Set: Real Estate Terms Ripoff

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All 571 Terms

Term Definition
Acre 43,560 square feet
Baseline An east-west line which intersects the meridian and creates a point from which land can be measured under the Government or rectangular survey method.
Lot, Block, and Plat A method of land descriptoin used for subdivisions, identifying the location of a particular parcel in the subdivision or tract.
Meridian A north-south line which intersects a baseline and crates point from which land can be measured under the Government or rectangular survey method.
Metes and Bounds A method of land description that uses measurements and monuments and utilizes angles.
Mile 5,280 linear feet
Monument A fixed surveyor’s marker for a metes and bounds description. It can be natural or manmade and marks the corners of the property.
Point of Beginning In the metes and Bounds method, this is the corner at which the boundary description starts.
Range A vertical column of townships, counted east and west form the meridian in the Government or Rectangular Survey Method.
Rectangular Survey A method of land description that uses base and meridian lines, townships and sections. It is also referred to as the government Survey Method.
Section An area of land one mile square in the government or Rectangular Survey Method. It contains 640 acres.
tier The horizontal row of townships, counted north and south from the baseline in the Governmental or Rectangular Survey method.
Township The largest land area used in the rectangular or government survey system. It is six miles square.
Accession The process of adding to real property.
Allodial A socio-economic system that allows for private ownership off real property.
Appurtenant Attached to the land (such as a house) or the deed (such as a recorded easement).
Bill of Sale Evidence of transfer of ownership of personal property.
Chattel A synonym for personal property. It comes for the word “cattle.”
Corporeal Rights Something that is physical or tangible, such as land or buildings.
Deed The document that serves as evidence of ownership of real property, as well as the document of conveyance.
Emblements Crops nurtured in the year of the transfer or sale of the property. They are considered personal property.
Fixture That which is attached without losing its identity. It is always real property.
Improvements A term that refers to any additions to the land made by man. It includes building, roads and utilities and landscaping.
Incorporeal Rights Intangible or non-possessory rights in the real property, such as easements, licenses, mining claims, etc.
Lateral Support The duty to give support to a neighbor’s property, such as building a retaining wall.
Mineral Rights Subsurface right of an owner of real property which extend downward to the center of the earth. These rights are real property.
Non-homogeneous A term that means no two parcels of land are exactly alike.
Personal Property The opposite or real property, it is moveable and destructible. Synonyms are chattel and personalty.
Personalty A synonym for personal property. The opposite of “realty.”
Real Property Land and appurtenances, air space to infinity, and the subsurface to the center of the earth.
Serverance A process by which real property becomes personal property.
Situs Personal preference for one location over another which affects the value of the property.
Trade Fixture That which is considered legally attached to a business. It is always personal property.
Acknowledge The legal process of having the signature on a contract or other legal document verified by a notary public.
Actual Delivery transferring a deed from the grantor to the grantee by handing the deed to the grantee or sending it by certified mail.
Administrator A person appointed by the court to carry out the terms of a will.
Bargain and Sale Deed This deed makes no guarantees as to the condition of the title, but unlike the Quit claims Deed, the grantor implies some actual interest in the property.
Bequest or Legacy A gift of personal property given in a will.
Codicil An addition or change to an existing will.
Constructive Delivery The process of transferring a deed from the grantor to the grantee by recording the deed at the country recorder’s office.
Covenant Against Encumbrances This covenant in a deed assures the grantee that the title has no leans for encumbrances except those that have been revealed by the grantor.
Covenant of further assurance In the event someone makes a claim against the property, the grantor has the full responsibility to defend the title against the claimant. This includes producing the proper documents to substantiate the ownership of the grantee, and going to court if necessary.
Covenant of Quiet Enjoyment in a deed, the guaranteed right of an owner or lessee legally in possession of property to uninterrupted use without interference from any third party claiming superior title.
