Basic Real Estate Appraisal Flashcards
Presence of pollutant in the area
Environmental factors
Demand for an aging population.
Social factors
Value to a specific investor with a specific plan for the property.
Investment value
Value used on property for tax purposes.
Assessed value
All property value is created by the of the future benefits the property will provide.
Anticipation
The idea that nothing remains the same.
change
If that building is a success other builders are likely to follow with more office buildings until the last office building a builder erects remains partially vacant because the suppliers have created a surplus of office space.
Competition
The whole is sometimes greater than the sum of its parts.
Plottage
That a buyer will try to pay as little as possible for the property that meets the buyer’s needs.
Substitution
Outmoded design in older structures or unacceptable design in newer structures usually points to a type of depreciation.
Functional obsolescence
Estimating depreciation is a way to calculate depreciation caused by wear and tear on the structure that presumes that structures wear at the same rate each year.
Straight line method
Analyzes the future financial benefits of a piece of real estate and converts it into an estimate of present value.
Income approach
The income that the building generates when rented at 100 percent occupancy.
Potential gross income.
The result of subtracting the vacancy and collection loss from potential gross income.
Effective gross income
The process of analyzing and weighing the results of the various approaches as applied to an appraisal problem.
Reconciliation
Valuation approach use in the single family homes.
Sales comparison approach
Value of superior property is adversely affected by the value of inferior property.
Regression
The key criterion in the valuation of real property or personal property.
UTILITY
Cost to create a virtual replica of the existing structure.
REPRODUCTION
Cost of constructing a structure with comparable utility.
REPLACEMENT
Very open and most transparent method of selling property.
Auction sale
The seller is under financial or other pressure to sell quickly.
Forced Sale
The amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
FAIR VALUE
An amount above the Market Value that reflects particular attributes of an asset that are only of value to a Special Purchaser.
SPECIAL VALUE
Additional element of value created by the combination of two or more interests where the value of the combined interest is worth more than the sum of the original interests.
Synergistic value
Describes a situation where an entire business is transferred as an operational entity.
Going concern value
The present value of the future cash flows expected to be derived from an asset or cash- generating unit.
VALUE IN USE
In the absence of sufficient direct market evidence, acceptable method of arriving value of specialized property.
DRC
Resulting from external influences may affect the value of the asset.
Obsolescence
Individual properties, such as hotels, fuel stations, and restaurants that usually change hands in the marketplace while remaining operational.
Trade Related Property
The process of analyzing sets of property and market data to determine the specific parameters operating upon a model.
CALIBRATION
Applies the basic economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchase or by construction.
Cost approach
Refers to a price expressed in terms of money payable for the asset in an arm’s length market transaction.
Estimated amount
Establishes that each party is motivated to undertake the transaction, but neither is forced or unduly coerced to complete it.
Without compulsion
Method of land valuation in the absence of vacant land sales, whereby improvement values obtained from the cost model are subtracted from sales prices of improved parcels to yield residual land value estimates.
Abstraction method
The distribution of the appraised value of the property between land and building.
ALLOCATION
The period of time over which the structure may reasonably be expected to perform the function for which it was designed or intended.
USEFUL LIFE
Conditions and assumptions under which appraisal is made.
Limiting condition
Statement that appraisers, in their professional capacity, personally conducted the appraisal in an objective manner.
Certification of value
Risk due to uncertainty in rent, vacancies and operating expenses.
Business risk
Risk due to uncertainty in future interest.
Interest risk
Land that has been improved for specific purpose.
SITE
Prepared the first documented valuation manual in Ireland.
Sir William Petty
Identify the market supply and demand of a particular product
MARKET ANALYSIS
It assumed that deterioration and wear occur at a constant average annual rate
Straight line depreciation
Poor layout is an example of .
Functional obsolescence
