VALUATION AND MARKET ANALYSIS Flashcards
(46 cards)
Looks to the future for value
ANTICIPATION
A document that gives an estimate of fair market value; for lenders, owners, etc.
APPRAISAL
Refers to an agreement arrived at under no undue pressure
ARMS-LENGTH AGREEMENT
The total value of combined properties exceeds total value of individual properties; also referred to as a plottage increment
ASSEMBLAGE
An approach to value best used on income producing properties such as shopping centers, apartment complexes, etc. This approach uses the net operating income and a capitalization rate to estimate the value. Also referred to as the income approach.
CAPITALIZATION APPROACH
Actual Age
CHRONOLOGICAL AGE
High profits attract competition
COMPETITION
(CMA) What an agent uses in trying to find a value for a piece of property; a residential agent analyzes sold properties, currently for sale properties, and expired listing properties in an effort to determine a range of value for a particular piece of property
COMPETITIVE MARKET ANALYSIS
Properties should conform to the neighborhood to maintain the greatest value
CONFORMITY
Value of improvement is equal to what it adds to total value
CONTRIBUTION
An approach to value best used on special purpose properties, such as churches and hospitals; the approach values a property by determining the current replacement cost, less depreciation, plus the current land value
COST APPROACH
A way to determine current replacement cost by taking the cubic footage (length times width times height) of a property times a cost per cubic foot
CUBIC FOOT METHOD
Money spent on improvement does not add at least that much or more to the total value
DECREASING RETURNS
An element of value; must be wanted
DEMAND
Number of years item is profitable; economic life is shorter than the physical life
ECONOMIC LIFE
A form of depreciation due to problems outside the property lines; e.g., owning a house next to a factory or sewage treatment plant; also referred to as external obsolescence
ECONOMIC OBSOLESCENCE
Apparent age based on condition; generally less than chronological age
EFFECTIVE AGE
The annual gross income for a property less a vacancy rate; used with the income approach
EFFECTIVE GROSS INCOME
A form of depreciation due to problems outside the property lines; e.g., owning a house next to a factory or sewage treatment plant; also referred to as economic obsolescence
EXTERNAL OBSOLESCENCE
A form of depreciation due to problems inside the property lines; does not function the way modern properties do; e.g., outhouses, pumps for water, etc.
FUNCTIONAL OBSOLESCENCE
The possible annual gross income for a property; used with the income approach
GROSS INCOME
(GRM); This is a form of the income approach used to estimate the value of a rental property. The gross rent multiplier is computed by taking a rental properties sale price and dividing by the rent charged.
GROSS RENT MULTIPLIER
The use of a property that provides greatest net return on land
HIGHEST AND BEST USE
An approach to value best used on income producing properties such as shopping centers, apartment complexes, etc. This approach uses the net operating income and a capitalization rate to estimate the value. Also referred to as the capitalization approach.
INCOME APPROACH
