Valuation And Market Analysis Flashcards
(28 cards)
Gross Rent Multiplier
A number derived from comparable rental property in an area, which then is used to estimate the value of a piece of real estate. The GMRM is only used for one to four unit residential properties. COMPARE: Gross Income Multiplier, which is a variation used for commercial properties that uses annual income.
Balance
A condition that exists in the real estate market when there are slightly more homes available than buyers.
Regression
A principle that says the value of a home is held down by the other homes in an area. (Usually said about the “best” home in the “worst” area.)
Supply and Demand
Law of economics that says for all products, goods and services when supply exceeds demand, prices will fall and when demand exceeds supply, prices will rise.
Physical Deterioration
Actual wear and tear on something due to age, the elements or other forces.
Substitution
A “rule” that says an informed buyer will not pay more for a home than a comparable substitute.
Amenity
A tangible or intangible feature that enhances and adds value to real estate.
Reconciliation
The appraisal process of analyzing the values derived from the different appraisal approaches to arrive at a final value estimate or opinion.
Seller’s Market
Situation in the housing market where sellers can choose from a large number of buyers looking for houses in an area.
Assemblage
The combining of two or more parcels of land into one larger parcel.
Comparative Market Analysis
A method of determining the approximate market value of a home by comparing the subject property to other homes that have sold, are presently for sale, or did not sell in a given area.
Arm’s Length Transaction
A transaction that occurred under typical conditions in the marketplace where each of the parties were acting in their own best interests.
Progression
A principle that says the value of a home is helped up by the other homes in an area. (Usually said about the “worst” home in the “best” area.)
Plottage
An increase in value by successful assemblage, usually due to a change in use.
Buyer’s Market
A situation in the housing market where buyers have a large selection of properties to choose from.
Land
The actual dirt or soil on the ground. From a legal standpoint, also refers to everything under the ground to the center of the earth, and everything over the land into the air (within limits to allow for air traffic).
Scarcity
A physical characteristic of real property that says there is a limited supply of real estate; the perceived supply of a good or service relative to the demand for the item.
Market Price
The price that a piece of real estate sold for in an actual transaction.
Square Foot Method
Method for determining the cost of a building that relies on cost manuals (and is sometimes called the cost manuals method).
Capitalization
A way to convert a property’s income figure into an estimated value.
External Obsolescence
When something outside the control of a property makes it less desirable. Also called economic obsolescence.
Diminishing Returns
Law that says beyond a certain point, the added value of an additional feature, addition, repair, etc. is less than the actual cost of the item. Also called law of decreasing returns.
Demand
The need or desire for a specific good or service by others.
Gross Income Multiplier
(GIM) A variation of the GMRM which is used for commercial properties, but uses annual income figures.
