Understanding Appraisal Terminology: A Consumer’s Guide

Whether you’re dealing with a divorce, estate, tax appeal, pre-listing, or any other home valuation situation, the appraisal process can feel full of industry jargon. At REI Valuations, we believe in transparency — and that starts with helping you understand the terms appraisers use every day.

Here’s a simple breakdown of common appraisal terms to help you feel more informed and confident throughout the process:

The Basics

  • Subject: The property being appraised — your home or the home you’re evaluating.

  • Comparable Sales (Comps): Recently sold homes similar to the subject. These help determine your home’s value.

  • Adjustments: Dollar value changes made to comps to reflect differences (like square footage, garages, or renovations).

  • Gross Living Area (GLA): The total heated, finished above-grade living space, typically measured in square feet.

  • MLS (Multiple Listing Service): A database of homes for sale or recently sold — a key source of data for appraisers.

Appraisal Approaches to Value

Appraisers use one or more of these methods depending on the property and purpose:

  • Sales Comparison Approach: Most common. Compares your home to similar recently sold properties, making adjustments where needed.

  • Cost Approach: Estimates what it would cost to rebuild your home from scratch, minus depreciation.

  • Income Approach: Used mostly for rental or investment properties. Values a property based on the income it generates.

Types of Value You Might See

  • Fair Market Value: What a willing buyer would pay a willing seller in an open market.

  • Value in Use: The value of a property based on how it’s used by a specific owner, not necessarily market-based.

  • Liquidation Value: The price a property would fetch quickly, under forced-sale conditions.

Physical + Functional Terms

  • Functional Obsolescence: A design or layout feature that makes a home less desirable (e.g., no hallway access to a bedroom).

  • External Obsolescence: Negative influences outside the property — like being next to a highway or landfill.

  • Latent Defects: Hidden problems in the property (like foundation cracks) that may affect value.

How the Appraisal Process Works

  1. Walkthrough or Drive-By:
    A walkthrough is a full interior inspection. A drive-by involves only viewing the exterior and public data — often used in limited-scope appraisals.

  2. Gathering the Data:
    We collect property details, photos, comps, public records, and any relevant documents (HOA, blueprints, etc.).

  3. Analyzing the Data:
    We evaluate sales trends, condition, features, and neighborhood factors to determine a credible value.

  4. Report Writing:
    Everything is compiled into a formal document — often on the URAR (Uniform Residential Appraisal Report) form — that explains how the value was determined. This report complies with USPAP (Uniform Standards of Professional Appraisal Practice), the ethical and professional guidelines we follow.

Why This Matters to You

Knowing these terms helps you:

  • Ask better questions

  • Understand what’s in your report

  • Communicate clearly with attorneys, agents, or lenders

You don’t need to be an expert — that’s our job. But the more informed you are, the smoother the process becomes.

If you still have questions after reading your report, we’re always here to walk you through it.