The Words We Use

Words are powerful and language matters in all situations, but today, I want to specifically talk about the importance of how we use language in the appraisal profession. There are several misleading key words and phrases that we often use as appraisers, and I think we would be doing ourselves and our profession a favor by correcting our language. 

A word I have often heard appraisers use is, “undervalue.” Realtors will often say, “The property came in undervalue” when really, they mean to say, “The value of the property is below the purchase price or cost to build.” As appraisers, it is our job to report value, so when we say that a property came in undervalue, we are really saying that we are incompetent appraisers who did not report the value correctly. Unless you are guilty of fraud, the property came in at value as established by the market. Additionally, the property did not come in at value. Rather, the value was reported.

“Inspection” is a word that I use all the time and will likely continue to use simply out of habit. However, I recently heard a different word that I have since fallen in love with. The word “inspection” can give a false impression of what we will be doing when we go out to the property. In truth, we are not inspecting the property. We are not home inspectors, we are simply walking through the property and observing. I have started calling my “inspections” “observations” instead. This is an additional safeguard against any potential liability resulting from someone thinking we are home inspectors.

There have been times when a homeowner or realtor has given “comps” for me to look at as I do my valuation. However, at the time they are given to me, they are not comps. They are sales or listings. They are not comps until I, as the valuation expert, determine that they are comparable to the property I am appraising. It would be in our best interest to kindly and professionally correct whoever is providing us with these sales or listings if they call them comps by saying something along the lines of, “Thank you for providing me with these sales, I will do some additional research so that I can know whether or not they are comparable to the property.”

Finally, rather than only referring to and thinking of ourselves as “appraisers,” we should also think of ourselves as professionals and small business owners. 

Words have power and we improve ourselves and our profession when we use them correctly.

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 313 Language Matters

5 Comments on “The Words We Use”

  1. Represented as a single number, the appraised value is neither high nor low, but rather becomes as such when other parties consider their interests.
    How about “market value” versus “sales price”? Appraisers had better be putting in paragraphs explaining to their clients that with different definitions / meanings, it’s completely false to draw comparisons to the two, and to thus explain why there may be differences. Are appraisers doing retrospective appraisals on the subject at the time of its prior sale (sales price), to determine their opinion of market value at that time? Does your work file contain such information / support? If it doesn’t, then don’t compare the prior sales price to the current market value.

    Relating to sales versus comps. Are appraisers clearly providing their search criteria, (city, zip code, street boundaries, distance, age, bedroom variance, HOA fees, GLA differences, attached, detached, non-new construction, etc.), and as such providing explanation when similar, but unlike / non-substitute homes show up in general searches. Are you providing your clients with a list of sales that may filter into your greater search, but yet for explained reasons were not considered comps?

    Words have power, seek the truth, and go make up a value.

  2. Love this- one of my pet peeves, using words or phrases that are meant to have one meaning yet in light of the situation, have a completely different meaning… so use another word or phrase that represents the truth. I’ve even been revising “observation” to using the word view or viewing.

  3. When I teach appraisal classes to RE agents / Brokers, my attempt is to get them to stop telling the appraiser they have comps. The agents/brokers have market data, as stated the appraiser by profession and direction is tasked with figuring out what is comparable and what is not. As to inspections that word left my vocabulary long ago. My engagement letters all state that I will visit the site and complete a walk through of the property along with measurement of the structure if that is part of the scope of work. Yep words they can be a pain especially in this world we work.

  4. I’ve been using the word “observation” for over a decade. I’ve never like the word “inspection” in an appraisal report and include this commentary in all of my reports: The word inspection used in this report is meant as “viewing of the property” for appraisal purposes, and no other meanings are intended or apply.

    I further break things down as to what I do and do not do in regards to the “complete visual inspection” in Cert 2.

  5. I recently was in a continuing ed class and I brought up the exact thing Dustin said about the “under value” issue. Another appraiser stated that in our current market it is common to be under value on the appraisals. I stated, you may be under sales price, but you are the one determining value, therefor, by definition, the value cannot by over (or under). The value is what the value is. I also have been using observation for some time. I even have a sentence in all of my reports, that if in the report the word inspection shows up, it means observation. Just another layer of coverage.

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