Covenant of Seizin This covenant in a deed guarantees the grantor holds title to the property and has the right to convey it to a grantee.
covenant of Warranty forever If the grantor were to lose in defense of the title, this covenant guarantees payment for the defense of the title and for damages caused the grantee, including buying the property back from the grantee if necessary.
Descent The laws by which the court determines ownership of property of a person who has died intestate, but who has heirs.
Deed the document that serves as evidence of ownership of real property, as well as the document of conveyance.
Delivery The process of the grantor giving the deed to the grantee.
Devise (Devisor/Devisee) A gift of real property given in a will.
Exception and Reservations Clause In a deed, it indicates rights in the real property which will not be conveyed to the grantee and is another name for the habendum clause.
Executor or Executrix The title of a person named in a will to carry out the terms of the will after the death of the testator.
Formal Will Most valid form of a will, usually prepared by an attorney. It is the least likely form of a will to be challenged.
General or Full Warranty Deed A deed that contains all five covenants and covers the period of time from the date of transfer back to the date of the patent.
Gift Deed A transfer of ownership made for love and affection. Creditors of the donor could still use the property for payment of the grantor’s debts if it can be shown that the donor was insolvent and transferred the property to evade creditors.
Grant Deed A type of deed used in some states which contains limited warranties. The grantor usually also provides title insurance.
Grantee One who receives property or property rights from a grantor.
Grantor one who conveys property or property rights to a grantee.
Habendum Clause (Subject to clause) Know as the “to have and to hold clause,” and sometimes as a “subject to” clause, it defines and limits the estate which the grantee will receive when the property is transferred.
Holographic will A handwritten will, which must be dated, written entirely in the handwriting of the testator, and does not need witnesses in order to be valid. It can pass both real and personal property.
Intestate The condition of a person who dies and leaves no will.
Nuncupative will Oral will, written down by someone and witnessed by two non-beneficiaries. It can only convey personal property.
Patent or Public Grant Deed The instrument issued when the property is first conveyed from public or government ownership to a private individual.
Personal Representative a term used in Utah for the Administrator or Executor of a will.
Recording A form of delivery of a deed, also known as constructive delivery or notice.
Quit Claim Deed A deed that conveys all interest in a property which the grantor may or may not have, and gives no warranties as to the condition of title. Its primary use is to remove clouds from the title.
Special Warranty Deed This type of deed contains only two covenants: the covenant of seizing and the covenant against encumbrances. Furthermore, it only warrants the period of time that the grantor actually owned the property.
Testator the title of a person who makes a will
Third Party Delivery Delivery of the deed is accomplished by a disinterested party who has written, acknowledged instructions from the grantor. it is also called a deed in escrow.
Title An abstract term denoting ownership; not a document.
Adverse Possession The process whereby a non-owner can gain ownership of property by occupying it in hostile, continuous, open, and notorious possession, and in Utah, paying the property taxes for the statutory period of time (7 years in Utah).
Bundle of Rights All rights and interests that can be legally held in real property. They are separated in possession, use and control, quiet enjoyment and disposition.
Color of title To all outward public appearance, or form a document that seems to be valid, the possessor of the property would seem to have ownership.
Community Property A form of ownership between husband and wife where each has an equal interest in property obtained during their marriage. The only way either can hold separate property is to obtain it before marriage, after the marriage is ended or during the marriage by gift or inheritance.
corporation A legal person. It cannot die or go to jail.
Dedication A private individual’s girt of property for public use. It may be voluntary (giving land for a public park) or statutory (subdivide giving land for roads).
Fee Simple, Fee Estate, Fee simple absolute The highest or most complete form of ownership that can be held under the law. The ownership rights go on forever.
Fee Simple Defeasible Estate, Defeasible Fee Estate A fee simple estate which has conditions attached, the violation of which could cause the grantee to lose title. If written in the deed with the words “so long as,” it automatically reverts back to the grantor or his heirs if the conditions are violated. It may also be referred to as “Fee Simple Qualified.”
