Ch 1-2 Flashcards
Which factors are referred to as elements of comparison?
Property rights appraised
Sales or financing concessions
Market conditions when sale occurred
Location
Site characteristics
Physical characteristics of structures
Quality
Functional attributes
Amenities
Motivations of sellers and buyers
Basic formula for the sales comparison approach:
Sales price of comparable
+ or - adjustments to price
= Indicated value of subject
The subject is a three-bedroom home that is 25 years old. It has a brand new kitchen. The comparable is a similar house, also 25 years old, in the same neighborhood, but it has its original kitchen. New kitchens have a contributory value of $15,000. The comparable sold for $200,000. The subject is therefore worth
$200,000 + $15,000 = $215,000.
What are the five steps of the sales comparison approach?
ReVeSIR
Research the market
Verify the information
Select relevant units of comparison
Identify differences and make adjustments
Reconcile the value indications
Unit of comparison for One unit residential:
Total property price
Price per SF of GLA
Unit of comparison for 2-4 unit residential
Price per SF of GBA
Price per unit
Price per room
Price per bedroom
Unit of comparison for Offices
Price per SF of GBA
Price per SF of Gross Leasable Area
Price per SF of Net Leasable Area
Unit of comparison for Vacant land
Price per SF
Price per acre
Price per Front Foot
Price per Buildable Unit
Price per Animal Unit
A neighborhood is defined as
“A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises”
A district is defined as
“A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural”
A market area is defined as
“The geographic region from which a majority of demand comes and in which the majority of competition is located. Depending on the market, a market area may be further subdivided into components such as primary, secondary, and tertiary market areas, or the competitive market area may be distinguished from the general market area.”
General data is defined as
“Data that relates to the four forces that affect real property values—social, economic, governmental, and environmental forces.
This type of data is usually not specific to any particular property but is applicable in many assignments of similar types of properties. Also known as macro-level data.”
Social forces might include such things as:
Age of residents
Average family size
Economic factors comprise a large category that could include:
Median wages Tax rates Unemployment rates Interest rates Construction costs Land values
Governmental forces might include such items as:
Zoning Public utilities Public transportation Schools Building codes Police and fire protection
Environmental forces include:
Public access Convenience to employment Convenience to shopping Presence of hazards Climate Topography
Specific data is defined as
“Details about the property being appraised, comparable sale and rental properties, and relevant local market characteristics”
Suggested sources of specific information
Here: long list of all kinds of possibilities
Personal inspection Homeowner Deed Lease(s) Assessment record Tax bill Survey Site plan Title document Homeowners Association declaration and bylaws MLS listing Sales agreement Previous appraisal Home inspection report Blueprints Sales brochure Condominium documents Zoning documents Master plan Building code Environmental assessment Building cost estimate
Suggested sources of sales information
Here: long list
Multiple listing services Data subscription services Real estate agents Other appraisers Appraisal organizations Your own files Courthouse records Assessor records Newspaper articles Newspaper advertisements Trade journals The Internet Title reports or title companies Mortgage recordings County planning officials Lending institutions Attorneys Accountants Chamber of commerce Contractors Insurance agents Utility companies
10 Elements of comparison:
Residential:
Real property rights being conveyed (fee simple, easements, air rights, etc.)
Financing terms (favorable or not)
Conditions of sale (arm’s length or otherwise)
Expenditures made immediately after purchase (things not included in age or condition adjustments that were necessary)
Market conditions (time or date of sale)
Location (neighborhood, waterfront, adjacent to school)
Physical characteristics (quality, condition, size, special features)
Commercial:
Economic characteristics (factors that affect a property’s income)
Use (zoning)
Non-realty components of value (other influences on value)
