Xtra - FLASH AID Flashcards
(141 cards)
1
Q
Value Principles:
A
Value Principles: Problem Identification, Property Content, Legal Considerations, Highest/Best Use,
Economic Analysis “key consideration for highest best use”
2
Q
Demand:
A
Demand: measures quantity of property market would like to purchase at given price
3
Q
Property Content:
A
Property Content: physical, legal, financial, locational
4
Q
Problem Identification:
A
Problem Identification: purpose, intended use, value
5
Q
Competition:
A
Competition: 2 or more buyers to purchase/lease
6
Q
Legal Considerations:
A
Legal Considerations: property rights, land use regulations, legislation
7
Q
Substitution:
A
Substitution: when many similar goods are avail, low price= greatest demand
8
Q
Elements of Value:
A
Elements of Value: certain point in time, price which would be expected, willing seller/buyer, normal consideration
9
Q
Factors of Value:
A
Factors of Value: Supply Utility- product to satisfy need/want/desire Scarcity- undersupply of an item relative to demand for it
Demand Desire- purchasers wish to satisfy need/want Effective purchasing power- individual/group to participate in market, acquire good/services
10
Q
Approaches to Value:
A
Approaches to Value: direct comparison, cost approach, income approach
11
Q
Assessment Ratio:
A
Assessment Ratio: ratio assessed value to market value
12
Q
Forces:
A
Forces: Physical, Economic, Government
13
Q
Social Change:
A
Social Change: forces + environment influence real property value
14
Q
Cost Index:
A
Cost Index: Current cost index / cost index (date of) = (x) construct. Cost
15
Q
Real Property:
A
Real Property: immobility, durability of improved land, indivisibility of services, divisibility of ownership
16
Q
Public Limit on Bundle of Rights:
A
Public Limit on Bundle of Rights: Zoning
17
Q
Fixture:
A
Fixture: part of the real estate
18
Q
Chattel:
A
Chattel: personal property, not affixed
19
Q
Supply:
A
Supply: quantity of property supplied at given price (fixed location/X > / < rapid)
20
Q
Market Value:
A
Market Value: expected or forecasted sale price $ property should sell on open market (via direct comparison=well informed buyers
21
Q
Trade Fixtures=
A
Trade Fixtures= Personal property placed in, or affixed to, the premises leased by a tenant that is used in connection with the tenant’s business operations at the leased premises. Typically, trade fixtures remain the tenant’s property even if they are affixed to the leased premises.
ie. ovens
22
Q
Real Property:
A
Real Property: Use/Market Value (leases/easements) * durability of improved land
23
Q
Real Estate:
A
Real Estate: physical entity that is tangible/immobile
24
Q
Use Value=
A
Use Value= Limited market properties ** intended use of appraisal determines type of value to be developed
25
FORMULA - Overall Cap Rate=
Overall Cap Rate= NOI / Selling Price
26
CUSPAP:
Canadian Uniform Standards of Professional Appraisal Practice
27
Surplus Productivity=
Surplus Productivity= labour, capital, land
28
FORMULA - NOI=
NOI= Selling Price x OCR
29
Investment Value:
Investment Value: value to individual not value in marketplace
30
Conformity=
Conformity= characteristics of property conform to demand of its market
31
FORMULA - Selling Price =
Selling Price = NOI / OCR
32
“Going Concern Value”:
“Going Concern Value”: value of a proven property operation
33
Externalities=
Externalities= affected by changes taking place beyond borders
34
FORMULA - Rate of Return=
Rate of Return= income / sale price
35
Public Interest Value:
Public Interest Value: social, political and public policy goals- based on non economic highest/best use
36
FORMULA - Market Value= **directcap
Market Value= NOI / Cap Rate **directcap
37
Actual Cash Value=
Actual Cash Value= Insurance Concept
38
Macro Economics:
Macro Economics: inflation, unemployment, interest rates, govern. policies (national/intern)
39
Micro Economics:
Micro Economics: individ/small firm
40
FORMULA ( MV= EGI X GIM **gim)
MV= EGI X GIM **gim
41
Replacement Cost:
Replacement Cost: Normal Depreciation
42
Easement=
Easement= privilege acquired by owner to benefit his land over another
43
FORMULA - Gross Inc. Multi (GIM) =
Gross Inc. Multi (GIM) = Selling Price / Eff. Gross Inc (EGI)
44
Anticipation price:
Anticipation price: we pay for goods/services is present worth of anticipated future benefits
45
Restrictive Covalent =
Restrictive Cov= restriction on use of one persons land
46
Balance:
Balance: combination of land and improvements is optimal, no additional marginal benefit
47
Contribution=
Contribution= how items contribute to overall value
48
Ownership=
Ownership=“legal rights of ownership”
49
Bundle of Rights=
Bundle of Rights= rights of ownership attributable to property (mortgage/lease/sell etc)
50
Leasehold Estate=
Leasehold Estate= life tenant has exclusive possession for limited time
51
Life Estates=
Life Estates= life tenant lives until title reverts to designated party
52
Fee Timesharing=
Fee Timesharing= interval ownership
53
Permitted Use=
Permitted Use= relevant by laws informs of use and development
54
Legal Non Conforming=
Legal Non Conforming= use of land/structure legally est. according to applicable zoning at the time, but doesn’t meet current standards
55
Trends:
Trends: vacancy rates, capitalization rates, changes in supply/home prices
56
Depreciation:
Depreciation: physical, functional, external obsolescence
57
Foundation:
Foundation: Footings, Piers, Piles
58
Plottage:
Plottage: increment of value resulting in 2/more sites assembled to produce 1 of greater utility
59
Social Influence:
Social Influence: # of people unemployed
60
Market Study
Market Study: ”market analysis” (inferred/fundamental)
61
Marketability Study:
Marketability Study: market for specific property (utility, scarcity, desire, effective purchase power)
62
Short Term Capture:
Short Term Capture: Absorption
63
Long Term Capture:
Long Term Capture: Share of Market
64
Entrepreneurial Profit=
Entrepreneurial Profit= difference between total cost of development and market value
65
Quality/Condition Survey:
Quality/Condition Survey: short lived, long lived, immediate repair
66
Not Economically Feasible:
Not Economically Feasible: cost approach produces value higher than direct comp/income approach
67
Green Building Practices:
Green Building Practices: development density, use of renewable materials, innovative design
68
Metes:
Metes: "measurements"
69
Bounds:
Bounds: terrain described in conjunction w/ compass bearings/distance
70
Cost Approach:
Cost Approach: vacant/avail for development of its highest and best use. Most app
71
Assessed Value:
Assessed Value: market value of property, as date specified in assessment legislation
72
Comprehensive Method:
Comprehensive Method: quantitative survey and comparative unit
73
FORMULA :: Property Taxes:
Property Taxes: multiply assessed value of property x tax rate (mill rate)
74
Financially Feasible Uses:
Financially Feasible Uses: Marketability & Financial Analysis
75
Plottage:
Plottage: ‘value increment” lots are subdivided
76
Assemblage:
Assemblage: joining of lots
77
Surplus Land:
Surplus Land: land over and above norm for the area
78
Excess Land:
Excess Land: extra land can be used as additional lots
79
Topography:
Topography: site analysis (slopes/deep hollows etc)
80
Paired Sales Method:
Paired Sales Method: no major adjustments required, finding 2 identical/similar sales one with average and one with better landscaping
81
6 Parts -Market Analysis:
Market Analysis:
1. Property Productivity Analysis
2. Market Delineation
3. Fore Demand
4. Fore Competitive Supply
5. Residual Analysis
6. Fore. Subject Capture
82
Market Delineation:
Market Delineation: Characteristics of likely buyers, income and age are analyzed
83
NOI:
NOI: remains after deducting all operating expenses but before mortgage deb services
84
Definition- Highest Best Use:
Highest Best Use: what would land be worth if it were vacant and awaiting redevelopment, what is site worth as presently developed with improvements
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4 Parts- Highest Best Use:
4 Parts- Highest Best Use:
1. Physically Possible
2. Legally Permissible
3. Financial Feasible
4. Maximally Productive
86
Income:
Income: allowance for vacancy / collection loss estimated as %
87
Highest Best Use ”funnel process” narrows range of possible uses Contract Rent=rental income specified in lease Market Rent= rent income that command in open market
1.Problem Definition 2.Analyze Legally Permissible Uses 3.Apply Principle of Change 4.Demand Analysis 5. List Probable Uses (Financial)
Highest Best Use ”funnel process” narrows range of possible uses Contract Rent=rental income specified in lease Market Rent= rent income that command in open market
1.Problem Definition 2.Analyze Legally Permissible Uses 3.Apply Principle of Change 4.Demand Analysis 5. List Probable Uses (Financial)
88
Highest Best Use Vacant:
Highest Best Use Vacant: any existing improvement can be demolished
89
Capital Cost Allowance:
Capital Cost Allowance: depreciation of assesses, claimed for tax income purpose
90
Special Considerations:
Special Considerations: Conforming/Non,General Use/Specific, Separate Use/Combined, Public Use/Private, Special Purpose, Excess Land, H/B as improved
91
Highest/Best as Improved:
Highest/Best as Improved: Continuation of existing use, modification of existing use, demolition of existing use/redevelopment
92
Reporting:
Reporting: Uses, Timing for uses, market participants (users, most probable buyers)
93
NOI excludes:
NOI excludes: depreciation, capital cost allowance, income tax, debt repayment
94
Present/Future Use: (for land)
Present/Future Use: current trends/demands of market to asses best use for land
95
Effective Gross Income:
Effective Gross Income: income from all operations of real property
96
Definitive Use/ Speculative Use:
Definitive Use/ Speculative Use: ‘r-urban’ underdeveloped land on fringe of urban development
97
Interim Use:
Interim Use: ‘holding use’ until market changes and demand for particular development is ready
98
Absorption Period:
Absorption Period: measure of time to sell lots in subdivision
99
5 Steps: Direct Comparison Approach:
1. research the data
2. verify
3. select units of comparison
4. analyze/adjust comparable
5. reconcile value indications Anticipation, Change, Supply/Demand, Substitution*** (value of given property, should be no more than cost of buying another substitute), Balance, Externalities
100
Physical Characteristic=
Physical Characteristic= property adjustment
101
Breakdown method:
application of age life ratio, incurable physical deterioration
102
Quantitative Technique:
Quantitative Technique: Market Observation Analysis (science) isolating/separating valuing each element of comparison
103
Qualitative Technique:
Qualitative Technique: Appraisers judgment on experience (art) larger view comparing each comparable sale on an overall basis w/ subject property
104
Real Property Analysis:
Real Property Analysis: science/art. Reconciliation: (final step) indicating value estimate for subject property
105
Grouped Data Analysis:
Grouped Data Analysis: paired sales
106
IASS:
IASS: feature of comparable property inferior-Add to sale price of comparable, feature of comparable property Superior-Subtract from sale price of comparable
107
Special Use properties:
Special Use properties: do not lend themselves to direct comparison approach.