Freehold Estate An interest in property in which some form of ownership is held.
General Partner A partner who has full authority to make decisions, acts for the partnership, and has full liability of the business dealings of the partnership.
General partnership A partnership composed only of general partners.
Holder of a Life Estate The receiver of a life estate who has the property for the duration of the grantee’s own life.
Joint Tenancy A form of concurrent ownership where all owners have equal rights of possession, equal interest, took title at the same time, there is one deed, and each owner has full rights of survivorship.
Joint Venture A “temporary” partnership between individuals and/or companies to accomplish a particular project or business activity.
Life Estate A form of freehold estate wherein the holder acts as though he owns the property so long as he lives.
Life Estate Pur Autre Vie A life estate based on the life of a person other than the holder of the life estate.
Limited Partner A partner who has no authority to make decisions or act for the partnership. He is financially liable only for the amount of his investment.
Limited Partnership A partnership with at least one general partner and on limited partner. Beyond that, there can be as many general or limited partners as desired.
Natural Person An individual. The opposite of a legal person.
Partition Suit A court process where property owned concurrently can be divided into distinct portions so each co-owner may hold his or her portion in severalty. The court may order the property sold.
Quiet Enjoyment One of the rights in the “bundle of rights.” The right of an owner or lessee to uninterrupted legal use of the property without interference or disturbance3 caused by defective title.
Quiet Title Action A court action to determine the actual ownership of real property. This type of proceeding would be conducted to transfer title to an adverse possessor.
Remainderman The person who will receive the life estate when the current holder of the life estate dies. There can be more than one of these.
Severalty A form of ownership where in an individual owns the property in sole ownership.
statutory dedication When the developer is allowed by the city, county, or state to convey the streets, sidewalks, gutters, etc. for maintenance by the government.
survivorship The surviving owner(s) automatically receives ownership of the deceased person’s share. It takes precedence over a will.
tacking In adverse possession, this process allows consecutive periods of adverse possession by multiple adverse possessors to be added together to make up the required number of years.
tenancy by the entirety A form of ownership that can y be held by husband and wife, similar to joint tenancy, except that one party cannot sell or encumber the property without the approval of the spouse.
tenancy in common A form of ownership where owners have full rights of possession, but each owner can have a different percent of ownership. Upon the death of one, that interest goes to the heirs.
title An abstract term denoting ownership; not a document.
voluntary dedication When a private individual gives land as a gift for public use, such as land for a park, church, hospital, etc.
Actual eviction The legal process by which a lessor evicts the lessee and regains possession of the property.
assignment of lease A contract that substitutes a new tenant in the lease. The assignee becomes liable for the remaining term of the lease. Unless prohibited by the lease contract, this can be done without the approval of the lessor, but the original lessee retains secondary liability.
constructive eviction When the landlord violates the terms of the lease by not keeping the property livable or habitable, the tenant can legally vacate the property and not be held liable for further rent payments.
escalation cause A clause written into a loan or lease that allows for payments to be increased at specified times by state amounts.
estate or tenancy for years a lease which contains a termination date. Its term can be for any agreed-upon period of time. (it can be more or less than one year.)
estovers The right of a tenant to use natural resources on leased land, such as timber, water, etc. When required as necessities.
flat lease the lessee makes periodic, equal rent payments
graduated lease A lease where the rent will increase periodically in amounts specified in the lease, as contained in the escalation clause.
gross lease The tenant pays a set amount of rent. From this rent, the lessor is required to pay some or all operation expenses.
ground lease the landlord leases the land to the tenant, and the tenant builds improvements on the leased land.
habitability clause If not actually written in the lease, there is an unwritten or implied warrant of this in every lease, that says the property is livable.
holdover tenant The lessee had an estate for years which has new terminated. The lessor accepted a rent check so now the tenant is on periodic tenancy basis.
