Chapter 16: Essentials Of New Jersey Real Estate. Key Terms Part 1

Question 1

Amenity

Answer 1

The extra that contributes to an owner satisfaction: clean air, view and so on…

Question 2

Appraisal

Answer 2

The process of estimating a value.

Question 3

Appraiser

Answer 3

An independent person trained and licensed to estimate value.

Question 4

Capitalization rate

Answer 4

A rate of return a property produces on the owners investment.

Question 5

Comparables

Answer 5

The similar nearby properties that have recently sold.

Question 6

Cost approach

Answer 6

The analysis of rental income, used roughly in sales comparison approach.

Question 7

Depreciation

Answer 7

The loss of value due to any cause.

Question 8

External obsolescence

Answer 8

A loss of value due to factors be on the property boundaries. Such as social or environmental forces or objectionable neighboring property. Also called locational obsolescence or economic obsolescence.

Question 9

Functional obsolescence

Answer 9

A loss of value due to worn or outmoded features. A loss of value to an improvement to real estate due to becoming outdated, often caused by age or poor design.

Question 10

Gross income multiplier

Answer 10

The analysis of income including rental and other factors.

Question 11

Gross Rent Multiplier (GRM)

Answer 11

The analysis of rental income, used roughly in sales comparison approach. It is the Sales Price divided by the Rental Income known as the Gross Rental Multiplier. SP\RI=GRM

Question 12

Highest and best use

Answer 12

The use of land that you’re the most money.

Question 13

Income approach

Answer 13

The analysis of value of property using the (ROI) return on investment.