Appraisal Flashcards
Anticipation
The appraisal principle that value increase or decreases based on the future benefit or detriment that may be received
Accrued depreciation
Total depreciation to date ( Yearly depreciation x number of years
Appraisal
An estimate of value
Appraisal Institute
National Association of real estate appraisers who are governed by a code of ethics and control the awarding of various appraisal designations as senior residential appraiser (SRA ) and member appraisal Institute ( MAI )
Appraisal value
An estimate of what a Parcell of property will sell for. Estimate of market value
Appreciation
Increase in value
Assemblage
The process of combining two or more lots to make the resulting parcel more valuable. Increasing value is known as plottage
Assess value
Value which the city or town places On property as a base for determining taxes ( Appraised value x assessment right )
Assessment rate
The percent of the assessed value that will be tax
Capitalization rate
(Cap rate.) Comparison of value to Net income used by an appraiser to estimate value of income property. Net income divided by value
Certified appraisaler
Professional appraisal designation under the financial institutions to reform. Recovering and enforcement act if( FIRREA ) requiring a special amount of classroom hours of training field experience and passing a state examination
Change
One of the economic variables to value real estate appraisal that recognizes that things are in the state of flux and do not remain constant
Comparative market analysis (CMA )
An opinion of value derived by market analysis by licensed sales person Or broker
Comparable
A recently sold or currently for sale parcel real estate that is similar to the subject property being appraised. Use as an indicator of value in the market comparison appraisal approach
Condemnation
The administration or judicial procedure used to taking land by local state or federal government for the public good called eminent domain
Conformity
The principle which holds that a house will hold it’s value better in an area of like types home
Contribution
An appraisal principle that deals with the amount of increase in value to a piece of property because by improvements to the property ( may be more or less than the cost of the improvements )
Cost
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Cost approach
Method of real estate appraisal the estimated value by calculating replacement or reproduction cost
Decreasing return
Concept in appraisal that holds some Improvements to real estate increase value by less than the amount invested
Demand
One of the elements of value and appraisal. The amount of goods that the market will buy at a certain price. Associated with supply
Depreciation
A reduction in value due to any cause. In appraisal of real estate it includes physical deterioration functional obsolescence Economic obsolescence
Economic obsolescence
Loss of value do to a number of forces outside the property owners control and including economical environmental and social change. A principal used it appraised
Exchange
A transaction whereby part of the consideration includes properties of like kind and or use. Capital gains tax deferment may be a obtained using an exchange if the transaction conforms to all requirements and IRS code 1031
Fiduciary
One who is in a position of trust and confidence
Financial institutions Reform recovery and enforcement act ( FIRREA )
Federal legislation setting minimum standards each state must establish to regulate the real estate appraisal profession
Functional obsolescence
A lost in value due to outdated quality Caused by age or poor design. Maybe curable such as outdate electric wiring or incurable such as low ceiling height
Gross income
Total revenue from rents or orger sauces ( prior to any deductions for any expenses
Gross rent multiplier
A ratio of market value compared to gross rent. Use by an appraiser to estimate value when the gross rent and the gross rent multiplier are unknown
Highest and best use
Use an appraisal concept that identifies the use of a parcel property that produces the highest net return and therefore the highest value
Income approach
Appraisal technique that uses the amount of net income property will produce over its useful life to determine value. The net income ( gross income less expenses ) is divided by capitalization rate determined by experience to determine value
Increasing return
Concept that appraisal that holds some improvements to real estate increase value by more than the amount invested
Market approach
Appraisal technique that compares the subject property to similar properties that have sold recently to establish value
Market value
The most probable price property will bring assuming a knowledgeable seller and buyer and a fair and open market and a reasonable time to market
Massachusetts Association of real estate appraisers
State Association of real estate appraisers that set standards regulates membership and issues professional designations of accomplishments
Member appraisal Institute ( MAI )
Professional designation issued to Real estate appraises by the appraisal Institute indicating confidence in the appraisal of all types of real estate
Net income
Gross income ( total revenue ) less expenses
Opinion of value
An estimate of property value by a real estate broker or salesperson is not required appraisals license
Over improve
An improvement that based on cost exceeds the highest and best use. For example 400,000 house built in a $200,000 neighborhood or a 50,000 kitchen that increases the value by 30,000
Plottage
The process of combining two or more lots to make the resulting parcel more valuable. The increasing in value is known as a plottage
Progression
An appraisal principle dealing with conformity and holes that property is increased in value when located near other properties that is of higher value example A house suraround more expensive homes
Physical deterioration
A reduction in property value due to a negative change in physical conditions. Maybe curable or incurable. Could because by physical elements such as Weather or by normal usage.
Rate of return
Comparison of the net income to total investment for a parcel of income property expressed as an annual percentage
Reconciliation
The path of the appraisal process with the appraiser company is the most appropriate appraisal methods with all the methods used
Regression
An appraisal principle dealing with Conformity that holds that property is decreased in value when located in other properties of lesser value example house surrounded by less-expensive home
Replacement cost
The cost at current prices to replace a structure with the same materials. Often used as the same as reproduction cost which require similar design and materials but not the same
Reproduction cost
Same as replacement cost but similar, not an exact duplication of the structure
Scarcity
An appraisal principle that a reduction in the availability or supply of good will increase it’s value
Senior residential appraisal (SRA)
Professional appraiser designation awarded by the appraisal Institute indicating confidence in appraisal of 1 to 4 family residence
Square-foot approach
Appraisal technique of estimate course by multiplying total square footage of times a constant of cost per square foot. Example 2000 ft.² times a constant square feet equals $200,000 estimated value
Substitution
Appraisal principle that holds a property’s value is determined by the cost to substitute a comparable piece of property through purchase or construction
Supply and demand
Economic principle used in property appraisal that holds value is influenced by the amount of property for sale ( supply ) and the number of potential buyers ( demand)
Tax rate
The rate set by the city or town which multiplied by properties assessed value will yield the property’s annual tax.
Transferability
The ability to transfer the legal bundle of rights without undue restrictions
Unit in place
Appraisal method of estimating replacement cost by individual components of a piece of property and adding them together to arrive at an estimate cost. Example Carpentry plus electric plus plumbing plus carpeting etc. equals total cost
Useful life
The number of years a thing will last before needing replacement
Utility
appraisal concept that relates to properties usefulness as a measure of value
Value
What’s something is worth. The power of a good or service to command of the goods in exchange
