Appraisal and Land Use Flashcards
Subdivision
A plot of land divided into smaller portions for the purpose of building
Functional Utility
The combined factors of usefulness with desirability.
Cul-de-Sac Lot
A lot on a dead-end street
Fiscal Year
A year as reckoned for taxing or accounting purposes
Assemblage
Putting several smaller, less valuable parcels together under one ownership to increase value of total property
Cost
Represents expenses in money, labor, material, or sacrifices in acquiring or producing something
Book Value
The initial cost of the property plus capital improvements and minus the total accrued depreciation
Scarcity
Less availability of a commodity in the marketplace resulting in increased value when demand exceeds supply.
Market Value
The price the property would bring if freely offered on the open market with both a willing buyer and a willing seller
Net Income
Sometimes known as net operating income. The remaining income after operating expensed have been subtracted from the gross income of a property
Corner Lot
A lot found at the intersection of two streets
Appreciation
An increase in value
Deferred Maintenance
Negligent care of a building
Sales Comparison Approach
An appraisal method using the principles of substitution to compare similar properties
Transferability
The ability to transfer ownership of an item from one person or entity to another.
Economic Life
The estimated period over which an improved property may be profitably used to yield a return
Front Footage
The width of a property along the street
Cost Approach
An appraisal method that estimates replacement cost of the improvements, deducts estimated accrued depreciation, and then adds market value of the land.
Income approach
A method of appraising property based on the property’s anticipated future income.
Accrued Depreciation
The difference between the cost to replace the property and the property’s current appraised value
Operating expenses
Expenditures necessary to the operation of an income-producing building
Gross Rent
Income (figured annually) received from rental units before any expenses are deducted
Depriciation
Loss in value from any cause
Capital Improvements
Any permanent improvement made to real estate for the purpose of increasing the useful life of the property or increasing the property’s value
Principle of Anticipation
The market anticipates the future benefits that are to be derived from the property.
Comps
A term used by real estate agents and appraisers to mean comparable properties
Variance
An exception granted to existing zoning regulations for special reasons
Appraisal
An act or process of developing an opinion of value.
Supply
The total amount of an item that is for sale or lease, at various prices, at any given point in time.
Gross income multiplier (GIM)
A figure which, when multiplied by the annual gross income from all sources, not just annual rent, equals the property’s market value.
Gross rent multiplier (GRM)
A figure which, when multiplied by the monthly rental income, equals the property’s market value.
Demand
The desire to buy or obtain a commodity
Cap Rate
A term sometimes used to refer to capitalization rate
Utility Value
The usefulness of the property
Environmental Impact Report
A study of how a development will affect the ecology of its surroundings
Improvement
Any buildings or structures on a lot
Effective Age
The years or age shown by the condition and utility of a structure, rather than its actual or chronological age
Calendar Year
This starts on January 1 and continues through December 31 of the same year.
Actual Depreciation
That depreciation occurring as a result of physical, functional, or economic forces that cause loss in value to a building
Market Rent
The rent a property should bring in the open market
Effective Gross Income
The anticipated income resulting from estimated potential gross income from a rental property less an allowance for vacancy and bad debts
“DUST”
The 4 elements that create value: Demand, Utility, Scarcity, Transerability
Assessed Value
Value placed on property by a public tax assessor as a basis for taxation.
Contract Rent
The amount of rental income due from the tenant as agreed in the lease agreement
Price
What is paid for something
Eminent Domain
The right of the government to take private property from the owner, for public use, and paying for the fair market value
Actual Age
The real age of a building
Condemnation
A common name for eminent domain, or the right of the government to take private property from an owner for public use, paying fair market value
Reproduction Cost
The current cost of building a replica of the subject structure using similar quality materials; refers to exact duplication of the buildings; usually costs more than replacement costs
Economic age
Age of a building determined by its condition and usefulness.
Value
The power of goods or services to command other goods in exchange for the present worth of future benefits arising from ownership
Vacancy Factor
Lost income because of a vacant unit
Ad Valorem
A Latin prefix meaning according to value. Local governments levy real property tax based on the assessed value. Property taxes are unknown as ad valorem taxes.
Principle of Substitution
The market value of a property is affected by the cost of obtaining an equally desirable and valuable property as a substitute.
Effective Demand
The desire coupled with purchasing power.
Accrued
Accumulated over a period of time
Replacement Cost
The cost of replacing improvements with modern materials and techniques
Appraisal Report
A written report setting forth an appraiser’s estimates of value of a subject property
Capitalization
The process of calculating the present worth of a property on the basis of its capacity to continue to produce an income stream
Reconciliation
Sometimes called correlation, this is the adjustment process of weighing the results of all three appraisal methods to arrive at a final estimate of market value for the subject property.
