Appearance – the valuation of the property is based on its appearance “as is” (or as instructed by the client) on the date of value opinion. The Definition of Anticipated Sales Price under Point 1 (found on page 1 under the Definitions and Guidelines section of the form) indicates that, “The analysis reflects the subject property’s appearance “as is” (or as instructed by the client) and is based on its present use as a residential dwelling.” Client instruction may require the appraiser to base the anticipated sales price on a property appearance other than “as is” such as “as if vacant” or “as if repaired.”
Appraisal Inspection - an interior and exterior inspection of a property that is performed by an appraiser.
Assignment Marketing Period – the time period on which the appraiser is to base his/her opinion of value. Within the Definition of Anticipated Sales Price under Point 4 (found on page 1 under the Definitions and Guidelines section of the form) this time period is identified as, “An assignment marketing period, not to exceed 120 days (or as instructed by the client) commencing on the Date of Value Opinion,…” Client instruction may require the appraiser to base the anticipated sales price on an assignment marketing period other than “not to exceed120 days” such as “not to exceed 60 days” or “not to exceed 180 days.”
Date of Appraisal Inspection – the actual date the subject property is inspected by the appraiser. (This is not to be confused with the effective date of the appraisal which is the date of value opinion).
Date of Value Opinion - the date of value opinion is the effective date of the appraisal. It represents the date the appraiser arrives at his or her value conclusion. This date is not necessarily the date of appraisal inspection. This allows the appraiser to consider pertinent information that may have become available after the date of appraisal inspection - e.g., changes to the subject property’s listing price, the closing of a pending sale, changes to the listing prices of competing properties, as well as any changes in market/economic conditions.
Distressed Market Competition – competing bank owned, foreclosure, short sale, and/or abandoned properties in the subject property’s market segment.
Extraordinary Assumption – the Uniform Standards of Professional Appraisal Practice (USPAP), define an extraordinary assumption as, “…an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions.” The extraordinary assumption defined in the Worldwide ERC® Summary Appraisal Report is that no physical changes have occurred to the subject property between the date of appraisal inspection and the date of value opinion when developing an opinion of anticipated sales price.
GLA Data Source – the data source(s) used in calculating and reporting the gross living area of the subject property, competing properties, and comparable sales (e.g., appraiser measurements, public records, assessor records, MLS, etc.).
Market Segment – the area in which potential buyers for the subject property may look for substitute properties. This market segment is used in the Market Trends Analysis on pages 4 and 5 of the form and the Sales Comparison Analysis on page 6. It may be different from the subject neighborhood addressed on page 2 of the form in that it can also include other areas beyond the subject property’s neighborhood. The appraiser selects the most appropriate market segment for the analyses based on the buyer profile for the subject property.
Market Segment Normal Marketing Time – the normal marketing time for comparable properties in the subject property’s market segment as measured from listing date to contract date.
Market Trends Analysis – an analysis of historic, current and forecasted market trends that serves as the foundation for developing a credible opinion of anticipated sales price. This analysis is presented on pages 4 and 5 of the Worldwide ERC® Summary Appraisal Report.
Monthly Absorption Rate – the monthly average of closed sales during the appraiser defined time period found in the absorption rate/inventory analysis section of the Market Trends Analysis on page 4 of the form. It equals the total number of closed sales divided by the number of months in the appraiser defined time period.
Neighborhood Boundaries – the physical area surrounding the subject property that has similar characteristics, influences and complimentary land uses. To define the neighborhood boundaries, the appraiser should use natural or man-made boundaries such as rivers, lakes, street names, school districts, etc., rather than subdivision names. The neighborhood boundaries identified on page 2 of the form may or may not be the same as the defined market segment used for the Market Trends Analysis and the Sales Comparison Analysis on pages 4 - 6 of the form.
Number of Months Supply of Inventory (Inventory Analysis) – the number of months supply of current inventory in the subject property’s market segment. It equals the total number of active listings divided by the monthly absorption rate and is found in the absorption rate/inventory analysis section of the Market Trends Analysis on page 4 of the form.
Repairs and/or Improvements Priority – an indication of the impact of repairs and/or improvements on the marketability of the subject property. The “priority” line item along with the “total estimated cost to cure” line item on page 3 of the form are intended to help the client evaluate not only the costs of the recommended repairs and improvements but also what the effect might be of choosing to either do or not do the repairs/improvements.
Subject Property Estimated Normal Marketing Time – the estimated normal marketing time for the subject property assuming competitive pricing (this is not the same as the assignment marketing period).
Scope of Work – under the Scope of Work Rule in USPAP, for each appraisal, the appraiser must properly identify the problem to be solved, determine and perform the scope of work necessary to develop credible assignment results and, disclose the scope of work in the report. The scope of work includes but is not limited to:
- the degree to which the property is identified;
- the extent of to which tangible property is inspected;
- the type and extent of data researched; and
- the type and extent of analysis applied to arrive at opinions or conclusions.”
On page 1 of the Worldwide ERC® Summary Appraisal Report, the scope of work (formerly called “scope of the appraisal” in the 2003 version of the form) includes, “…performing an interior and exterior inspection of the subject property; collecting, verifying and analyzing pertinent data; considering market trends; developing an opinion of the subject property's Anticipated Sales Price utilizing Forecasting, and communicating the findings in this Summary Appraisal Report. The appraisal is to be developed utilizing only the Sales Comparison Analysis, which most accurately reflects the actions of typical buyers and sellers in the market place. This approach must include an analysis of competing properties, pending sales and closed sales, resulting in a reliable opinion of Anticipated Sales Price. The cost approach, income approach, and highest and best use analysis are excluded as they are not necessary to develop a credible opinion of Anticipated Sales Price.”
Unstable Trend – evidence of irregular fluctuations in the marketplace (See Market Segment - Historic Price Trends sub-section of the Market Trends Analysis on Page 4.)