108
Relative Comparison Analysis:
Relative Comparison Analysis: ranking sales
109
Elements of Comparison: Not as common=
Elements of Comparison: Not as common= rights conveyed, financing terms, conditions of sale, expenditures made immediate after purchase
110
Elements of Comparison: Require Adjustment=
Elements of Comparison: Require Adjustment= market conditions (time), location, physical/economic characteristics, use, non realty items
111
Rights Conveyed:
Rights Conveyed: fee simple/freehold, life estates, leasehold, mineral rights
112
Observed Condition Method:
Observed Condition Method: allocates depreciation among individual Build. Components
113
Financing Conditions:
Financing Conditions: low interest mortgage assumptions, conditional sale contracts, purchase mortgages, seller paid concessions, atypical financing
114
Conditions of Sale:
Conditions of Sale: motivated sellers, motivated buyers, related parties, sales of adjacent properties, sales w/ one buyer
115
Expenditures Made Immediately:
Expenditures Made Immediately: immediate repairs, demolitions, zoning/redevelopment, remediation
116
Physical Short lived deterioration:
Physical Short lived deterioration: not curable Physical /eco short term replacement.
117
Market Conditions:
Market Conditions: time adjustment, Adjustments for Physical Attributes: size of land, condition, age of improvements, amenities, functional utility
118
Gross Adjustments “absolute adjustments” :
Gross Adjustments “absolute adjustments” total adjustments made ignoring negative signs
119
Physical Curable Deterioration:
Physical Curable Deterioration: cost to fix problem is less than loss in value
120
Net Adjustments:
Net Adjustments: difference between properties sale price and adjusted sale price
121
Cost to cure:
Cost to cure: cost to restore an item of a deferred maintenance/new condition
122
Principle of Substitution:
Principle of Substitution: holds value of a property tends to equal the cost of acquiring an equally desirable substitute property
123
Adjustments:
Adjustments: financing, market conditions, basement
124
Incurable Super adequacy:
Incurable Super adequacy: unwanted extra costs not adding to value
125
Ground Rate Cap:
Ground Rate Cap: (portion of total rent allocated to underlaying land) V= I / R
126
Curable Deficiency:
Curable Deficiency: property lacking a major component that market demands, fix the deficiency
127
Land Value=
Land Value= income / land capitalization rate
128
Functional Obsolescence:
Functional Obsolescence: functionally inadequate items whose cost cure is more than upgrading it
129
FORMULA: Value=
Value= ground rent (net income) / land capitalization rate
130
Cost Eliminating Methods:
Cost Eliminating Methods: direct and indirect costs must be calculated and included
131
Extraction Method:
Extraction Method: land value = sale price - depreciated building value (uses data from comparable sales to estimate depreciation)
132
Cost of Development method:
Cost of Development method:
(yield capitalization, subdivision analysis) land value based on redevelopment potential Projected sale price of lots: Lots#(x)price (*subtract)
133
New improvements:
New improvements: Market Value
Site development costs (*subtract) - Land Value
Total overhead costs (%) of *projected sale total (*subtract) +Depreciation
= NOI - Entrep. Profit
Holding costs and profit (%) of NOI (subtract from above total)
134
Super adequacy:
Super adequacy: component building exceeds standard normally in marketplace
=indicated value of undeveloped land
135
Depreciation:
Depreciation: accumulated loss in market value, wear and tear
136
Value Penalty:
Value Penalty: improvements that make no contribution to property value and constitute equivalent cost of their demolition
137
Short Lived:
Short Lived: furnaces, hot water tanks, carpets, cupboards
138
Effective Age:
Effective Age: property condition/overall maintenance
139
Physical Life:
Physical Life: building period of time to remain standing
140
Economic Life:
Economic Life: period of time improvements contribute to overall value
141
Economic Age-Life Method: % depreciation =
Economic Age-Life Method: % depreciation = effective age / economic life Functional Depreciation: (functional obsolescence) loss in value outdated design
