMENTS OF IMPROVEMENTS ATTACHED. |
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Term
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Definition
| 1) A LIEN FILED AGAINST REAL PROPERTY BY A MUNICIPALITY, WHICH CREATES AN ENCUMBRANCE, FOR THE NONPAYMENT OF ANNUAL TAXES FOR REAL PROPERTY ASSESSED BY THE COUNTY APPRAISAL DISTRICT. 2) A LIEN FILED AGAINST REAL AND PERSONAL PROPERTY BY THE INTERNAL REVENUE SERVICE FOR THE NONPAYMENT OF INCOME TAXES. TAXES ARE THE HIGHEST PRIORITY LIEN FOLLOWED BY MORTGAGE AND CONTRACTOR LIENS. |
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Term
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Definition
| A COMBINED LIST OF THOSE REAL PROPERTIES WHICH ARE SUBJECT TO TAXES BASED UPON THE ASSESSED VALUE AND THE TAXING RATES PER $100.00 OF ASSESSED VALUE. |
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Term
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Definition
| ALSO REFERRED TO AS HOLD OVER TENANT - A LANDLORD TENANT RELATIONSHIP IN WHICH THE LEASE HAS EXPIRED AND THE TENANT IS SUBJECT TO EVICTION. |
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Term
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Definition
| A FORM OF LEASE AGREEMENT IN WHICH BOTH PARTIES HAVE AGREED TO LET AND TAKE THE REAL PROPERTY. ADDITIONALLY, THE TENANT IS ALLOWED TO OCCUPY AND THE LANDLORD IS ALLOWED TO LEASE TO THE TENANT SO LONG AS BOTH PARTIES AGREE. EITHER PARTY MAY TERMINATE THE AGREEMENT AT ANYTIME WITHOUT RESTRICTION. |
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Term
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Definition
| 1) THAT FEE OR TAX CHARGED AS A RESULT OF COMMUNITY IMPROVEMENTS MADE BY A MUNICIPALITY OR GOVERNMENTAL AUTHORITY THAT WILL BENEFIT THE PUBLIC. 2) THAT FEE OR LEVY CHARGED TO MEMBERS OF A HOMEOWNERS ASSOCIATION OF CONCOMINIUMS OR TOWN HOMES TO REPAIR IMPROVEMENTS NOT OTHERWISE ANTICIPATED. SPECIAL ASSESSMENTS ARE MOST OFTEN APPLIED IN THE EVENT FAULTY CONSTRUCTION DETAIL, OR ACTS OF NATURE SUCH AS WIND DAMAGE AND TORNADOES, REQUIRING REPAIRS THAT WOULD NOT HAVE OTHERWISE BEEN EXPECTED. SPECIAL ASSESSMENTS ARE USED FOR REPAIRS ON BUILDINGS AND COMMON ELEMENTS WHICH INFLUENCE THE MARKETABILITY OF THE DEVELOPMENT AS A WHOLE. REPAIRS FOR THE INTERIOR OF A UNIT ARE THE RESPONSIBILITY OF THE UNIT OWNER. |
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Term
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Definition
| ONE OF THE FOUR PRIMARY INSTRUMENTS USED TO CONVEY TITLE IN REAL PROPERTY. THE SPECIAL WARRANTY DEED CONVEYS TITLE FROM ONE PARTY TO ANOTHER, WITH THE GRANTING PARTY WARRANTING THE TITLE TO BE GOOD WHILE THEY OWNED THE REAL PROPERTY ALONG WITH THE PARTY THAT OWNED THE PROPERTY PRIOR TO THEM. TITLE IS NOT WARRANTED BEYOND THAT POINT. |
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Term
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Definition
| THE REQUIREMENTS ACCOMPANYING FLOOR PLANS OF AN IMPROVEMENT OUTLINING WHAT IS TO BE BUILT. THE SPECIFICATIONS DETAIL AND OUTLINE WHAT MATERIALS ARE TO BE USED ALONG WITH THE CONSTRUCTION AND ADAPTATION REQUIREMENTS ASSOCIATED WITH THE PLUMBING, MECHANICAL AND ELECTRICAL INSTALLATIONS. |
