Appraisal - Economic Principle Flashcards
Change
The only constant variable in real estate
Basis of Market Condition Analyst
Land - Highest & Best Use
the four CELL in Harmony
Production - 4 agents
C - Capital
E - Entrepreneurship
L - Land
L - Labor
Principle of Substitution
When markets are in BALANCE, market rent is established by what a typical and prudent tenant would pay for an equally desirable substitute
Principle of change
closely related to broad forces of value (P-E-G-S)
Progression
- “worst” house of the “best area”
- Value of home helped up by other home in the area
- An increasing return result
Regression
“Best”house in a “worst” area
Principles - Balance
supply & demand
the 4 agents of production are in optimal balance
Principles - Change
constant physical & economic change that influence value
Principles -Conformity
property is in harmony with surrounding properties
progress and regression
Principles -Contribution
an item is only worth what is contributes in value to the whole
Principles - Substitution
Knowledge buyer will pay no more for one item than for a comparatively equivalent substitute
Principles - Plottage
Increased value by combining smaller lots in to one large lot for greater money
Principles - Assemblage
Combining smaller lots in to one large lot for greater money
Loan -Acceleration Clause
if borrower defaults, then entire amount due
