Ch 14 Flashcards
“The perception that value is created by the expectation of benefits to be derived in the future.” is the principle of
Anticipation
The principle of anticipation has its strongest application in the valuation of x properties.
income-producing.
for Residential buyers it is the Amenities (privacy, safety, comfort…)
“the present worth of future benefits.” is
another way to define value with the principle of anticipation
The principle of change is defined as:
“The result of the cause and effect relationship among the forces that influence real property value.”
As the definition states, this is the result of a cause and effect relationship, or tug-of-war, among the various forces that interact to influence real property values. These are the external market factors that are categorized as Social, Economic, Governmental, and Environmental.
The principle of supply and demand is defined as
In economic theory, the principle that states that the price of a commodity, good, or service varies directly,
but not necessarily proportionately, with demand, and inversely, but not necessarily proportionately, with supply.
Classic economic theory says that supply and demand will tend to move towards a xxx
point of equilibrium.
The principle of competition is defined as
“1. Between purchasers or tenants, the interactive efforts of two or more potential purchasers or tenants to make a sale or secure a lease.
2. Between sellers or landlords, the interactive efforts of two or more potential sellers or landlords to complete a sale or lease.
3. Among competitive properties, the level of productivity and amenities or benefits characteristic of each property considering the advantageous or disadvantageous position of the property relative to the competitors. “
The principle of competition is an offshoot of the principle of supply and demand. It studies the relationships between participants in the marketplace, such as xxx
buyers and sellers or landlords and tenants.
The principle of substitution is defined as
“The appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price willattract the greatest demand and widest distribution. This is the primary principle upon which the cost and sales comparison approaches are based. “
The principle of x is the basic principle that underlies x of the appraisal approaches to value. Of the approaches, the sales comparison approach relies most heavily on the principle of x.
substitution
all three
substitution
The principle of substitution assumes two important things:
(1) that there will be xxx, and
(2) that a xxx
no long delay in acquiring a substitute
buyer will accept a substitute.
The principle of contribution is defined as:
“1. The amount a component of a property adds to the total value of the property.
Contribution may or may not be equivalent to the cost to add the component.
2. The concept that the value of a particular component is measured in terms of the amount it adds to the value of the whole property or as the amount that its absence would detract from the value of the whole.”
The principle of externalities is defined as
“1. The principle that economies outside a property have a positive effect on its value while diseconomies outside a property have a negative effect on its value.
2. In appraisal, off-site conditions that affect a property’s value. Exposure to street noise or proximity to a blighted property may exemplify negative externalities, whereas proximity to attractive and well-maintained properties or easy access to mass transit may exemplify positive externalities.”
The principle of balance is defined as:
“The principle that real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium.”
The principle of conformity is defined as
“The appraisal principle that real property value is created and sustained when the characteristics of a property conform to the demands of its market.”
