To be able to fully understand the concepts of residential real estate appraisal, here is a list of important terms with meaning. Appraisal becomes important in times of selling the property, buying a property, divorcing the partner, settling the estate, and relocating an employee. In some point of our lifetime, we are going to encounter appraisals at least once.

Fair Market Value

It is the median price between the highest price acceptable to buyer and lowest price acceptable to seller.

Market Value

It is the most likely price at which the property would sell. The property must sell at a right price in which the price is not too high and low. Thus, an overprice property will sell a little longer. In most cases, an overprice property sells when the market value catch up with the selling price.

Price

It is often confuse with Market Value. Price differs slightly from Market Value. Although the Market Value gives the seller an idea how much to sell the property, the price may be higher or lower than the Market Value. For example, a buyer is willing to pay $20,000 more than the Market Value. This happens when there are many potential buyers for the property.

Value in Use

This relates to the net present value (NPV) of the property use. The NPV is the difference between present value of cash inflow and outflow. For example, a home buyer wants to purchase a property. He estimates the future cash flow that the property would generate. Then, he discounts the cash flow into a lump sum value amount. Let us say $450,000. If the home owner sells less than $450,000, the home buyer considers in purchasing the property.

Investment Value

It is the amount that the investor would pay to acquire the property. The Investment Value may be higher or lower than the fair Market value.

Insurable Value

The Insurance Policy covers the value of the property which is the Insurable Value.

Subject Property

It is the property which the appraiser evaluates or analyzes. The Appraiser analyzes the location, amenities, and condition of the subject property to arrive to the fair market value.

Comparables or Comps

Appraiser compares the subject property to another local property. The other local property is called Comparables or Comps. With the information from Comparables or Comps, the Appraiser calculates the fair market value of the subject property.

Real Estate Appraisal covers a huge scope. It is impossible to include all appraisal terms. For any missing key terms, you may consider online mortgage dictionary. A dictionary awaits your command. In an instant, it searches for possible definition.

By: Dennis Estrada

About the Author:
Dennis Estrada is a webmaster of mortgage calculators website which calculate the monthly payment, bi-weekly payment, affordability, refinance, annual percentage rate, discount points, and more.

There are a lot of fallacies that come out whenever you hear the word foreclosures. Actually, individuals are puzzled on what is the true explanation about foreclosures. That is why they are messed up whenever foreclosure begins to knock on their doors. There are facts about the whole procedure of foreclosure and it will all depend on the person on how he will make himself knowledgeable about this.

Getting some foreclosure facts and learn how the entire process can be a big help in turning you to become a wise property investor. These common foreclosure facts and misconceptions can enlighten the investors and aspiring homeowners so that they can easily handle the situation if there will come a time that foreclosure will hit them. Thus, you need to learn and distinguish the foreclosure facts and fictions to be able to prevent you from being messed up if you become a candidate in the future.

Normally, there are individuals who know that purchasing a foreclosed house from a bank is the ideal way to buy a foreclosed property. Well, this is totally not true because you can not maximize the saving that you can actually get from your investment. Indeed, buying properties from banks can be safer in getting foreclosed houses but bear in mind that it can be risky too. Acquiring properties directly from banks means a tedious legal process has occurred and there are lesser risks related to purchasing foreclosures. But the possibility of negligent lenders is still unavoidable.

In some way, there are talks that lenders are carefully avoiding themselves from any foreclosure transactions. Although, it is fact that banks are eager to dispose foreclosed properties, this intention comes from their objective to increase their revenues or simply to prevent from incurring possible loss. But for the lenders, they normally sell these properties immediately with a greater advantage to the part of the home buyer.

In addition to that, buyers and investors must learn that not all lenders who sell foreclosed houses use similar marketing strategies. Lenders have their various selling techniques and some of them transact the business on their own. But others get the services of real estate agencies to help them dispose the properties faster.

Aside from announcing the foreclosed properties, there are banks that advertise their Real Estate Owned properties in the local papers and ad listings. Some of them even store details for their stockholders and their accounts.

It is completely false to think that banks have to sell foreclosed houses with similar rates that they charge to score ownership and do not have any profit. This misconception is derived from the fact that banks or other lenders may not ask payment from homeowners of foreclosed properties over the regular existing balance to any accrued interest, delayed payments, taxes, fees or other charges to the lender.

However, once the bank has scored ownership of a foreclosed house at an auction, they assume that such is owned by the institution like any homeowner would. This covers the repairs, the leasing and the disposal of the property in a price that they find appropriate for it.

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