incorporeal rights Intangible or non-possessory rights in real property, such as easements, licenses, mining claims, etc.
index lease Rent payments are periodically adjusted based on an economic indicator, such as the consumer price index.
lease A contract for a less-than-freehold estate or right in real property. Rent is paid for the right of possession in someone else’s property.
less then freehold An estate or legal interest in real property that is not an ownership interest.
license interest A limited, revocable interest in property. It grants a privilege, not a right, and ss often an oral agreement granting a short term use of real property. Examples would include an owner allowing someone to hunt, boat, or fish on his property; or attendance at movie theaters and sporting events.
net lease Tenants pay the landlord rent; and , in addition, also pay their portion of the operating expenses (such as utilities.)
non-disturbance clause A clause in a mortgage which protects the right of the lessee if the property should be foreclosed by the lender upon the owner’s default.
notice to quit The first step a lessor mush take against a tenant before filing an unlawful detainer with the courts.
perecentage lease A lease used in commercial leasing. The tenant pays a percent of the net or gross income derived from the use of the property, or the tenant may be paying a flat rate plus a stated percent of the gross or net income.
periodic tenancy (month-to-month) a lease which automatically renews itself. The period for legal notice is established by statue in each state, or can be agreed upon as one of the terms of the lease (15 days in Utah.)
proprietary lease Sometimes called an “owner’s” lease. It is held by a person who owns shares in a stock cooperative. They own personal property which entitles them to this type of lease.
reappraisal lease A lease wherein the rent is determined by a periodic reevaluation of the property’s value.
rooftop lease This lease is used when the tenant only wants to rent the top of the building.
sale/leaseback An owner sells a property, then leases it back from the new owner. This could be a long or short term lease.
sublease A lease given by the original lessee. The lessee remains fully liable to the lessor. The lessee pays rent to the lessor or landlord, and collects rent form the Sublettee.
tenancy at sufferance or estate at sufferance The lease has expired and the lessee is now possessing the property illegally, having been given proper notice to vacate. It is similar to trespassing except that the lessee, at one time, held a legal ease.
tenancy at will or estate at will A lease which requires little or no notice of termination. It is used in special circumstances wherein both the lessor and lessee agree that the lease can be terminated by either party. It is of uncertain duration.
unlawful detainer The legal action a landlord brings against the tenant to evict when there is legal cause.
vertical lease A lease for either air rights or subterranean rights (such as oil.)
writ of restitution in an unlawful detainer action, the judge's order for the sheriff to evict a tenant and restore the premises to the lessor.
wirt of execution a court order directing an officer of the court to sell property of the defendant in order to satisfy a judgment.
Adjusted cost basis cost basis plus improvements, minus depreciation claimed during the years the property was owned.
appreciation a percentage of increase in the value of the property over it’s value when it was originally purchased.
boot Personal property or money needed to make up a difference in value when exchanging real property.
capital gain The taxable profit derived from the sale of a capital asset, such as real property.
cost basis what you paid for the product or property when you bought it.
cost recovery (depreciation) An income tax deduction allowed on investment property to treat the improvements as thought they will waste away in a certain number of years. It cannot be applied to raw land or personal residence. Also known as depreciation.
deductions Items which the IRS allows to be subtracted from your gross taxable income in order to determine your taxable income.
tax deferred exchange An exchange of like for like properties. Tax on any capital gains is paid at a later date. Boot or debt reduction is taxable.
tax credit Items which the IRS allows you to subtract from the dollar amount of taxes due. There are very few of these allowed.
addendum additions or changes incorporated into the REPC by reference.
document receipt A confirmation by the buyer and seller that they received a copy with all signatures.
seller disclosures The property’s title and physical condition information required by the REPC to be given to the buyer by the seller.
walk-through inspection An optional visit by the buyer to check and approve the condition of the property and any repairs that have been made.
board of adjustment The body to which one would appeal in order to obtain a variance to do something contrary to the current zoning law.
buffer zone An area established by the zoning and planning commission to separate commercial and industrial areas from residential. Its purpose may be safety or economics.
building codes Rules set by government to establish minimum standards of construction.
