Flashcards in Chapter 10 - Valuation Process and Pricing Properties Deck (22)
Opinion of value of property as of specified date, supported by objective data. Only done by licensed appraisers.
Taxation purposes, not necessarily market value.
Comparative Market Analysis (CMA)
Prepared for seller as their home goes on market. Includes:
1) recently closed sales, within last 90 days
2) those currently on market (competition)
3) recently expired listings
"Days on Market" (DOM) - how was the pricing?
How much it costs to build
Appraisal method. Works best with new construction or one-of-a-kind properties. Factors in the costs of building the home - hard costs like materials, labor, and land, as well as soft costs like architecture, legal, and permits and subtracts depreciation.
The loss in value to property for any reason
Construction Site Security
Study of the nature, quality, or utility of certain property interests in which a value estimate is not necessarily required.
Type of depreciation - something outside the property makes it less desirable. EX: rise in neighborhood crime rate, building of a large retail center across the street, etc.
Type of depreciation - building becomes less desirable because of something inherent in design or structure itself. EX: outdated design, home that has been over-improved for its neighborhood.
Appraisal method. Used with income properties - rental, commercial, investment. Analyses net operating income (gross income minus operating expenses) compared to similar properties nearby.
Real estate taxes
Fees - engineering, architecture, appraising, accounting, legal
Insurance during construction
Interest and expenses on loans
The amount a property can be insured for - typically structure only.
Highest price that investors would pay for a property.
Greatest effect on property value - where is it? Is there scarcity in that neighborhood? Is that area accessible?
1) Demand - desirability
2) Improvements - structure vs. cosmetic
3) Scarcity - supply and demand
The amount of money a lender is willing to let a property owner borrow to finance the property.
Putting two parcels of land together so that land value increase because newer parcel allows for a larger building
What someone actually pays for a property
Residential Market Analysis (RMA)
More indepth analysis of market. Includes
- recently sold properties
- comps currently on market
- recently expired listings
- assets and drawbacks
- area market conditions
- recommended terms of listing
- curb appeal
- market value range
- market value position - where do you stand?
Sales Comparison Approach
Appraisal method. Residential, single family properties. Compares minimum of 3 comparable properties (comps) that are similar in style/type in the same market area sold within the last 90 days.