Factors Influencing Value Flashcards
Anticipation
The Value created by expectation of benefits to be collected in the future
Assemblage
The process of combining two or more parcels into one
Balance
The principal that implies a balance between net return on investment and expenses of labor, capital, management, and land
Change
A principal in valuation that considers economic social, and physical changes
Compaction
A state where soil particles are forced closely together, reducing pore space. Important for building considerations
Competition
The appraisal principle that states excess profits generate competition; if too much competition is attracted to an area, losses in profits will result
Conformity
An appraisal principle stating that a property achieves maximum value when the property reasonably conforms to the neighborhood
Contribution
The same principle as increasing and decreasing returns, in that it applies only to a portion of the property
Depreciation
The annual deduction allowed for recovering the taxpayer’s cost of the investment property
Economic Life
The expected period that a property provides a benefit
Economic Obsolescence
Caused by an influence outside the property over which the property owner has no control
Excess Land
Land that does not provide the highest and best use for a property and could be sold separately at a higher value
Functional Obsolescence
Loss of value from all causes within property, except those due to physical deterioration
Highest and Best Use
The most profitable use for which land can be used at the time of appraisal; the use that will bring the greatest return
Increasing and Decreasing Returns
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
Integration, Equilibrium, and Disintegration
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
Percolation Test
Determines the speed at which standing water is absorbed by the soil. Important for foundation consideration
Physical Deterioration
The loss of value due to normal wear and tear or to postponed maintenance
Plottage
Process of putting several parcels together as one larger parcel to achieve the highest and best use and increase in value
Progession
Opposite of regression; exists when there is poorer property among more expensive properties. Poorer property increases in vlaue
Regression
When there are properties of different values in the neighborhood, the better property is adversely affected by the poorer properties
Substitution
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
