Chapter 12: Value Flashcards
What are the 4 prerequisites to value? (DUST)
demand, utility, scarcity, transferability
What are the 4 requirements to create value
payment in cash, open market exposure, parties are motivated, parties are knowledgable
What are the 8 economic principles of value?
principle of supply and demand, highest and best use, substitution, conformity, change, progression and regression, competition, increasing/decreasing returns, contribution, anticipation
What are 6 factors influencing value?
location, size and shape, depth tables, soil characteristics, key lots, assemblage,
What is assemblage?
combining several individually owned adjoining parcels into one tract
What is plottage?
two or more tracts assembled to create one large parcel resulting in greater utility and increase in value
What are the 4 major forces that work to create the overall market where a property is located? (PEGS)
physical, economic, governmental, social
What is a GLA or gross living area?
the measurement of exterior structures
What are the 3 approaches to analyzing data?
Sales comparison/market data, cost/replacement, income/capitalization approach
What does the sales comparison/market data approach consist of?
estimating the value by comparing the property being appraised with similar properties
What does CIA stand for?
Comparable inferior add. if the comparable property is inferior the sales price of comparable should be adjusted upward
What does CBS stand for?
Comparable better subtract. if the comparable property is superior, the sales price of comparable should be adjusted downward.
What is an adjusted sales price?
after all adjustments between comparable property and subject, the property has been made, the result is the indicated value
What does the cost/summation approach consist of?
similar to the comparison approach (principle of substitution) most applicable for special purpose properties, new properties & when comparable and income data are lacking
What is reproduction cost?
the cost at today’s price of constructing an exact replica
What is the definition of replacement cost?
at modern prices with modern materials & replacing the building w/one that serves the same functional utility &same amenities
What is the definition of curable in the context of depreciation?
makes economic sense to fix.
if the cure would cost less than the added value of the repair its curable
What is the definition of incurable in the context of depreciation?
doesn’t make economic sense to fix.
the cost to cure would exceed the value
What is accrued deprecation?
a lump sum of the dollar amount the property has depreciated from the time it was build until date of appraisal
What is the definition of physical life in the context of a structure?
how long a structure will remain physically sound with maintenance
What is the definition of economic life in the context of a structure?
how long the property will remain economically productive
What is the definition of effective age?
how old the property appears
How do you calculate the percentage of depreciation?
effective age / total economic life
How do you calculate total economic life?
effective age + remaining economic life
