Appraisal - An appraisal is a professional opinion of value, determined by a licensed real estate appraiser, and transmitted via a written appraisal report.
URAR/1004 - This is the name of the main form that an appraisal report is done on.
Drive-by - Sometimes, lenders do not require an interior inspection of your home. In these cases, the appraisal that is done is called a drive-by, or an exterior only appraisal
Comparable (comp) - Short for comparable sale. The most common method of appraising involves comparing your home to similar homes that have been sold recently. These sales are called comparables.
Market Value - Market value, or fair market value, is the probable price that your home would sell for. Market value assumes a reasonable marketing time and that the buyer and seller are equally motivated and knowledgeable. When an appraisal is performed, it is the market value that we are appraising.
Sale price - Sale price is the agreed upon price that a home is selling for. This is determined by the agreement of sale. This is NOT necessarily the same as market value. The most common appraisal related complication to a home sale is when the sale price is higher than the market value.
Square footage/GLA - Square footage, or gross living area, is the measurement of the living space of your home. For an appraisal, it is the exterior of the home that is measured and used to calculate the square footage.
Cost to Cure - If a home is in the process of renovation, remodeling, or an addition; or if there is deferred maintenance or a repair issue, the appraisal will include a cost to cure. Cost to cure is an estimate of what it will cost to repair or complete the property.
Scope - In some cases, we provide lenders with a range that homes are selling for in an area. This is to decide if what someone thinks their home might be worth is even possible. The term scope is misleading, due to the fact that we are not "scoping" the homes value, but rather, providing a range that homes in the neighborhood are selling for, which is public information. A "scope" or a "comp check" is specifically prohibited by USPAP, and it is impossible to tell what your house will appraise for until we complete the entire appraisal.
PMI - Private mortgage insurance is a fee collected by a bank when you have less than 20% equity in your home (when your loan is more than 80% of the home's value). Most banks only require you to provide an appraisal to prove that the homes value is enough to stop PMI from being collected.
Intended use - USPAP requires every appraisal to have a specific intended use. Most often, this use is to obtain financing. Since every appraisal has only one intended use, once it is used for that purpose, the appraisal is considered obsolete. You cannot reuse that appraisal for another loan, for insurance, etc.
Intended user - USPAP requires every appraisal also to have one intended user. In most cases, this user is the bank that is loaning money on the home. While the bank will provide you with a copy of the appraisal for your reference, the homeowner is not the intended user.
USPAP - Uniform Standards of Professional Appraisal Practice. These are the federal guidelines that appraisers are required to follow when developing a real estate appraisal.