SECTION 12 - Property Values in CA Flashcards
Relates to a property’s popularity
DUST
DEMAND
Speaks to the property’s function
DUST
UTILITY
Reflects the market supply, or lack thereof
DUST
SCARCITY
The ease with which the deed can be transferred and the property put to the desired use.
(DUST)
TRANSFERABILITY
The most reliable of the three approaches when appraising single-family homes for market value.
SALES COMPARISON APPROACH
A process in which an appraiser determines a probable range of values for a property by comparing a group of comparable sales to the subject.
BRACKETING
Finding appraised value measures value as a cost of production, including acquisition of the land and the construction costs.
Is not used in condominium and cooperative properties, or with older properties,
COST APPROACH
Will help you and your client determine if a property might meet the desired rate of return.
Estimates the present value of any future benefits of owning a particular property.
INCOME APPROACH
DIVIDE the sale price of a comparable property by that property’s monthly or annual gross rent to arrive at a single number.
That number is then multiplied by the subject property’s anticipated monthly or annual gross rent to arrive at a property value
GROSS RENT MULTIPLIER
DIVIDE the sale price of a comparable property by that property’s monthly or annual gross rent to arrive at a single number.
That number is then multiplied by the subject property’s anticipated monthly or annual gross rent to arrive at a property value.
Sales price divided by the gross monthly rent.
GROSS RENT MULTIPLIER
The multiplier is found from a comparable property by dividing the sales price by the property’s annual gross income from all sources.
Sales price divided by gross annual income.
You can then apply the multiplier to the subject property’s income to determine value. Therefore, THIS is more suitable for five-unit or larger income properties.
GROSS INCOME MULTIPLIER
if you know the GRM derived from the comparables is 110X, you would:
Multiply the gross monthly rent by 110
HOW TO CALCULATE GRM
If you know the GRM derived from the comparables is 110X, you would:
Multiply the gross monthly rent by 110
HOW TO CALCULATE GRM
Divide annual income by value (or sales price) (I / V = R).
CAP RATE
A poor floor plan is an example of which type of depreciation?
A) External depreciation
B) Functional obsolescence
C) Incurable depreciation
D) Physical depreciation
B.
Functional obsolescence is a form of depreciation or loss in value caused by defects in design.
