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expenses. Costs incurred for day- to-day upkeep, such as management,
wages and benefits of building employees, fuel, utility serv- ices,
decorating and repairs.
(See community property and tenancy by the entirety.)
A place or condition suitable for selling and buying.
approach. (See sales comparison approach.)
method of depreciation. (See sales comparison method of depreciation.)
approach. (See sales comparison approach.)
method of depreciation. (See series comparison method of depreciation.)
(See sales price.)
The amount for which the competitive rental market indicates property
should rent. An estimate of a property's rent potential.
The most probable price real estate should bring in a sale
occurring under nor- mal market conditions.
average of all items included within a group, calculated by dividing
the sum of the individual items, or variates, by the number of variates.
A lien created by statute that exists in favor of contractors, laborers
or material men who have performed work or furnished materials in
the erection or repair of a building. meridian. (See principal meridian.)
Metes and bounds
description. A method of legal description specifying the perimeter
of a parcel of land by use of measured distances from a point of
beginning along specified boundaries, or bounds, using monuments,
or markers, as points of reference.
measurement of distance, being 1,760 yards or 5,280 feet.
A structure transportable in one or more sections, designed and
equipped to contain not more than two dwelling units to be used
with or without a foundation system; does not include a recreational
vehicle. Also called a manufactured home.
Natural or artificial objects used to define the perimeter of a
parcel of land using the metes and bounds method of legal description.
A conditional transfer or pledge of real property as security for
the payment of a debt; also, the document used to create a mort-
The lender in a loan transaction se- cured by a mortgage.
An owner of real estate who borrows money and conveys his or her
property as security for the loan.
report. A detailed written presentation of the facts and reasoning
behind an appraiser's estimate of value.
A residential or commercial area with similar types of properties,
buildings of similar value or age, predominant land-use activities,
and natural or fabricated geographic boundaries, such as highways
life cycle. The period during which most of the properties in
a neighborhood undergo the stages of development, equilibrium and
decline. decline. Properties require an increasing amount of upkeep
to retain their original utility and become less desirable. development
(growth). Improvements are made, and properties experience a rising
demand. equilibrium. properties undergo little change; also called
Net income ratio.
The ratio of net operating income to effective gross income.
A lease requiring the tenant to pay rent and part or all of the
costs of maintenance including taxes, insurance, repairs and other
expenses of ownership. Sometimes known as an absolute net lease,
triple net lease or net, net, net lease.
income. Income remaining after operating expenses are deducted
from effective gross income.
use. A once lawful property use that is permitted to continue
after a zoning ordinance prohibiting it has been established for
the area; a use that differs sharply from the prevailing uses in
depreciation. A method of computing depreciation in which the
appraiser estimates the loss in value for all items of depreciation.
(See also incurable depreciation and cur- able depreciation. )
Lessening of value from out-of- date features as a result of current
changes in property design, construction or use; an element of depreciation.
(See also external obsolescence and functional obsolescence.)
Possession and use of property as owner or tenant.
The percentage of total rental units occupied and producing income.
ratio. The ratio of total operating expenses to effective gross
The cost of all goods and services used or consumed in the process
of obtaining and maintaining income. (See also fixed expenses, maintenance
expenses and reserves for replacement. )
The written record of a business's gross income, expenses and resultant
ratio. Relationship of a property's expenses to income, found
by dividing total operating expenses by effective gross in- come.
cost. The value differential be- tween alternative investments
with differing rates of return.
A right given for a valuable consideration to purchase or lease
property at a future date, for a specified price and terms. The
right may or may not be exercised at the option holder's (optionee's)
Positioning a structure on its lot with regard to exposure to the
sun, prevailing winds, privacy and protection from noise.
Rent paid over a base amount in a percentage lease.
rate. A rate of investment return derived by comparing the net
in- come and sales prices of comparable properties.
The direct ratio between a property's annual net income and
its sales price.
An improvement to property that is more than warranted by the property's
highest and best use and thus not likely to contribute its cost
to the total market value of the property.
severalty. Individual ownership of real estate, not to be confused
with the use of the word several to mean "more than one";
also called tenancy in severalty, sole tenancy or separate ownership.
analysis. A method of estimating the amount of adjustment for
the presence or absence of any feature by pairing the sales prices
of otherwise identical properties with and with- out the feature
in question. A sufficient number of sales must be found to allow
the appraiser to isolate the effect on value of the pertinent factor
(also called paired data set analysis and matched pairs analysis).
A single number or attribute of the individual things, persons or
other entities in Population.
Any property interest that is less than full fee simple ownership
of the entire property.
An association of two or more individuals who carry on a continuing
business for profit as co-owners. Under the law a partnership is
regarded as a group of individuals rather than as a single entity.
A lease commonly used for commercial property that provides for
a rental based on the tenant's gross sales at the premises. It generally
stipulates a base monthly rental, plus a percentage of any gross
sales exceeding a certain amount.
Items that are tangible and movable and do not fit the definition
of realty; chattels.
Loss of value due to neglected repairs or maintenance that are economically
feasible and, if performed, would result in an increase in appraised
value equal to or exceeding their cost.
Loss of value due to neglected repairs or maintenance of short-lived
or long-lived building components that would not contribute comparable
value to a building if performed.
The length of time a structure can be considered habitable, without
regard to its economic use.
development(PUD). A subdivision consisting of individually owned
residential and/or commercial parcels or lots as well as areas owned
map representing a parcel of land subdivided into lots, showing
streets and other details or a single site.
The subsequent increase in the unit value of a group of adjacent
properties when they are combined into one property in a process
Point of beginning.
Place at which a legal description of land using the metes and bounds
The right of the government to impose laws, statutes and ordinances
to protect the public health, safety and welfare. Includes zoning
ordinances and building codes.
The right of the owner to occupy property. When property is occupied
by a tenant, the owner has constructive possession by right of title.
income. A property's total potential income from all sources
during a specified period of time.
of expense. Expense items, such as insurance premiums and tax
reserves, that have been paid in advance of the time that the expense
is incurred. Prepaid expenses typically are prorated and credited
to the seller in the preparation of a closing statement.
amount of money set or paid as the consideration in the sale of
an item at a particular time.
(1) A sum lent or employed as a fund or investment--as distinguished
from its income or profits; (2) the original amount (as of a loan)
of the total due and payable at a certain date; or (3) a party to
a transaction--as distinguished from an agent.
One of 35 north and south survey lines established and defined as
part of the U.S. government or rectangular survey system.
statement. (See operating statement.)
technique. A method of capitalization using the net income remaining
to the property as a whole.
The adjustment of taxes, interest, insurance and/or other costs
on a pro-rata basis as of the closing of a sale. (See also closing
mortgage. A note secured by a mortgage or trust deed given by
the buyer, as mortgagor, to the seller, as mortgagee, as part of
the purchase price of real estate.
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