Chapter 13 Flashcards
What is an appraisal
Appraisal is an opinion A value by a licensed appraiser on a specific date
How can appraisers be paid?
can be paid by A flat fee or an hourly rate.
What is a broker pricing option
It is where a broker may create a BPO for free but it is not an appraisal
Best definition of market value
What a willing buyer will pay and what a willing seller will except
Highest and best use
Most Profitable use,
Principle of substitution?
Given to similar properties, the buyer will purchase the least expensive of the two
Progression in regression
Aggression is the presence of greater value properties will increase
the price of lesser value ones
Regression is the presence of lesser value properties will Decrease the price of greater value ones
Principle of Anticipation
Future benefits and determinates will affect the property value
What is the process of the appraisal
First they gather general data then gather specific data. Then they apply valuation models and create a report then they deliver the findings
What are the three approaches to value
Comparable sales which is residential
Cost
Income
What is heterogeneity
No two properties are identical
The cost approach formula
Value of land plus appreciation plus cost of building Minus depreciation equals the property value
Three types of depreciation
Physical deterioration wear and tear
Functional obsolescence
Poor or outdated
Economic obsolescence external factors
Reconciliation
The process of bringing together different approaches to arrive at one final value