CC & R's The abbreviation given to restrictions and requirements created in the Uniform Declaration of restrictions for condominiums.
condemnation action A legal action initiated by the government to seek the right to purchase land from a private individual by eminent domain.
dominant tenement The name given to a property that encumbers a neighboring property with an easement.
easement A non-possessory interest which on person has in land owned by another, allowing limited use or enjoyment of the owner’s land. it may be referred to as a physical use or condition.
easement appurtenant An easement which attaches to the land and/or the deed, and passes from owner to owner with the deed.
easement by implication an unexpressed, but legally binding understanding regarding a right of way between the parties, created by their actions.
easement by necessity Created by a court of law in situations where justice and need, not convenience, dictate the appropriateness of the easement; such as the case of land locked property.
easement by prescription An easement created by adverse use. The use must be adverse, hostile, open, notorious and continuous. This type of easement can be prevented by giving permission to the user, or by ordering the use to discontinue the use before the statutory period passes. (it requires 20 years in Utah.)
easement in gross an easement which is personal in nature and does not pass with the deed or the land. it runs with the persons who agreed to it for the term of their lives, or with the need for which it was created, such as a utility easement.
egress Leaving a property by traveling across the servient tenement or property.
eminent domain The right of the government to take title, at fair market value, to land owned by a private individual.
encroachment the unauthorized intrusion of a building, tree, or other improvements onto a neighbor’s property.
encumbrance Anything which burdens the title to real property so as to restrict, limit, or otherwise affect an owner’s rights.
escheat This occurs when someone dies without a will, having no heirs.
ingress Entering by traveling across the servient tenement property.
injunction Legal action taken to enforce the restrictive covenants in the uniform declaration of restrictions or to prevent a neighbor from encroaching.
inverse condemnation The legal process by which a private individual sues to have the property taken by eminent domain.
legal non-conforming use The right of an individual to continue a use of land contrary to current zoning regulations because the use existed prior to the establishment of the current zoning category.
merger The joining of two contiguous properties so as to extinguish a lesser right. For instance, this process can terminate an easement on land locked property.
party wall A common wall between two properties, usually involving a zero lot line.
police power The right of government, such as in zoning, to exercise control over private property without their consent and without compensation.
servient tenement the name given to a property encumbered by an easement appurtenant such a landlocked situation.
special purpose property Property that doesn’t fit one of the standard zoning classifications (residential, commercial, agricultural, etc.) is put in this general category.
spot zoning The process involved when the zoning and planning commission changes the zoning of a single lot to be different from others surrounding it.
uniform declaration of restrictions the document that is used when a sub divider or developer records a group of restrictive covenants on all of the lots in a subdivision.
urban renewal the procedure of condemning private property as a blighted area and having it torn down and rebuilt.
variance the right of an individual to do something that violates current zoning regulations because the zoning and planning commission or board of adjustment granted that right.
zoning A right of state governments to regulate the height, bulk and use of private property in order to protect the health, morals, welfare, and safety of the public; usually delegated to the local level.
abandonment When a tenant leaves a property before the expiration of the lease agreement.
business plan A written overview that reveals the basic philosophy and strategy for an investment property.
management contract An employment contract between a property manager and an owner of investment property.
operating budget A projection of the financial operation of an investment property.
property management This activity occurs when a licensee manages investment property for the owner.
property manager One who represents the interests of the owner of investment property. The property could be for residential or commercial purposes. This person must have a real estate license.
uniform residential landlord and tenant act unilateral contract Federal legislation aimed at creating proper legal relationships between landlords or owners and tenants.
amenity A “nice, but not necessary” feature which provides personal pleasure to the owner of real property. It can be tangible or intangible.
