Factors Influencing Value

Question 1

Anticipation

Answer 1

The Value created by expectation of benefits to be collected in the future

Question 2

Assemblage

Answer 2

The process of combining two or more parcels into one

Question 3

Balance

Answer 3

The principal that implies a balance between net return on investment and expenses of labor, capital, management, and land

Question 4

Change

Answer 4

A principal in valuation that considers economic social, and physical changes

Question 5

Compaction

Answer 5

A state where soil particles are forced closely together, reducing pore space. Important for building considerations

Question 6

Competition

Answer 6

The appraisal principle that states excess profits generate competition; if too much competition is attracted to an area, losses in profits will result

Question 7

Conformity

Answer 7

An appraisal principle stating that a property achieves maximum value when the property reasonably conforms to the neighborhood

Question 8

Contribution

Answer 8

The same principle as increasing and decreasing returns, in that it applies only to a portion of the property

Question 9

Depreciation

Answer 9

The annual deduction allowed for recovering the taxpayer’s cost of the investment property

Question 10

Economic Life

Answer 10

The expected period that a property provides a benefit

Question 11

Economic Obsolescence

Answer 11

Caused by an influence outside the property over which the property owner has no control

Question 12

Excess Land

Answer 12

Land that does not provide the highest and best use for a property and could be sold separately at a higher value

Question 13

Functional Obsolescence

Answer 13

Loss of value from all causes within property, except those due to physical deterioration

Question 14

Highest and Best Use

Answer 14

The most profitable use for which land can be used at the time of appraisal; the use that will bring the greatest return

Question 15

Increasing and Decreasing Returns

Answer 15

A principal of value; if funds spent on improving a property increase return, the law of increasing return applies; if they do not produce a positive return, the law of decreasing return applies

Question 16

Integration, Equilibrium, and Disintegration

Answer 16

Integration is the development stage when the value of a property is increasing;
Equilibrium is the static period when property reaches its max value;
Disintegration is period when neighborhood declines and price goes down

Question 17

Percolation Test

Answer 17

Determines the speed at which standing water is absorbed by the soil. Important for foundation consideration

Question 18

Physical Deterioration

Answer 18

The loss of value due to normal wear and tear or to postponed maintenance

Question 19

Plottage

Answer 19

Process of putting several parcels together as one larger parcel to achieve the highest and best use and increase in value

Question 20

Progession

Answer 20

Opposite of regression; exists when there is poorer property among more expensive properties. Poorer property increases in vlaue

Question 21

Regression

Answer 21

When there are properties of different values in the neighborhood, the better property is adversely affected by the poorer properties

Question 22

Substitution

Answer 22

The principal of value wherein the maximum value of a property in the marketplace tends to be set by the cost of purchasing an equally desirable substitute property