If you have a home appraisal coming up, it is vital to know a few key terms that you may encounter in your report. This knowledge will help you understand and communicate better with the appraiser and will ensure you can notice potential problems on your property. Here are seven terms to understand.

Important Appraisal Terms to Understand

1. Effective Age

Effective age is the term that describes a property based upon its overall condition and updating. If a property has been updated or renovated it would have an effective age that is less than the actual age. However, if a property has been poorly kept and show extreme distress, wear, and tear – the effective age may be in excess of the actual age of the property. 

2. Abstraction Method

When the appraiser researches other properties similar to yours to develop the opinion of value, it is called the abstraction method. Properties should be the same style and size as yours and should be geographically similar. This method represents an example of other homes that a typical buyer in your market area would look at, if your property was listed for sale.

3. Amenities

Any feature that adds value and makes your home stand out from other nearby properties is an amenity. This can be anything from a natural feature like the view from your home or something that has been upgraded, like kitchen and bathrooms. Hidden amenities add value, but they may not be easily seen, like eco-friendly building materials and smart technology for security systems.

4. Gross Living Area

This includes the square footage of the above grade part of your home, including storage areas like closets as well as hallways. Appraisal professionals will measure the exterior of your home in order to obtain an accurate accounting of the total square footage.  This calculation does not include the open stair cases.

5. Latent Defects

These problems are not easily seen, but they may require repair before you take the next step in selling the house or working on your estate plan. Latent defects include holes in roofing, shingle damage, and other tough-to-spot signs of damage.

6. Major Deficiency

Major deficiencies are large, problematic issues that are a big red flag on the property. Anything from termites and black mold to foundation issues falls into this category. For homes with septic systems, trouble with tanks and other areas is also considered a major deficiency.

7. Depreciation

Depreciation is a normal process that occurs as your home ages.  Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life expectancy. Depreciation represents how much of an asset's value has been used up.

Serving the Denver Metro Area since 2003, Concept Appraisal Services can help with necessary property appraisals when you need to value your home or you have a divorce settlement coming up. Using the best technology in the industry, their services are beneficial in estate planning as well as bankruptcy appraisals. Licensed and certified, their reputation for precise assessments makes them the top choice in the area. For an appraisal quote, call (303) 506-6254. Visit their website for their full list of offerings.