Appraisal theory Flashcards
(25 cards)
What is an appraisal?
An estimate of a property’s value by a licensed appraiser.
What is the purpose of an appraisal?
To determine market value for transactions, lending, taxation, etc.
Who regulates appraisers in New York?
NYS Department of State Division of Licensing Services.
What is USPAP?
Uniform Standards of Professional Appraisal Practice — ethical and performance standards for appraisers.
What is the cost approach?
Valuation method based on cost to replace or reproduce improvements minus depreciation.
What is the sales comparison approach?
Estimating value by comparing property to recent sales of similar properties.
What is the income approach?
Valuing property based on the income it produces.
What is site value?
Value of land as if vacant and ready for use.
What is reproduction cost?
Cost to build an exact replica of a structure using original materials.
What is replacement cost?
Cost to build similar structure using modern materials.
What is depreciation?
Loss in value due to any cause.
What are the three types of depreciation?
Physical deterioration, functional obsolescence, external obsolescence.
What is effective age?
Age based on condition and utility, not chronological age.
What is economic life?
Period property is expected to remain useful for its intended purpose.
What is gross income multiplier (GIM)?
Multiplier for valuing commercial property based on gross annual income.
What is net operating income (NOI)?
Gross income minus operating expenses (used in income approach).
What is capitalization method?
Dividing NOI by cap rate to estimate value.
What is assemblage?
Combining adjacent lots into one larger parcel.
What is plottage?
Increase in value from assemblage of land parcels.
What is reconciliation?
Appraiser weighs results from different approaches to reach final opinion of value.
What is the principle of contribution?
Value of a component is measured by its contribution to the property’s value.
What is market value vs. investment value?
Market value = value to the market; investment value = value to a particular investor.
What is market rent?
Rent property can command on the open market.
What is appraised value?
Appraiser’s estimate of property’s market value on appraisal date.
