study guide chapter 16 Flashcards

1
Q

Price:

A

The amount received in a transaction (Purchase Price) (pg 269)

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2
Q

Going Concern:

A

The concept of value pertaining to the appraisal of a profitable business. (pg 295 also Ch 17 pg 333)

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3
Q

Liquidation Value:

A

The value of a business that is NOT expected to continue. (pg
296)

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4
Q

Principle of Substitution:

A

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)

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5
Q

Cost Depreciation:

A

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)

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6
Q

What is the Highest and Best use of a parcel in real estate?

A

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)

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7
Q

Functional Obsolescence:

A

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)

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8
Q

External Obsolescence

A

External Obsolescence is the loss in value caused by factors beyond the boundaries of the property. (pg 304)

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9
Q

Effective Age:

A

Is the age that a property appears to be due to extensive updates or excessive wear and tear due to negligent management. (pg 304)

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10
Q

Actual Age:

A

The true age of a property (pg 304)
ACRONIM for Principle of Substitution.
CIA: Comparable Inferior Add.
CBS: Comparable Better Subtract.

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