Term & Definitions used in Real Estate Appraisal industry
AACI: Accredited Appraiser, Canadian Institute
A.I.C: Appraisal Institute of Canada
Accepted Appraisal Standards: This is a level of professional practice qualifications that affect current appraisal teachings, experience and work performance that reasonable appraisers would believe to be justified.
Accrued Depreciation: The difference between an improvement’s cost new and its value as of any given date.
Appraisal: A formal opinion of value
1. Prepared as a result of a retainer
2. Intended for reliance by identified parties, and:
3. For which the appraiser assumes responsibility
Appraisal Practice: The work or service performed by appraisers, defined by three terms in the standards: appraisal, review and consulting.
Appraisal Report: Types of reports include:
Full Narrative – comprehensive and detailed; prepared without Extraordinary Limiting Conditions
Narrative - a detailed report where an extraordinary Limiting conditions has been invoked
Short Narrative – concise and brief description
Form -a standardized format combining check off boxes and narrative comments
Appraisal Review: The act of process of developing and communicating an opinion about the quality on another appraisers work.
Assessed Value: A value assigned to a property by the tax assessor to be used as a basis for taxation; usually a percentage of market value.
Assignment: An appraisal, consulting or review service provided as a consequence of an agreement between an appraiser and client.
Assumption: That which is taken to be true.
Bias: A preference or inclination used in the development or communication of an appraisal, review, or consulting assignment that precludes an appraiser's impartiality.
CRA: Canadian Residential Appraiser
Client: The party of parties who engages an appraiser (by employment or contract) in a specific assignment.
Competence: Having the required or adequate ability or qualities to perform the specific assignment.
Confidential Information: Information, not otherwise publicly available, provided in the trust that the recipient will not disclose it to another.
Consulting: The act or process of providing information, analysis of real estate data, and recommendations or conclusions on diversified problems in real estate,other that an appraisal
Contingent Fee: Compensation that is dependent on the result
Depreciation: A loss in property value from any cause
Effective Date: The date at which the analyses, opinions and advice in an appraisal, review or consulting service apply.
An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraisers’ opinion or conclusions.
Extraordinary Limiting Condition:
A necessary modification or exclusion of a Standard Rule. May diminish the reliability of the report
Feasibility Analysis: A study of the cost-benefit relationship of an economic endeavour.
Fee simple value: The most complete ownership in real estate, subject in common law countries to the powers reserved to the state (taxation, escheat, eminent domain, and police power)
Hazardous Substance: Any material within, around or near the property in question that has sufficient form, quantity and bio-availability to create a negative impact on value.
Highest & Best Use: The reasonable probable and legal use of property, tha6t is physically possible, appropriately supported, and financially feasible, and the results in the highest and best value.
Hypothetical Condition: That which is contrary to what exists, but is supposed for the purpose of analysis.
Intangible Property (intangible assets): Non physical assets
Intended Use: The use or uses of an appraiser’s reported appraisal, consulting, or review assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment.
Intended User: The client and any other party as identified, by name or type as users of the appraisal, consulting, or review report, by the appraiser based on communication with the client at the time of the assignment.
Jurisdictional Exception: Permits the appraiser to disregard a part or parts of these standards that are determined to be contrary to law or public policy given jurisdiction and only that part shall be void and of no force or effect in that jurisdiction.
Lease: A legal agreement which grants to another the right to use, occupy, or control all or part of a property for a stated period of time at a stated rental
Limiting Condition: A statement in the appraisal identifying conditions that impact the value conclusions.
Leased fee value: The interest held by a tenant. If the tenant pays market rent, then the leasehold has no market value. However, if the tenant pays less than market, the difference between the present value of what is paid and the present value of market rents would be a positive leasehold value. For example, a major chain retailer may be able to negotiate a below-market lease to serve as the anchor tenant for a shopping center. This leasehold value may be transferable to another anchor tenant, and if so the retail tenant has a positive interest in the real estate.
Leasehold value: The interest held by a tenant. If the tenant pays market rent, then the leasehold has no market value. However, if the tenant pays less than market, the difference between the present value of what is paid and the present value of market rents would be a positive leasehold value. For example, a major chain retailer may be able to negotiate a below-market lease to serve as the anchor tenant for a shopping center. This leasehold value may be transferable to another anchor tenant, and if so the retail tenant has a positive interest in the real estate.
Market Analysis: A study or real estate market conditions for a specific type of property
Personal Property: Identifiable portable and tangible object which are considered by the general public as being “personal”: all property that is not classified as real estate.
Real Estate: Land, building, and other affixed improvements, as tangible entity.
Real Property: The interests, benefits, and rights inherent in the ownership of real estate
Report: Any communication, written or oral, or an appraisal, review, or consulting service that is transmitted to the client upon completion of an assignment.
Scope of Work: The amount and type of information researched and the analysis applied in an assignment.
Value: The monetary relationship between properties and those who buy sell or use those properties.
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