Level 3 Valuation and Market Anaylsis Flashcards
an impartial, qualified appraiser’s opinion of value of a specific property as of a specific date, supported by relevant market information
appraisal
increase in value of a property
appreciation
the combining of multiple contiguous pieces of real property into a single tract of land, often resulting in an increase in value
assemblage
the value placed on a property by a governmental unit for use in calculating property taxes
assessed value
any market that is experiencing an excess of sellers or supply, creating more favorable conditions for buyers
buyer’s market
property secured by a lender in order to assure payment and protect the lender’s investment
collateral
a report that compares the prices of recently sold or listed homes (“comparables”) in order to estimate the market value of a similar property (the “subject property”) located in the same area
comparative market
analysis
the amount of market value added to a property by an addition or improvement to the property; not necessarily the same as the cost of the improvement
contribution
method of estimating the value of a property by determining how much it would cost to replace the building or other improvements, minus the cost of depreciation, plus the value of the land itself
cost approach
a measure of the general desire for an asset or commodity at a given time
demand
a reduction in value for any reason
depreciation
the length of time for which an improvement on property is expected to remain functional and useful
economic life
a theoretical market condition in which levels of supply and demand are balanced
equilibrium
loss of property value caused by negative forces outside the property which are beyond the control of the owner
external (economic)
obsolescence
loss of value because a property’s function or appearance has gone out of style or has been replaced by a more appealing or effective version
functional obsolescence
the relative difficulty of converting an asset to cash without loss of value
illiquidity
method of estimating the value of a property by applying a rate of return to the net income it produces
income capitalization
approach
the purchase of an asset with the intention of profiting from it in the future
investment
a theoretical construct that isolates the selling and purchasing of any one particular commodity from the economy as a whole
market
the price for which a property will theoretically sell under typical conditions
market value
a database in which local member brokers share listings so that fellow member brokers can procure buyers for those properties and establish compensation for properties sold jointly
multiple listing service
an occasional or continuous expense required for the
operation of an income-producing property
operating expense
the loss of value caused by physical wear and tear over time
physical deterioration
an increase in overall value resulting from the successful assemblage of multiple plots
plottage
the manner in which a price is determined by a buyer and seller (a quantification of value) with respect to the forces of supply and demand
price mechanism
an individual authorized to perform appraisals, which estimate the value of real property
real estate appraiser
the actual cost of replacement without regard to depreciation of the property
replacement cost
the cost of building an exact duplicate of a property, taking today’s material and labor costs into consideration
reproduction cost
property appraisal method that estimates value by comparing the subject property to the sales prices of similar properties in the same market area
sales comparison
approach
the lack of availability of a commodity in relation to the
demand for it
scarcity
a market condition in which the number of properties for sale does not meet the demand (number of people looking to buy)
seller’s market
an accounting method in which depreciation expenses are deducted from a property’s income
straight-line cost recovery
an economic principle stating that the value of a good or service is affected by the cost of getting a similar (substitute) item elsewhere
substitution
in real estate, the amount of properties that are vacant or are available for sale or rent
supply
the value placed on a property by a governmental unit for use in calculating property taxes, minus any exemptions
taxable value
