LESSON 2 Flashcards
Market value
most probable price as of a specified date for which property should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale
value to the owner
the personal opinion of a property value held by an individual owner; in appraisal this refers to floor and ceiling
market value conditions
value is price that might be reasonably expected , willing seller and willing buyer, adequate time and exposure to the market
floor price
minimum price at which a seller is willing to sell their property
ceiling price
the maximum price a purchaser is willing to pay for a property
justified investment price
a value that is justified for a single owner based on their specific investment needs and wants
fee simple or absolute ownership
closest to unlimited ownership of real estate in Canada
expropriation
government to take private property for public use upon payment of just compensation
chattel
personal property, not affixed to the real estate
fixture
part of the real estate
property analysis from broad to specific
broad- province, region and city
subject neighbourhood and immediate area
subject property land and site
subject improvements
market areas, neighbourhoods, and districts
change and transition
life cycle
growth
stability
decline
revitalization
evidence of transition
environmental influences
topography and physical features are crucial: local amenities, traffic patterns and nuisances
property taxes=
mill rate * AV / $1000
physical characteristics of land
site size, and shape, corner influence, pottage potential, excess land and surplus land, topography, soil analysis, utilities, site improvements, accessibility, environment
excess
land not required to support the current improvements
can be repurposed and have its own highest and best use
topography
underlying soil conditions determine what can be built on a site
environment
the direction of the site faces affect its value , Many prefer year yards facing south or west
latent value
value possessed by a property that has potential for redevelopment because it is currently not employed at its highest and best use
highest and best use
provides the max net return in the future, with consideration for all legal, physical, financial, and market constraints
HBU
results in the highest land value
what is reasonable and probable
HBU
Physically possible
financially feasible
legally permissible
maximally productive
PEGS; factors affecting land values
physical, environmental, and locational
economic
government
social
off site costs
municipal permits
three income focused methods
land residual, ground rent cap, subdivision or discounted cash flow
land valuation techniques
DCA
Extraction
allocation
income
land residual
ground rent
subdivision development
DCA
most common used and preferred method
lot measurement or area basis
price per front metre, price per square feet, price per lot
density of development basis
price per building unit
price per buildable square metre/foot FAR, FSR
adjustments for size
acre = 1m , 100acre is not going to be 100m, adjustments are made for size, typically larger sites worth less
principle of diminishing marginal utility
price of smaller sf is greater than property with higher SF
