Achieving Agreements through Transaction Analysis Part 2 Flashcards
Forces that affect the value of all markets (4)
Physical
Economic
Governmental
Social
Physical Characteristics of Real Property (3)
Uniqueness + Immobility + Indestructibility
Types of Physical Factors (5)
Topography + Water + Location + Popularity + Environment
Economic Factors that can affect real estate values (5)
Business Cycles + Real Estate Cycles + Supply & Demand + Buyer’s Market + Seller’s Market
Buyer’s Market
Housing market with a large selection of properties from which the buyer can choose
Seller’s Market
Housing market where sellers can choose from a large number of buyers who are looking for houses in a particular area
Social Factors that impact real estate markets (5)
Population Growth + Population Migration + Population Age + Size of Families + Trends and Tastes
Government Factors that affect real estate (4)
Land use controls/zoning laws + Environmental Protection Laws + Eminent Domain + escheat
Federal Factors that influence real estate (5)
Fiscal Policy + Monetary Policy + Secondary Mortgage Markets (fannie mae, freddie mac) + government programs (FHA, VA) + taxation
What does the principle of substitution state?
States that an informed buyer will not pay more for a property than a comparable substitute
Whats does the principle of conformity state?
States that a particular property achieves its maximum value when it’s surrounded by properties that are similar in style and function
What does the principle of contribution state?
States that a particular item or feature of a property is only worth what it actually contributes in value to that piece of real estate
What are the value characteristics of real property (4)
Demand + Utility + Scarcity + Transferability
What is the principle of progression?
When the value of a specific property is helped up by the value of the surrounding properties in the area
What is the principle of regression?
When the value of the “best” property is held down by the value of other properties in the area.
What is an appraisal?
An estimate or opinion of value supported by objective facts and data
What is the highest and best use of a property?
It is the use that supports the highest present value as of the date of the appraisal OR the use that develops the highest present value over a reasonable period of time
Cost Approach Formula
Replacement Cost - Accrued Depreciation + Site Valuation = Property Value
Cost Approach Formula
Replacement Cost - Accrued Depreciation + Site Valuation = Property Value
What is the most commonly used approach to appraisal of residential real property?
Sales comparison approach
What is the most commonly used approach to appraisal of residential real property?
Sales comparison approach
What does an appraisal report have ? (4)
- Reports a final opinion of value for the subject property
- Explains the appraiser’s rationale and process used in developing the appraisal and conclusion
- supports any opinions with analytical data
- follows professional standards, rules and guidelines
What is the Uniform Residential Appraisal Report (URAR)
A standard appraisal report form used by lenders and appraisers for residential appraisals.
What is a competitive market analysis (CMA) ?
A method of determining approximate market value