anticipation The appraisal principle that weights the value of the future benefits a product or property will bring.
appraisal A professional process for estimating the value of real property.
assemblage combining two or more parcels of land into one.
capitalization rate or cap rate The ratio created when the net operating income is divided by the value of the property. It is also called the rate of return.
change (cycle of change) This appraisal principle involves activity which goes from growth or integration to equilibrium to disintegration and perhaps to growth again.
competition An appraisal principle: when a particular use of property is bringing a high return, others enter into the same business or purchase property for the same purpose.
conformity an appraisal principle which states that because all homes in a particular area are harmonious in design and value, their value is sustained and tends to increase over time.
contribution The appraisal principle which states that an improvement to a property must add its cost to the value.
correlation (reconciliation) An appraiser should use as many of the approaches to appraising as possible. This technique synthesizes the results into a single estimate of value. It is sometimes called correlation.
cost or cost basis what you paid for the product or property when you bought it.
cost approach an approach to appraisal which considers the price of resources necessary to build the same or a similar property. It is the only approach which places a separate value on the land.
cubic foot method Under the cost replacement approach, this method determines the cost per unit of volume and then multiplies it by the number of units of volume. It is most often used with warehouses.
deferred maintenance When physical deterioration is repairable, but hasn’t yet been taken care of.
depreciation A loss of value in real property, regardless of the reason for the loss. Also an accounting process used for investment property taxation, referred to by the IRS as cost recovery.
economic life The period of time during which improvements give a return on investment. It is generally considered to be shorter the physical life.
economic obsolescence A form of depreciation caused by forces outside the property boundaries. They may be political or social factors. It is considered to be incurable.
effective age An age placed on property for appraisal purposes, based on the condition of the property. It may be more or less that the actual chronological age.
fair market value What a willing buyer is willing to pay, and a willing seller is willing to accept, with neither of them under duress and the property has been on the market for sufficient time to verity its value.
functional obsolescence The item in question is working fine, but is not what people want in their homes anymore. Examples are a poor floor plan, four bedrooms and one bath, inadequate insulation, insufficient electrical outlets, etc.
gross operating income (GOI) the total income received from an investment property after subtracting vacancies and lost rents.
gross rent multiplier (GRM) A “quick and dirty” estimate of value based only on a relationship between the value of the property and the gross rents. It is referred to as the GRM.
gross scheduled income (GSI) What an investor would receive if there were no vacancies or lost rents.
highest and best use The appraisal principle which states that value should be based on the utilization of the property which will bring the greatest return to the owner. That use must be legal and feasible.
income (capitalization) approach An appraisal approach based on the cash flow the property produces. It addresses the question, “how much will a potential investor pay for the cash flow?”
incurable depreciation Physical deterioration that cannot be repaired in a cost-effective manner.
investment property Property which is generating a cash flow, such as a strip mall or a single or multi-family rental property.
letter form report An appraisal report that provides a short, written statement giving the bare essentials of the appraisal.
market data (comparison) approach an appraisal approach that contrasts the subject property with other properties that have recently sold. Adjustments are made to account for variations between the subject property and the others.
narrative report The longest form of appraisal report which uses a variety of supporting documentation.
net operating income (NOI) the profit that remains after the operating expenses have been subtracted from the gross effective income.
non-investment property A property that has no cash flow; for example, you home or a vacant lot.
physical deterioration a type of depreciation that occurs when something wears out and will no longer perform the function or give the service that was originally intended.
physical life The time span during which an improvement is still standing through it no longer has economic life.
plottage Combining two or more parcels of land with a resulting increase in total value.
price The amount of money being asked for a product or property, or the amount it sells for.
quantity survey method the appraiser determines the cost of the materials; labor; management fees, and profit. These are used to determine the value of improvements when using the cost approach in appraisal.
rate of return Same as capitalization rate or cap rate.
