chapter 16 Flashcards
highest use of property
looks good, money, legal, productive
concept of Market value
agreed on Price and Market exposure
weakness of sales comparison approach to the value
no recent data of Price
method data approach or s.c.a steps
id sales comparables, compare, make adjustments to comparables, estimate value
in sales comparison approach an adjustment is warranted if
seller offers below-market seller financing
principal of substitution
2 Properties are similar, buyer Buys cheaper one
brokers opinion
May not be a disinterested party
Cost approach steps
estimate depreciation, subtract depreciation from Cost, add back land value
income cap
used for income producing Real Estate
GRM weakness
many expenses are not taken into account
net operating income is equal to
potential Gross income minus vacancy and credit loss minus expenses
income capitalization approach steps
estimate effective income, subtract tax, apply a cap rate
to complete s.c.a appraisor
weights comparable
Cost approach weakness
Market value isnt always the same as what the property costs
replacement cost
Cost of making a functional equivalent of subject property
incurable economic obsolescence
House located in place where owners failed to maintain their properties
