Lesson 1 Bus330 Flashcards

1
Q

first principles of value

A

problem identification, property content, legal considerations, highest and best use, research, economic analysis,

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2
Q

professional competencies

A

analytical thinking, conceptual thinking, decisiveness, focus on quality and details, client service orientation

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3
Q

real estate

A

physical assets, like land and buildings

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4
Q

real property

A

the legal rights that attach to land, real property cannot be touched, but can be appraised and sold

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5
Q

real property example

A

lease or easement

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6
Q

bundle of rights

A

the packaging of all the rights of ownership attributable to a property

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7
Q

key characteristics of improved land

A

unique, immobile, durable, of finite supply, and usefulness

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8
Q

characteristics of real property

A

immobility, durability of improved land, indivisibility of services, divisibility of owership

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9
Q

immobility

A

transactions in one market area have little impact on transactions in another area but not isolated from national economic conditions, or legislative changes

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10
Q

industrial areas grow around

A

waterfront or railways

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11
Q

value of land is directly related to its

A

use

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12
Q

economic factors

A

interest rates, taxes, foreign investment, and political changes

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13
Q

production of all goods and services including real estate, depends upon the combined effects of four economic ingredients: known ad the agents of production

A

land
labour
capital
entrepreneurial profit

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14
Q

factors of value

A

supply: utility and scarcity,
demand: desire, effective purchasing power

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15
Q

market determines what the value is

A

worth

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16
Q

principles impacting real property value

A

anticipation and change
supply and demand
substitution, balance, surplus productivity, contribution, conformity, externalities

17
Q

appraisal is largely about attempting to see a property through the eyes of

A

market participants

18
Q

anticipation and change

A

present worth of future benefits
real estate markets change constantly

19
Q

substitution

A

this principle stats that a buyer will not pay more for a property than for another that is equally desirable

basis for the three traditional approaches to value

20
Q

approaches to value and principle of substitution

A

direct comparison
cost
income

21
Q

principle of balance

A

previous sale may satisfy demand at that price level and prices may begin to drop or stabilize

22
Q

surplus productivity

A

land value is based on the difference between market value and the cost to create a given real estate property

23
Q

contribution

A

knowledge of the market determines how much certain items contribute to the value of the property. a kitchen remodel could cost 50K and could reflect 75K or 25K in the market

24
Q

conformity

A

values are maximized when a property characteristics conform to market demand

25
externalities
good and bad
26
highest and best use
land meets its economic potential, if the building burned down, would the same on be constructed
27
land value opinon
property value as a combined value of land and improvements as this is how real estate market participants tend to view market value
28
application of the approaches to value
apply 1 approach
29
DCA
no more or less than the sale prices of similar properties most common for vacant land, simple commercial good reliable sales data exists expired listings determine price ceilings
30
income approach
determine applicable rents, vacancy rates, collection losses, operating expenses, and capitalization or yield rates
31
cost approach
purchaser should be willing to pay no more for a new property than the cost of buying a similar parcel of land and constructing a new building. useful for really new or old, or unique buildings