NCh3 Principles Of Value

Question 1

This principle of value gives the GREATEST return in money and/or amenities. This can be considered the most important detail by an appraiser.

Answer 1

Highest and best use

Question 2

This principle of value sets an upper limit on price where the maximum value of a property is set by the cost of acquiring a SIMILAR SUBSTITUTE property. The principal is used to demonstrate the need to price correctly as an over priced property will not sell.

Answer 2

Principle of substitution

Question 3

This principle of value states that maximum value is found when properties are the SAME or have a reasonable degree of SIMILARITY (price, range, amenities, size)

Answer 3

Principle of conformity

Question 4

This principle of value emphasizes investing in property whenever each dollar invested will return a dollar or more of increase value, and stop when each dollar invested returns less than a dollar in value.

Answer 4

Principle of increasing and decreasing returns

Question 5

The result of over-improving a property is also referred to as

Answer 5

The law of diminishing returns

Question 6

This principle of value states that the value of a part is determined by its CONTRIBUTION to the total value of the property, rather than by it cost

Answer 6

Principle of contribution

Question 7

The principal value states that the presence of lower valued or DECLINING-valued properties in the neighborhood leads to a decline in the value of your property.

Answer 7

The principle of regression

Question 8

This principle states that the presence of HIGHER- valued properties will increase the value of your property

Answer 8

The principle of progression

Question 9

This principle of value states that an increase in COMPETITION will result in decreased profits for current providers

Answer 9

Principle of competition

Question 10

This principle of value states that CHANGE is constant and is reflected in values. Appraisers must make adjustments for CHANGES in the market conditions and for time. An appraisal is only good for six months.

Answer 10

The principle of change

Question 11

This principle of value states that purchase price is affected by the EXPECTATION of future appeal and benefits

Answer 11

The principle of anticipation

Question 12

This principle of value states that MIXED land use should result in the maximum value for ALL properties involved (master-planned communities demonstrate this principle)

Answer 12

The principle of balance