Valuation & Market Analysis Flashcards
(24 cards)
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
external obsolescence
when something outside the control of the property makes it less desirable.
aka. ECONOMIC OBSOLESCENCE
functional obsolescence
when a building is less desirable because of something permanent in the design of the structure
gross income multiplier (GIM)
used for commercial properties, but uses annual income figures
gross rent multiplier (GRM)
a number from comparable rental property in an area, then used to estimate the value. 1-4 unit residential properties only.
market price
price the property actually sold for
physical deterioration
“wear and tear” due to age, the elements, or other forces
plottage
increase in value by successful assemblage, usually due to a change in use
progression
principle that says the value of a home is helped up by the other homes in an area
reconciliation
appraisal process of analyzing the values derived from the different appraisal approaches to arrive at a final value estimate or opinion.
regression
principle that says the value of a home is held down by the other homes in an area
scarcity
physical characteristic of real property that says there is a limited supply of real estate
square foot method
method for determining the cost of a building that relies on cost manuals
substitution
a “rule” that says an informed buyer will not pay more for a home than a comparable substitute
supply & demand
when supply exceeds demand, prices will fall and
when demand exceeds supply, prices will rise
amenity
tangible or intangible feature that enhances & adds value to real estate
assemblage
combining of 2 or more parcels of land into 1 larger parcel
four characteristics of value
DUST
- demand
- utility
- scarcity
- transferability
seller’s market
when the market favor’s the seller.
large demand for properties in a given area and few properties on the market.
(increases market value)
buyer’s market
when the market favors the buyer.
supply of properties is much greater than the demand for those properties.
(prices will go down)
capitalization rate
a factor, which if applied to an income, will convert that income into an indication of value.
higher the cap rate, lower the sales price
highest & best use
use which gives the greatest return in money and/or amentities.
appraisal
estimate of value
essentials to an appraisal report
date purpose opinion of value legal description signature of appraiser