Part 8 Vocab Flashcards
The most commonly used cost-estimating method of the 3. Used to derive a cost estimate in terms of dollars per unit of area or volume based on known costs of similar structures that are adjusted for market conditions, geographic location, time, and physical differences; usually applied to total building area (eg. size). The appraiser must compare the subject building with similar, recently constructed buildings for which cost data is available.
comparative-unit method
Note: cost service manuals are most commonly used in this method.
- If a building’s contract price is available, the unit-cost figures are usually expressed in terms of cost per SqFt of gross building area or cost per cubic foot. If they are in different markets, an adjustment for location may have to be made.
- If contract prices are not available, the cost of new buildings can be extracted from sales of similar buildings by subtracting the value of the improved land together with site improvements (ex: driveway or landscaping). Building improvements should be at highest and best use for the improved land and assuming the property has reached stabilized occupancy for commercial properties.
this is not a true cost-estimating method but can be a useful tool when properly applied by an appraiser. To convert a known historical cost into a current cost estimate, the appraiser can apply a percentage change based on an index service such as the BLS or use a comparative cost multiplier supplied from a cost service provider like Marshall and Swift.
cost-index trending
expenditures for the labor and materials used in the construction improvements. ___ are typically part of a construction contract and include things like labor, materials, equipment, building permits, tempory fencing, material storage, power line installation, contractor’s overhead and profit including workman’s comp and insurance, and performance bonds.
direct (hard) costs
a market-derived figure that represents the amount an entrepreneur expects to receive for providing coordination and expertise with the development of a project including associated risk.
entrepreneurial incentive
expenditures that are necessary components but are not typically part of the construction contract and include things like: architectural and engineering fees, appraisals/accounting/legal fees, cost to carry the investment during construction, insurance and taxes during construction, the cost to carry the investment after construction until occupancy is stabilized, lease/marketing/ and sales costs, administrative expenses of the developer, cost of title change.
indirect (soft) costs
One of the 3 methods of cost-estimating. The quantity and quality of all materials used and all categories of labor required are estimated and unit cost figures are applied to arrive at a total cost estimate for labor and materials. It is the most comprehensive and time-consuming, and detailed method of measurement.
quantity survey method
Note: It frequently requires the services of an experienced cost estimator and is rarely used in routine appraisal assignments.
the estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout
replacement cost
Note: most cost services provide replacement cost rather than reproduction cost.
the estimated cost to construct, at current prices as of the effective date of the appraisal, an exact replica or duplicate of the building being appraised, using the same materials, construction standards, design, layout, and quality of workmanship and embodying all the deficiencies, superadequacies, and obsolescence of hte subject building.
reproduction cost
Note: can be the same as replacement costs assuming there are no overimprovements. Especially when the building is relatively new or construction components and design are impossible to tell apart from current building standards.
One of the 3 methods of cost-estimating. The total building cost is estimated by adding together the unit costs for the various building components installed (ex: roof, walls, foundation, excavation, electrical system, etc.). Standardized costs are used for the structural components. The costs may be applied on the basis of SqFt or floor area or linear feet of wall length at a certain height.
unit-in-place method
a market-derived historical figure that represents the amount an entrepreneur receives for his or her contribution to a project and risk.
entrepreneurial profit
Note: can be used to estimate entrepreneurial incentive.
Market Vale - Total cost of development = Entrepreneurial profit or loss
the total area of finished, above-grade residential space as calculated by measuring the outside perimeter of the structure and only includes the finished, habitable, above-grade living space.
Gross living area
Note: Remember for residential structures, the GLA is calculated using exterior dimensions
Note #2: for attached residential structures (townhouses and twin homes), exterior dimensions are measured to the center point of the party wall
Note #3: for Condos, the GLA is based on interior dimensions of the unit’s overall perimeter shell. (the floor area of the “air space” ignoring all interior walls.) In some areas, the condo unit is measured to the center of the perimeter walls.
the total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above-grade area. This includes mezzanines and basements if and when typically included in the market area of the type of property involved. Used in commercial and industrial applications.
Gross Building Area (GBA)
the total floor area designed for the occupancy and exclusive use of tenants, including basements and mezzanines; measured from the center of joint partitioning to the outside wall surfaces
Gross Leasable Area (GLA)
the amount of space on which the rent is based; calculated according to local practice
Net Rentable Area (NRA)
- typically the floor area of a building that remains after the square footage of vertical penetrations such as elevator shafts, etc. has been deducted. Common areas and mechanical rooms are included, and there are no deductions made for necessary columns and projections of the building.
ceiling height
an issue whenever an appraiser is calculating habitable space, gross living area, and gross leasable area. Building codes and minimum property standards also govern what constitutes an acceptable ceiling height for habitable spaces. (in contrast to wall height which pertains to cost regardless of livability issues)
