CHAPTER THREE: VALUATION AND MARKET ANAYLSIS

Question 1

Principle OF ____- Affirms that value is created by anticipated benefits to be derived in the future.

-looks at demographics and growth of the neighborhood in the past, applied to future value of the property.

Answer 1

Principle of Anticipation

Question 2

Principle of ____- Holds that it is the future, not the past, which is of prime importance in estimating value. Change is largely the result of cause and effect.

Answer 2

Principle of Change

Question 3

Principle of ____ - supply and demand. The more buyers - the higher the demand. The fewer buyers (more properties) - the lower the value of the home.

Answer 3

Competition

Question 4

Principle of ____- Holds that the maximum of value is realized when a reasonable degree of homogeneity of improvements is present. Use conformity is desirable, creating and maintaining higher values.

being unique is invaluable

Answer 4

Principle of Conformity

Question 5

Principle of _____- A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the improvements on a site produce the highest (net) return, commensurate with the investment. (the features of a home)

Answer 5

Principle of Contribution

Question 6

___ and ___ Use- An appraisal phrase meaning that use which at the time of an appraisal is most likely to produce the greatest net return to the land and/or buildings over a given period of time; that use which will produce the greatest amount of profit. This is the starting point for an appraisal.

Answer 6

Highest and Best Use

Question 7

Principle of ____- Affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution.

Answer 7

Principle of Substitution

Question 8

Principle of ____- building mobile homes in a nice area

Answer 8

Principle of Regression

Question 9

Princple of ____- The worth of a lesser valued residence tends to be enhanced by association with higher valued residences in the same area.

Answer 9

Principle of Progression

Question 10

___ ___ approach- aka market data approach, this appraisal method involves comparing similiar type properties, which have recently sold, to the subject property. Commonly used to value residential properties (1-4 dwelling units).

Answer 10

Sales Comparison

Question 11

___ approach- an appraisal method in which the value of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.

used for 
schools
places of worship
government buildings
new construction

Answer 11

Cost