Flashcards in Chapter 16: Appraisals Deck (42)
The locations of a particular property and peoples preferences for particular locations. Remember location, location, location.
Some extra that contributes to owner satisfaction: clean air, view, etc.
The rate of return a property produces on the owners investment.
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.
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.
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.
Sales Comparison Approach
The process of estimating the value of a property by examining and comparing actual sales of comparable properties.
Functional Obsolescence: Curable
Outmoded fixtures, such as plumbing, are usually easily replaced.
Functional Obsolescence: Incurable
Currently undesirable physical or design features that cannot be easily remedied.
Highest & best use
That possible use of land that would produce the greatest net income and thereby develop the highest land value.
That probable price a ready, willing, able, and informed buyer would pay a ready, willing, able, and informed seller would accept without pressure.
The actual selling price of the property.
Determing Reproduction or Replacement cost
Square Foot Method, Unit-in-place Method, Quantity-Survey Method, Index Method.
Appraisals are required...
For all Federally related transactions (any transaction with a value of $250,000)
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.
is the present worth of future benefits arising from the ownership of real property.
Types of Value
A locally determined percentage of market value, which is used by municipality to establish a property tax
Replacement cost of a building minus the land value.
Value of an asset less depreciation.
Estimated value of an asset at the end of it's economic life.
Characteristics necessary of property to Value in Real Estate
Need supported n=by purchasing power.
Capacity to satisfy human wants and needs.
Transfer ownership rights with relative ease.
The value of a property tends to set by the cost of purchasing an equally desirable and similar property.
Supply and Demand
The price of a property increases if the supply decreases and decreases of the supply increases.
Maximum value is realized if the land use conforms to the existing neighborhood standards.