REAL ESTATE TERMINOLOGY

AD VALOREM - According to the value

APPRAISAL -An estimate or opinion of value. The act or process of estimating value. The resulting opinion of value derived from the appraisal may be informal, transmitted orally; or it may be formal, presented in written form. Usually it is a written statement setting forth an opinion of the value of an adequately described property as of a specified date, supported by the presentation and analysis of relevant data. Synonym: valuation.

ARM'S LENGTH - A transaction freely arrived at in the open market, unaffected by abnormal pressure or by the absence of normal competitive negotiation as might be true in the case of a transaction between related parties.

ASSESSMENT - An official determination of the amount to be paid a property owner for the taking of all or part of his property for an improvement which is presumed and, in fact, is designed to benefit the public generally, e.g., assessment of benefits and damages for highway or school construction. In this usage, jurisdictional rules will determine in cases of a partial taking whether (a) benefits may be employed to offset only severance damages to the remainder area, (b) only special, as opposed to general benefits may be used as an offset against damages, or (c) both general and special benefits may represent an amount that offsets all damages.

ASSESSOR -One whose duty it is to assess property for ad valorem taxes.

BOARD OF EQUALIZATION - A nonjudicial board whose function is to review assessments to see that all districts are assessed at a uniform level of value; to raise or lower the assessments to achieve this purpose, so that a uniform basis of taxation is achieved. Also referred to as Board of Tax Review, Board of Appeals. 

MARKET VALUE - The highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as a specified date and the passing of title from seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated.
2. Both parties are well informed or well advised, and each acting in what he considers his own best interest.
3. A reasonable time is allowed for exposure in the open market.
4. Payment is made in cash or its equivalent.
5. Financing, if any, is on terms generally available in the community at the specified date and typical for the property type in its locale.
6. The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.

REAL ESTATE - This refers to the physical land and appurtenances, including structures affixed thereto. In some states, by statute, this term is synonymous with real property.

REAL PROPERTY - This refers to the interest, benefits, and rights inherent in the ownership of the physical real estate. It is the bundle of rights with which the ownership of real estate is endowed. In some states, this term, as defined by statute, is synonymous with real estate. Does not include personal property.

REO - REAL ESTATE OWNED - This refers to the physical land and appurtenances, including structures affixed thereto. In some states, by statute, this term is synonymous with real property.

TAX RATE - The ratio of the tax to the tax base. The rate to be applied to the assessed value to determine the amount of tax. The rate is obtained by dividing the amount of the tax levy by the total assessed value of the tax district; usually expressed in dollars per hundred of assessed value.