4 - Valuation

Question 1

Name the 4 characteristics of VALUE in real estate

Answer 1

1. Demand 2. Utility 3. Scarcity 4. Transferability

Question 2

Define Market Value

Answer 2

Most probably price a property will bring (not average or highest)

Question 3

Define Market Price

Answer 3

What a property actually SOLD for.

Question 4

Objective Value

Answer 4

actual market value

Question 5

Subjective Value or UTILITY VALUE

Answer 5

personal use value of the benefits of ownership

Question 6

Book Value

Answer 6

original property cost plus the cost of any improvements, minus any depreciation taken. (is NOT uses for appraising, not related to market value)

Question 7

Exchange Value

Answer 7

the value that can be purchased with the sales proceeds. Relationship of the value to other goods.

Question 8

Assessed Value

Answer 8

value placed but the county property tax assessor. often influenced by paid price, always differs from market value. Not related to appraised value - esp in Colo.

Question 9

Loan Value

Answer 9

less than market value. customarily a percentage of the market value, leaving a margin for lender security.

Question 10

4 Special Influences affecting Value

Answer 10

1. PHYSICAL (topography, shape, size, exposure, soil, corner, location)
2. ECONOMIC (local economics tend to be more important that national changes in GDP impact real estate, values tend to rise during periods of inflation
3. POLITICAL (zoning, tax, growth limits, building codes, health codes, publi housing, rent control…)
4. SOCIAL (population movements, attitudes towards recreation, household sizes, etc.) - Neighborhood: income, ethnicity, boundaries, culture, education, age, recreational interests.., Zoning: gov restrictions on land use

Question 11

Consumer Price Index (CPI) measures what?

Answer 11

inflation