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Term
STAGES OF TRANSFORMATION OF A
NEIGHBORHOOD |
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Definition
| THE PROCESS OF ANALYZING WHAT STAGE AN IMPROVEMENT IS EXPERIENCING. THE STAGES UNDER WHICH IMPROVEMENTS EXIST WILL CHANGE OVER ITS LIFE SPAN. THE STAGES UNDER WHICH AN IMPROVEMENT WILL CHANGE INCLUDE: 1) DEVELOPMENT STAGE 2) STABILIZATION STAGE 3) RESTORATION STAGE 4) DETERIORATION STAGE AND 5) RENAISSANCE STAGE. |
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Term
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Definition
| THE EAST-WEST LINES ENCIRCLING THE GLOBE RUNNING PARALLEL TO THE BASE LINES. |
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Term
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Definition
| THE STATE STATUTE WHICH REQUIRES THAT CERTAIN TYPES OF CONTRACTS INVOLVING REAL PROPERTY MUST BE IN WRITING TO BE LEGALLY ENFORCEABLE IN A COURT OF LAW. LEASE AGREEMENTS FOR LESS THAN A YEAR ARE NOT REQUIRED TO BE IN WRITING. AN ORAL LEASE AGREEMENT IS NOT ENFORCEABLE BY EITHER PARTY. |
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Term
| STRAIGHT LINE DEPRECIATION |
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Definition
| AS USED IN ALL THREE APPROACHES TO VALUE - A LOSS IN THE VALUE OF A PHYSICAL COMPONENT OR ECONOMIC VARIABLE. IN APPRAISAL, DEPRECIATION IS A COMBINED LOSS IN VALUE DUE TO NUMEROUS ACTIONS INCLUDING PHYSICAL DETERIORATION AND FUNCTIONAL, ECONOMIC, ENVIRONMENTAL OR LOCATIONAL OBSOLESCENCE. STRAIGHT LINE DEPRECIATION IS A THEORETICAL PROCESS WHICH ASSUMES THAT THE RATE OF DEPRECIATION IS CONSTANT AT AN UNCHANGING RATE EACH YEAR. FOR EXAMPLE, A BUILDING HAS AN ANTICIPATED LIFE SPAN OF TEN YEARS AT THE END OF WHICH THE IMPROVEMENTS WILL HAVE DEPRECIATED 100 PERCENT. THE ANNUAL RATE OF DEPRECIATION IS TEN PERCENT EACH YEAR FOR TEN YEARS. IN FIVE YEARS, THE BUILDING WILL HAVE SUFFERED FROM FIVE YEARS OF DEPRECIATION = 50 PERCENT |
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Term
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Definition
| A DEFECT, FLAW OR WEAKNESS IN RELATIONSHIP TO THE IMPROVEMENTS WHICH IMPAIRS THE FUNCTIONAL USE OF THE STRUCTURE - DAMAGE TO THE LOAD BEARING WALLS, STRUCTURAL FOUNDATION CRACKING, EXCESSIVE ROOF LOAD STRESS, ETC. OCCASIONALLY, THESE DEFICIENCIES ARE NEITHER DETECTABLE BY APPRAISER NOT WITHIN THE REALM OF EXPERTISE OF AN APPRAISER TO DISCOVER THESE DEFECTS. |
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Term
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Definition
| THE PARTY WITH THE KNOWLEDGE, QUALIFICATIONS AND EXPERIENCE USED TO DISCOVER, PINPOINT AND ADVISE ON A STRUCTURAL DEFECT IN A BUILDING. |
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Term
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Definition
| THE IMPROVEMENTS EXISTING OR TO BE CONSTRUCTED ON REAL PROPERTY. |
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Term
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Definition
| AS USED IN RESIDENTIAL APPRAISING - AN AREA OF LAND SPECIFICALLY DESIGNED AND DIVIDED INTO A SERIES OF LOTS FOR THE CONSTRUCTION OF SINGLE FAMILY RESIDENCES. |
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