Valuation & Market Analysis Glossary

A C E F G H I M N P R S U

Adjustment (Appraisal): A dollar or percentage change applied to a comparable sale's price to account for differences from the subject property.
Appraisal: A professional, unbiased opinion of a property's value performed by a licensed or certified appraiser.
Comparable Sales (Comps): Recently sold properties similar to the subject property, used as a basis for estimating value.
Comparative Market Analysis (CMA): An informal estimate of a property's value based on recent sales of similar nearby properties, prepared by a licensee.
Curable Depreciation: A loss in value that is economically feasible to repair, where the cost of the fix is less than the value it adds.
Effective Age: An appraiser's estimate of a building's age based on its condition, which may differ from its actual chronological age.
External (Economic) Obsolescence: A loss in property value caused by factors outside the property, such as a declining neighborhood.
Functional Obsolescence: A loss in property value caused by outdated design or poor layout within the property itself.
Gross Income Multiplier (GIM): A ratio of a property's price to its total annual gross income, used to estimate value for income properties.
Gross Rent Multiplier (GRM): A ratio of a property's sale price to its gross rental income, used as a quick valuation shortcut.
Highest and Best Use: The legally permissible, physically possible, and financially feasible use of land that produces the greatest value.
Incurable Depreciation: A loss in value that is not economically feasible to repair, because the cost exceeds the value it would add.
Market Value: The most probable price a property should bring in a competitive, open market between willing, informed parties.
Net Operating Income (NOI): A property's annual income after operating expenses, before debt service and taxes.
Physical Deterioration: A loss in property value from wear, damage, or decay of the physical structure.
Principle of Anticipation: The idea that value is created by the expectation of future benefits a property will provide.
Principle of Conformity: The idea that property value is maximized when a property's use is similar to surrounding properties.
Principle of Contribution: The idea that an improvement's value is measured by how much it adds to the overall property value, not its cost.
Principle of Substitution: The idea that a buyer will not pay more for a property than the cost of an equally desirable substitute.
Progression: The principle that a lesser-value property gains value from proximity to higher-value properties.
Regression: The principle that a higher-value property loses value from proximity to lower-value properties.
Replacement Cost: The cost to construct a building of equivalent utility using current materials and design standards.
Reproduction Cost: The cost to construct an exact replica of a structure using the same materials and design.
Site Valuation: The process of estimating the value of land alone, separate from any improvements on it.
Uniform Residential Appraisal Report (URAR): The standardized form used by appraisers to report the value of a single-family residential property.

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