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Property Value & Appraisal Flashcards

1
Q

What’s the most significant type of value for real estate licensees?

A

market value

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2
Q

Definition of Market Value?

A

a price a willing seller will sell & the price a willing buyer will pay

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3
Q

Appraisal Value

A

is always MV (Market Value)

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4
Q

4 basic characteristics of value

A

(DUST) Demand, Utility, Scarcity, & Transferability

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5
Q

Demand

A

is demand for the item & the purchasing power to acquire it

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6
Q

Utility

A

is needed or wanted

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7
Q

Scarcity

A

limited supply

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8
Q

Transferability

A

ownership rights must be transferable.

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9
Q

Appraisal

A

Is an opinion - it is an estimate of value

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10
Q

Highest and best use

A

Most important detail by appraisers. Gives greatest returns in money/amenities

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11
Q

Principle of substitution

A

Cost to acquiring a similar substitution property

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12
Q

Principle of Conformity

A

Properties are the same/ have a reasonable degree of similarities

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13
Q

Principle of increasing and decreasing Returns

A

Invest in property whenever each dollar invested will return or more of increased value/ stop when each dollar returns less than a dollar in value

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14
Q

Law of Diminishing Returns

A

Over improvement of a property

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15
Q

Principle of Contribution

A

Value of a part by its contribution to the total value of the property rather its cost.

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16
Q

Principle of regression

A

Reduce value of property

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17
Q

Principle of Progression

A

Higher valued properties will increase the value of your properties

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18
Q

Principle of competition

A

Increase in competition will result in decrease profits

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19
Q

Principle of Change

A

change is constant and is reflected in values

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20
Q

Principle of Anticipation

A

purchase price is affected by the expectation of future appeal and benefits

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21
Q

Principle of Balance

A

mixed land use should result in maximum value for all properties involved

22
Q

Appraisal Process

A
  1. state the purpose
  2. collect & verify info about the property
  3. estimate value using all 3 approaches
  4. Reconcile the estimates by determining weighted average
  5. Prepare the report
23
Q

Reconciliation

A

completes the process of determining an exact #

24
Q

FIRREA (Financial Institutions Reform, Recovery, Enforcement Act

A

passed to regulate the appraisal industry nationwide

25
USPAP
Uniform Standards of Professional Appraisal Practice -how appraisals are developed & communicated.
26
3 approaches to appraisal
1. market data/sales approach 2. income/capitalization 3. Replacement/Reproduction
27
Market data/sales
used primarily in residential
28
Add to value
subject property has more amenities
29
Deduct from value
subject property has less
30
Cost Approach
unique properties and no comparables for a particular property
31
Value
Land Value + Bldg Reproduction - Depreciation Land Value + Replacement Cost-Depreciation
32
Reproduction Cost
exactly duplicate a building
33
Replacement Cost
replace structure using today's material
34
3 types of depreciation
1. Physical deterioration 2. Functional Obsolescence 3. Economic Obsolescence
35
Physical deterioration
curable/Least impact on the appraisal
36
Functional obsolescence
Factors in the property/outdated
37
Economic obsolescence
aka external/environmental loss of value from outside factors. it's incurable
38
income approach
aka capitalization - income producing properties. hightest weighted criteria - NAI/NOI - Net Annual Income/Net Operating Income
39
income approach
aka capitalization - income producing properties. highest weighted criteria - NAI/NOI - Net Annual Income/Net Operating Income
40
actual gross income/effective gross income
actual rent collected after subtracting for vacancies or uncollected rent
41
Net rent/Net Operating income
actual rent collected after subtracting for vacancies or uncollected rent.
42
GRM
Gross Rent Multiplier- used for residential properties
43
Neighborhood GRM
Avg Price/Avg monthly rent
44
Value for property
GRM * rent = price
45
GIM
used for commercial properties/ based on annual rent rather than monthly
46
CMA
determine realistic price for property
47
CMA
is a range of value for a property
48
BPO
Broker Price Opinion
49
Assessed Value
value of your property for tax purposes. tax rate * assessed value will tell you the annual taxes
50
per hundred valuation
$2.50 means the property owner will pay $2.50 of tax for every $100 of taxable value. mill - $1000
51
special assessment
tax levied against only those property owners who benefit from the improvement
52
municipal improvement district
aka property improvement district -

Real Estate (5 decks)

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