Sales Comparison, Cost, and Income Approaches that Appraisers Use Flashcards
What does direct sales comparison do?
It examines the sales of comparable vacant parcels that are analyzed and adjusted to indicate a value for the subject land
What does the appraiser do in the cost approach to value?
The appraiser estimates a property’s value by adding the land value to the depreciated value of any improvements to the property
What is the only reliable approach when dealing with special-use properties like public or governmental facilities?
The coach approach to value
What are the 5 steps of the cost approach?
- Estimate the value of the land as if it were vacant and available for its highest and best use
- Estimate the cost of improvements - replacement or reproduction cost
- Estimate the accrued depreciation that results from physical deterioration, functional obsolescence, or external obsolescence
- Subtract the depreciation total from the estimated cost of improvements
- Add the land value to the depreciated cost to get the total estimated value of the property
What is market value?
Market value of a property is an opinion of the value of a property based on analyzing data collected about the property
What is market price?
Market price of a property is the actual sales price
What are the 2 types of costs?
Direct costs (hard costs) and Indirect costs
What are direct costs?
They include the cost of labor and materials
What are indirect costs?
They include any/all administration costs, appraisal fees, architectural and engineering fees, attorney’s fees, filing fees, financing costs, interest, leasing costs, record fees, surveyor fees, and taxes
What are GRM and GIM used for?
To estimate the value of properties such as single-family homes and duplexes that could produce income but are not primarily income-producing properties like apartment buildings
What does GRM stand for?
Gross Rent Multiplier
What does GIM stand for?
Gross Income Multiplier
