Chapter 16: Appraisals Flashcards Preview

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Flashcards in Chapter 16: Appraisals Deck (42)
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1

Situs

The locations of a particular property and peoples preferences for particular locations. Remember location, location, location.

2

Amenity

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

3

Capitalization rate

The rate of return a property produces on the owners investment.

4

Cost approach

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

5

External Obsolescence

Reduction in a property's value caused by factors outside the subject's property such as social or environmental forces or objectionable neighboring property. This is always incurable.

6

Functional Obsolescence

A loss of value to an improvement to real estate due to becoming out dated, often caused by age or poor design. It can be Curable & incurable.

7

Sales Comparison Approach

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

8

Functional Obsolescence: Curable

Outmoded fixtures, such as plumbing, are usually easily replaced.

9

Functional Obsolescence: Incurable

Currently undesirable physical or design features that cannot be easily remedied.

10

Highest & best use

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

11

Market Value

That probable price a ready, willing, able, and informed buyer would pay a ready, willing, able, and informed seller would accept without pressure.

12

Market Price

The actual selling price of the property.

13

Determing Reproduction or Replacement cost

Square Foot Method, Unit-in-place Method, Quantity-Survey Method, Index Method.

14

Appraisals are required...

For all Federally related transactions (any transaction with a value of $250,000)

15

Competitive Market Analysis (CMA)

Used by the broker or the salesperson to help the seller determined a listing price for the property. Also, to help the buyer in formulating an offer.

16

Value

is the present worth of future benefits arising from the ownership of real property.

17

Types of Value

Assessed Value
Insurable Value
Book Value
Salvage Value

18

Assessed Value

A locally determined percentage of market value, which is used by municipality to establish a property tax

19

Insurable Value

Replacement cost of a building minus the land value.

20

Book Value

Value of an asset less depreciation.

21

Salvage Value

Estimated value of an asset at the end of it's economic life.

22

Characteristics necessary of property to Value in Real Estate

"DUST:
D-Demand
U- Utility
S- Scarcity
T; Transferabiity

23

Demand

Need supported n=by purchasing power.

24

Utility

Capacity to satisfy human wants and needs.

25

Scarcity

Finite Supply

26

Transferability

Transfer ownership rights with relative ease.

27

Substitution

The value of a property tends to set by the cost of purchasing an equally desirable and similar property.

28

Supply and Demand

The price of a property increases if the supply decreases and decreases of the supply increases.

29

Conformity

Maximum value is realized if the land use conforms to the existing neighborhood standards.

30

Increasing and decreasing return

Improvements to land and structures produce a proportionate increase in value until some point beyond which the impact improvements begin to decrease