reconciliation (see Correlation) An appraiser should use as many of the approaches to appraising as possible. This technique synthesizes the results into a single estimate of value. It is sometimes called correlation.
service property Property such as government buildings or churches which are used for public purposes and are non-profit.
amenity A “nice, but not necessary” feature which provides personal pleasure to the owner of real property. It can be tangible or intangible.
anticipation The appraisal principle that weights the value of the future benefits a product or property will bring.
appraisal A professional process for estimating the value of real property.
assemblage combining two or more parcels of land into one.
capitalization rate or cap rate The ratio created when the net operating income is divided by the value of the property. It is also called the rate of return.
change (cycle of change) This appraisal principle involves activity which goes from growth or integration to equilibrium to disintegration and perhaps to growth again.
competition An appraisal principle: when a particular use of property is bringing a high return, others enter into the same business or purchase property for the same purpose.
conformity an appraisal principle which states that because all homes in a particular area are harmonious in design and value, their value is sustained and tends to increase over time.
contribution The appraisal principle which states that an improvement to a property must add its cost to the value.
correlation (reconciliation) An appraiser should use as many of the approaches to appraising as possible. This technique synthesizes the results into a single estimate of value. It is sometimes called correlation.
cost or cost basis what you paid for the product or property when you bought it.
cost approach an approach to appraisal which considers the price of resources necessary to build the same or a similar property. It is the only approach which places a separate value on the land.
cubic foot method Under the cost replacement approach, this method determines the cost per unit of volume and then multiplies it by the number of units of volume. It is most often used with warehouses.
deferred maintenance When physical deterioration is repairable, but hasn’t yet been taken care of.
depreciation A loss of value in real property, regardless of the reason for the loss. Also an accounting process used for investment property taxation, referred to by the IRS as cost recovery.
economic life The period of time during which improvements give a return on investment. It is generally considered to be shorter the physical life.
economic obsolescence A form of depreciation caused by forces outside the property boundaries. They may be political or social factors. It is considered to be incurable.
effective age An age placed on property for appraisal purposes, based on the condition of the property. It may be more or less that the actual chronological age.
fair market value What a willing buyer is willing to pay, and a willing seller is willing to accept, with neither of them under duress and the property has been on the market for sufficient time to verity its value.
functional obsolescence The item in question is working fine, but is not what people want in their homes anymore. Examples are a poor floor plan, four bedrooms and one bath, inadequate insulation, insufficient electrical outlets, etc.
gross operating income (GOI) the total income received from an investment property after subtracting vacancies and lost rents.
gross rent multiplier (GRM) A “quick and dirty” estimate of value based only on a relationship between the value of the property and the gross rents. It is referred to as the GRM.
gross scheduled income (GSI) What an investor would receive if there were no vacancies or lost rents.
highest and best use The appraisal principle which states that value should be based on the utilization of the property which will bring the greatest return to the owner. That use must be legal and feasible.
income (capitalization) approach An appraisal approach based on the cash flow the property produces. It addresses the question, “how much will a potential investor pay for the cash flow?”
incurable depreciation Physical deterioration that cannot be repaired in a cost-effective manner.
investment property Property which is generating a cash flow, such as a strip mall or a single or multi-family rental property.
letter form report An appraisal report that provides a short, written statement giving the bare essentials of the appraisal.
market data (comparison) approach an appraisal approach that contrasts the subject property with other properties that have recently sold. Adjustments are made to account for variations between the subject property and the others.
narrative report The longest form of appraisal report which uses a variety of supporting documentation.
net operating income (NOI) the profit that remains after the operating expenses have been subtracted from the gross effective income.
non-investment property A property that has no cash flow; for example, you home or a vacant lot.
physical deterioration a type of depreciation that occurs when something wears out and will no longer perform the function or give the service that was originally intended.
physical life The time span during which an improvement is still standing through it no longer has economic life.
plottage Combining two or more parcels of land with a resulting increase in total value.
