valuation and market analysis Flashcards
(25 cards)
What is market value?
Most probable price a property will sell for under normal conditions.
What is market price?
Actual selling price of property.
What is value in use?
Value to a particular user, regardless of market value.
What is assessed value?
Value assigned by taxing authority for property tax purposes.
What is insurable value?
Value used by insurance companies to determine coverage amounts.
What is highest and best use?
Most profitable legal use of property.
What is substitution principle?
A buyer will not pay more for a property than a similar one available.
What is conformity principle?
Property value is highest when similar properties surround it.
What is regression principle?
Higher-value property’s value decreases when surrounded by lower-value properties.
What is progression principle?
Lower-value property’s value increases when surrounded by higher-value properties.
What is contribution principle?
Value of a component is based on its contribution to the overall value.
What is competition principle?
Excess competition lowers profits and property value.
What is anticipation principle?
Value is based on expected future benefits.
What is increasing and decreasing returns?
Adding improvements increases value to a point, then returns diminish.
What is supply and demand?
Property value rises when demand exceeds supply, and vice versa.
What is sales comparison approach?
Valuation method comparing subject property to recently sold comparables.
What is cost approach?
Value determined by cost to build new, minus depreciation, plus land value.
What is income approach?
Value based on income the property generates (commonly for rentals).
What is gross rent multiplier (GRM)?
Ratio of property price to gross rental income (used in income approach).
What are comparables (comps)?
Similar properties recently sold used for valuation comparison.
What is physical depreciation?
Loss of value due to wear and tear.
What is functional obsolescence?
Loss of value due to outdated design or layout.
What is external obsolescence?
Loss of value due to external factors (e.g., nearby factory).
What is reconciliation?
Final step in appraisal — weighing all valuation approaches to determine final value.
