study guide chapter 16 Flashcards
Price:
The amount received in a transaction (Purchase Price) (pg 269)
Going Concern:
The concept of value pertaining to the appraisal of a profitable business. (pg 295 also Ch 17 pg 333)
Liquidation Value:
The value of a business that is NOT expected to continue. (pg
296)
Principle of Substitution:
The concept that states that an informed buyer will pay no more for a property than the cost of acquiring another equally desirable property with the same or equal utility. (pg 297)
Cost Depreciation:
The approach of value that would be selected for a new property or a special property with no comparable proper es available. (i.e. County Court House, School, Church etc)
What is the Highest and Best use of a parcel in real estate?
The Highest and Best use of a parcel in real estate is the legal and possible use that generates the greatest return on the future use of land and improvements (pg 301)
Functional Obsolescence:
A loss in building value as a result of a deficiency or excess that is inherent to the structure. (i.e. An over improvement) (Pg 304)
External Obsolescence
External Obsolescence is the loss in value caused by factors beyond the boundaries of the property. (pg 304)
Effective Age:
Is the age that a property appears to be due to extensive updates or excessive wear and tear due to negligent management. (pg 304)
Actual Age:
The true age of a property (pg 304)
ACRONIM for Principle of Substitution.
CIA: Comparable Inferior Add.
CBS: Comparable Better Subtract.