Chapter 16 - Appraisal Flashcards Preview

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Flashcards in Chapter 16 - Appraisal Deck (22):
0

Amenity

Some extra that contributes to owner satisfaction: clean air, view, etc.

1

Appraisal

An estimate of value by someone who has specific training as an appraiser.

2

Appraiser

Independent person trained to estimate value.

3

Capitalization rate

The rate of return a property produces on the owner's investment.

4

Comparables

Properties listed in an appraisal report or a CMA that are substantially equivalent to the subject property. Also called comps.

5

Cost approach

The process of estimating value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building less depreciation.

6

Depreciation

In appraisal, a loss in value in property due to ant cause including physical deterioration, functional obsolescence, and locational obsolencense.

7

External obsolescence

Reduction in a property's value caused by factors outside the subject property such as social or economic forces or objectionable neighboring property. also called location obsolescence or economic obsolescence.

8

Gross Income multiplier (GIM)

When property has income from other sources than rent such as concessions it can be used to multiply income with this rate to determine value.

9

Highest and best use

The possible use of land that would produce the greatest income and thereby develop the highest land value.

10

Income approach

The process of estimating value of an income producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life.

11

Market price

What a property actually sells for - its selling price.

12

Market value

An estimate based on analysis of comparable sales and other pertinent market data.

13

Physical deterioration

Represents normal wear and tear. It may be curable, or incurable.

14

Reconcilaition

The final step in the appraisal process, in which the appraiser reconciles the estimates of value received from the direct sales comparison data, cost data, and income approaches to arrive at a final estimate of value for the subject property.

15

Replacement cost

The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose as the orginal.

16

Reproduction cost

The construction cost at current prics of an exact duplicate of the subject property.

17

Sales comparison approach

The process of estimating the value of a property by examining and comparing actual sales of comparable properties.

18

Situs

The location of a particular property and people's preferences for particular locations, is a major factor affecting value. Location, location location.

19

Subject property

Property being appraised.

20

Substitution

Principle that states the maximum value of a property tends to be set by the cost of purchasing another, equally desirable property assuming no undue cost because of delay. For example two houses are for sale in an area, the less expensive one sells first.

21

Value

The power of a good or service to command other goods in exchange for the present worth of future rights to income or amenities.