price The amount of money being asked for a product or property, or the amount it sells for.
quantity survey method the appraiser determines the cost of the materials; labor; management fees, and profit. These are used to determine the value of improvements when using the cost approach in appraisal.
rate of return Same as capitalization rate or cap rate.
reconciliation (see Correlation) An appraiser should use as many of the approaches to appraising as possible. This technique synthesizes the results into a single estimate of value. It is sometimes called correlation.
service property Property such as government buildings or churches which are used for public purposes and are non-profit.
amenity A “nice, but not necessary” feature which provides personal pleasure to the owner of real property. It can be tangible or intangible.
anticipation The appraisal principle that weights the value of the future benefits a product or property will bring.
appraisal A professional process for estimating the value of real property.
assemblage combining two or more parcels of land into one.
capitalization rate or cap rate The ratio created when the net operating income is divided by the value of the property. It is also called the rate of return.
change (cycle of change) This appraisal principle involves activity which goes from growth or integration to equilibrium to disintegration and perhaps to growth again.
competition An appraisal principle: when a particular use of property is bringing a high return, others enter into the same business or purchase property for the same purpose.
conformity an appraisal principle which states that because all homes in a particular area are harmonious in design and value, their value is sustained and tends to increase over time.
contribution The appraisal principle which states that an improvement to a property must add its cost to the value.
correlation (reconciliation) An appraiser should use as many of the approaches to appraising as possible. This technique synthesizes the results into a single estimate of value. It is sometimes called correlation.
cost or cost basis what you paid for the product or property when you bought it.
cost approach an approach to appraisal which considers the price of resources necessary to build the same or a similar property. It is the only approach which places a separate value on the land.
cubic foot method Under the cost replacement approach, this method determines the cost per unit of volume and then multiplies it by the number of units of volume. It is most often used with warehouses.
deferred maintenance When physical deterioration is repairable, but hasn’t yet been taken care of.
depreciation A loss of value in real property, regardless of the reason for the loss. Also an accounting process used for investment property taxation, referred to by the IRS as cost recovery.
economic life The period of time during which improvements give a return on investment. It is generally considered to be shorter the physical life.
economic obsolescence A form of depreciation caused by forces outside the property boundaries. They may be political or social factors. It is considered to be incurable.
effective age An age placed on property for appraisal purposes, based on the condition of the property. It may be more or less that the actual chronological age.
fair market value What a willing buyer is willing to pay, and a willing seller is willing to accept, with neither of them under duress and the property has been on the market for sufficient time to verity its value.
functional obsolescence The item in question is working fine, but is not what people want in their homes anymore. Examples are a poor floor plan, four bedrooms and one bath, inadequate insulation, insufficient electrical outlets, etc.
gross operating income (GOI) the total income received from an investment property after subtracting vacancies and lost rents.
gross rent multiplier (GRM) A “quick and dirty” estimate of value based only on a relationship between the value of the property and the gross rents. It is referred to as the GRM.
gross scheduled income (GSI) What an investor would receive if there were no vacancies or lost rents.
highest and best use The appraisal principle which states that value should be based on the utilization of the property which will bring the greatest return to the owner. That use must be legal and feasible.
income (capitalization) approach An appraisal approach based on the cash flow the property produces. It addresses the question, “how much will a potential investor pay for the cash flow?”
incurable depreciation Physical deterioration that cannot be repaired in a cost-effective manner.
investment property Property which is generating a cash flow, such as a strip mall or a single or multi-family rental property.
letter form report An appraisal report that provides a short, written statement giving the bare essentials of the appraisal.
market data (comparison) approach an appraisal approach that contrasts the subject property with other properties that have recently sold. Adjustments are made to account for variations between the subject property and the others.
narrative report The longest form of appraisal report which uses a variety of supporting documentation.
net operating income (NOI) the profit that remains after the operating expenses have been subtracted from the gross effective income.