Appraisal Flashcards
Gross area
the area of a building under the roof - includes unfinished areas
Plottage
the increased value resulting from the combining of several parcels of land into one larger tract
USPAP
Uniform Standards of Professional Appraisal Practice - appraiser’s rules
Income Approach
an appraisal used to determing value of property that produces income. AKA cap method. (net annual income = rate of return x market value)
Value
an estimate of future benefits to be derived from a property
Principle of Anticipation
pricing today based on the expectation of future appeal and/or benefits
BOV
broker’s opinion of value - similar to CMA but used by a relocation firm, bank or attorney - also called BPO, broker’s price opinion
Setback
the amount of space required between the lot line and the building line
D.U.S.T.
The four basic characteristics of value - demand, utility, scarcity, transferability
Effective Age
the condition of a property measured in years
Principle of Contribution
the value of a part is determined by its contribution to the total value of the property rather than the cost of the part
Physical Deterioration
depreciation due to ordinary wear and tear - curable - little impact on an appraisal
M.A.I.
Member, Appraisal Institute - a designation earned by a licensed appraiser
Economic Obsolescence
depreciation due to external factors. Also called environmental obsolescence. Like when someone builds an airport across from your dream home.
Capitalization rate
Cap rate, or the annual rate of return on income producing property
Reproduction cost
The cost to exactly duplicate a building
Life Cycle
the stages of growth and development of a community - grow, stabilize, decline, and revitalize
Principle of Progression
Higher valued properties in the neighborhood lead to an increase in value of a subject property
Straight Line Method
depreciation of equal annual installment amounts
GRM (gross rent multiplier)
a factor based on location and rent - a price per monthly rent used to give an initial estimate of value for a residential rental property
Principle of Increasing and Decreasing Returns
invest in property whenever each dollar invested will return a dollar or more of increased value and stop when each dollar returns less. Do not over improve!
Comparable
a recently sold property similar to a property being valued
Module
a unit of prefab housing - offsite construction
square footage
the finished space of a structure measured by the exterior walls - it never includes unfinished space like garages or attics
