Nat 9 Flashcards
Estimate or opinion of value
Appraisal
D- demand
U- utility
S- scarcity
T- transferability
Elements of value
The amount a willing buyer would pay and a willing seller would accept in an arms length transaction
Market value
The actual amount of money paid for the property in a transaction
Market price
The amount of money required to produce an item at today’s prices
Cost
Value is affected by scarcity of a product and the desire for that item
Principal of supply and demand
The use of the property which will produce the greatest net return
Principal of highest and best use
Maximum value of a property tends to be set by how much it costs to by an equally desirable property
Principal of substitution
Value will tend to be more stable in an area where there is reasonable degree of conformity
Principal of conformity
The presence of lesser properties adversely affects the value of greater properties
Principal of regression
The value of a component part is determined by how much it adds to or detracts from the value of the whole
Principal of contribution
Real estate values do not remain constant
Principal of change
Property goes through phases of growth, stability and decline
Principal of development, equilibrium and disintegration
Profit tends to breed competition which can reduce the profit
Principal of competition
Value is affected by the expectation of future events
Principal of anticipation
The increase in value for any reason
Appreciation
Is a loss in value for any reason
Deterioration
Accumulated deterioration
Deferred maintenance
Curing deferred maintenance
Rehabilitation
Loss due to outdated features, technological advances or poor design
Functional obsolescence
Loss due to factors outside of property and usually incurable
Economic obsolescence
Estimating the value of the subject property by comparing the subject property with similar properties that have recently sold
Comparison approach
An appraisal approach in which the cost of building the structure is calculated, depreciation is subtracted and the land value is added
Cost approach
Determined by measuring the exterior dimensions of the building and calculating the area
Square footage of living area
