Key Terms (Ch.3) 14% Flashcards

1
Q

BPO

A

Broker Price Opinion; an agents opinion of a property’s fair market value based on comparable sales.

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2
Q

Capitalization Approach

A

Appraisal method used by an appraiser to arrive at a property’s value based on present worth of property’s future net income

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3
Q

Capitalization Rate

A

(cape rate) Annual rate of return on an investment. Calculated by dividing the net operating income by the price asked or offered for income property.

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4
Q

Comparable Sales

A

Sales of properties recently sold which have similar characteristics of as subject property

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5
Q

Comparison Approach

A

Method for comparing a given property with similar surrounding properties, aka market comparison

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6
Q

Depreciation

A

Loss of property value

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7
Q

Economic Life

A

Period of time over which a property will yield a return on capital invested to own it

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8
Q

Economic Obsolescence

A

Loss in value of property due to external factors and not the condition of property itself.

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9
Q

Elements of Value

A

Factors that must be present for real estate to have value: DEMAND, UTILITY, SCARCITY and TRANSFERABILITY

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10
Q

Financial Analysis

A

Consideration of the income and expenses generated and incurred by an income producing property

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11
Q

Functional Obsolescence

A

Loss of value due to adverse factors within the structure which affect the utility of the structure

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12
Q

Gross Rent Multiplier

A

factor multiplied by gross income to estimate the properties value

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13
Q

Highest and Best Use

A

appraisal phrase addressing the use of a property that is likely to produce the greatest net return on the land and/ or buildings over a specific time period

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14
Q

Income Approach

A

One of 3 methods used in the appraisal process applied to income producing property

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15
Q

Influence on Value

A

An aspect of the principle change recognizing changes on real estate value due to outside forces.

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16
Q

Narrative Report

A

Summary of all factual materials, techniques and appraisal methods used by the appraiser to establish property value

17
Q

Opportunity Cost

A

Cost of an action that is forgone when choosing to take an alternative action, usually a consideration when making one investment over another.

18
Q

Physical Life

A

Total number of years a building is presumed to potentially exist in a productive capacity

19
Q

Principles of value

A

The Application of several appraisal principles to arrive at the final value.