Real Estate Appraisal Flashcards
Appraisal
opinion of value based on supportable evidence and approved method
Appraiser
an independent professional trained to provide an unbiased opinion of value in an impartial and objective manner, following an identified appraisal process
Comparative Market Analysis
an estimate of value based on solds, competition and expired listings in the area
Broker’s Price Opinion
a less expensive alternative for evaluation property that is often used by lenders working with home equity lines
Value
monetary worth based on desirability; demand, utility, scarcity & transferability
Market Value
the most probable price that a property should bring in a competitive and open market; based on analysis of data
Market Price
property’s sales price
Anticipation
value created by the expectation that certain events will occur
Change
real estate is subject to market demands
Competition
the interaction of supply and demand
Conformity
the maximum value is created when a property is in harmony with its surroundings
Contribution
value of any part of a property is measured by it’s effect on the value of the whole parcel
Highest and Best Use
most profitable single use of a property; must be physically possible, legally permitted, economically or financially feasible, most profitable or maximally productive
Law of Increasing Returns
when money spent on improvements produces an increase in income or value
Law of Diminishing Returns
when improvements do not increase income or value
Plottage
consolidation of adjacent lots into a single larger one; adds value
Assemblage
process of merging two separately owned lots under one owner
Regression
worth of a better quality property is adversely affected by the presence of a lesser quality property
Progression
the value of a modest home is higher if it were located among larger, fancier properties
Substitution
maximum value of a property tends to be set by how much it would cost to purchase an equally desirable and valuable substitute property
Supply and Demand
value of the product depends on the supply
Sales Comparison Approach
value is obtained by comparing the property being appraised with recently sold comparable properties
Functional Obsolescence
loss in value from the market’s response to the item
External Obsolescence
depreciation caused by negative factors not on the subject property, such as environmental, social or economic forces
Income Approach
value is based on the present value of the right to future income
Net Operating Income
deducting the annual operating expenses from the effective gross income
