Definition of Commercial Terms


Annual Update:  A change in assessed value based on new appraisal or mass appraisal methodology using current market date that occurs on an annual basis. 


Calibrate:  The process of estimating the coefficients of a mass appraisal model


Coefficient:  Values and ratios that are multiplied by dependent variables in valuation models, e.g. $X per square foot or Y% vacancy rate


Cost Approach:  The sum of the land value plus depreciated improvement value


Highest & Best Use:  The most profitable use of land or a building given legal, physical, and financial limitations


Income Capitalization Approach:  Convert a potential stabilized income stream into a value estimate based on it's quality, quantity, and duration. The basic formula is income / cap rate = value


Mass Appraisal:  The valuation of a group of properties as of a given date, using standard procedures and statistical testing


Model:  A depiction of how something works. In real estate appraisal, a model explains the relationship between value and supply/demand variables in the real estate market. It's used to predict the theoretical sale price of a property.


Physical Inspection:  Our appraisers physically inspect the property and update the characteristics including square feet, quality and condition. 


Sales Comparison Approach:  Comparing the property being appraised with properties that have sold


Single-Property Appraisal:  The valuation of a specific property as of a given date


Specify:  The process of designing models based on theory and market analysis


Value Update:  An annual adjustment applied to properties between inspections