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Flashcards in Appraisal Deck (58):
0

Accrued depreciation

Total depreciation to date ( Yearly depreciation x number of years

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Anticipation

The appraisal principle that value increase or decreases based on the future benefit or detriment that may be received

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Appraisal

An estimate of value

3

Appraisal Institute

National Association of real estate appraisers who are governed by a code of ethics and control the awarding of various appraisal designations as senior residential appraiser (SRA ) and member appraisal Institute ( MAI )

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Appraisal value

An estimate of what a Parcell of property will sell for. Estimate of market value

5

Appreciation

Increase in value

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Assemblage

The process of combining two or more lots to make the resulting parcel more valuable. Increasing value is known as plottage

7

Assess value

Value which the city or town places On property as a base for determining taxes ( Appraised value x assessment right )

8

Assessment rate

The percent of the assessed value that will be tax

9

Capitalization rate

(Cap rate.) Comparison of value to Net income used by an appraiser to estimate value of income property. Net income divided by value

10

Certified appraisaler

Professional appraisal designation under the financial institutions to reform. Recovering and enforcement act if( FIRREA ) requiring a special amount of classroom hours of training field experience and passing a state examination

11

Change

One of the economic variables to value real estate appraisal that recognizes that things are in the state of flux and do not remain constant

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Comparative market analysis (CMA )

An opinion of value derived by market analysis by licensed sales person Or broker

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Comparable

A recently sold or currently for sale parcel real estate that is similar to the subject property being appraised. Use as an indicator of value in the market comparison appraisal approach

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Condemnation

The administration or judicial procedure used to taking land by local state or federal government for the public good called eminent domain

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Conformity

The principle which holds that a house will hold it's value better in an area of like types home

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Contribution

An appraisal principle that deals with the amount of increase in value to a piece of property because by improvements to the property ( may be more or less than the cost of the improvements )

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Cost

?

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Cost approach

Method of real estate appraisal the estimated value by calculating replacement or reproduction cost

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Decreasing return

Concept in appraisal that holds some Improvements to real estate increase value by less than the amount invested

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Demand

One of the elements of value and appraisal. The amount of goods that the market will buy at a certain price. Associated with supply

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Depreciation

A reduction in value due to any cause. In appraisal of real estate it includes physical deterioration functional obsolescence Economic obsolescence

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Economic obsolescence

Loss of value do to a number of forces outside the property owners control and including economical environmental and social change. A principal used it appraised

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Exchange

A transaction whereby part of the consideration includes properties of like kind and or use. Capital gains tax deferment may be a obtained using an exchange if the transaction conforms to all requirements and IRS code 1031

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Fiduciary

One who is in a position of trust and confidence

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Financial institutions Reform recovery and enforcement act ( FIRREA )

Federal legislation setting minimum standards each state must establish to regulate the real estate appraisal profession

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Functional obsolescence

A lost in value due to outdated quality Caused by age or poor design. Maybe curable such as outdate electric wiring or incurable such as low ceiling height

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Gross income

Total revenue from rents or orger sauces ( prior to any deductions for any expenses

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Gross rent multiplier

A ratio of market value compared to gross rent. Use by an appraiser to estimate value when the gross rent and the gross rent multiplier are unknown

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Highest and best use

Use an appraisal concept that identifies the use of a parcel property that produces the highest net return and therefore the highest value

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Income approach

Appraisal technique that uses the amount of net income property will produce over its useful life to determine value. The net income ( gross income less expenses ) is divided by capitalization rate determined by experience to determine value

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Increasing return

Concept that appraisal that holds some improvements to real estate increase value by more than the amount invested

32

Market approach

Appraisal technique that compares the subject property to similar properties that have sold recently to establish value

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Market value

The most probable price property will bring assuming a knowledgeable seller and buyer and a fair and open market and a reasonable time to market

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Massachusetts Association of real estate appraisers

State Association of real estate appraisers that set standards regulates membership and issues professional designations of accomplishments

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Member appraisal Institute ( MAI )

Professional designation issued to Real estate appraises by the appraisal Institute indicating confidence in the appraisal of all types of real estate

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Net income

Gross income ( total revenue ) less expenses

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Opinion of value

An estimate of property value by a real estate broker or salesperson is not required appraisals license

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Over improve

An improvement that based on cost exceeds the highest and best use. For example 400,000 house built in a $200,000 neighborhood or a 50,000 kitchen that increases the value by 30,000

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Plottage

The process of combining two or more lots to make the resulting parcel more valuable. The increasing in value is known as a plottage

40

Progression

An appraisal principle dealing with conformity and holes that property is increased in value when located near other properties that is of higher value example A house suraround more expensive homes

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Physical deterioration

A reduction in property value due to a negative change in physical conditions. Maybe curable or incurable. Could because by physical elements such as Weather or by normal usage.

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Rate of return

Comparison of the net income to total investment for a parcel of income property expressed as an annual percentage

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Reconciliation

The path of the appraisal process with the appraiser company is the most appropriate appraisal methods with all the methods used

44

Regression

An appraisal principle dealing with Conformity that holds that property is decreased in value when located in other properties of lesser value example house surrounded by less-expensive home

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Replacement cost

The cost at current prices to replace a structure with the same materials. Often used as the same as reproduction cost which require similar design and materials but not the same

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Reproduction cost

Same as replacement cost but similar, not an exact duplication of the structure

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Scarcity

An appraisal principle that a reduction in the availability or supply of good will increase it's value

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Senior residential appraisal (SRA)

Professional appraiser designation awarded by the appraisal Institute indicating confidence in appraisal of 1 to 4 family residence

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Square-foot approach

Appraisal technique of estimate course by multiplying total square footage of times a constant of cost per square foot. Example 2000 ft.² times a constant square feet equals $200,000 estimated value

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Substitution

Appraisal principle that holds a property's value is determined by the cost to substitute a comparable piece of property through purchase or construction

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Supply and demand

Economic principle used in property appraisal that holds value is influenced by the amount of property for sale ( supply ) and the number of potential buyers ( demand)

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Tax rate

The rate set by the city or town which multiplied by properties assessed value will yield the property's annual tax.

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Transferability

The ability to transfer the legal bundle of rights without undue restrictions

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Unit in place

Appraisal method of estimating replacement cost by individual components of a piece of property and adding them together to arrive at an estimate cost. Example Carpentry plus electric plus plumbing plus carpeting etc. equals total cost

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Useful life

The number of years a thing will last before needing replacement

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Utility

appraisal concept that relates to properties usefulness as a measure of value

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Value

What's something is worth. The power of a good or service to command of the goods in exchange