Types of Value Flashcards
What is valuation?
It’s the process of estimating the value of an identified interest in specific property as of a given date
What is the purpose of valuation?
Largely to determine a property’s market value
What is investment value?
The amount of the return on an investment that an income-producing property will produce
What is insured value?
The face amount a casualty or hazard insurance policy will pay in case a property is deemed unusable
What is use value/value-in-use?
It’s the value the property holds for the owner
What factors contribute to use value?
Income, appreciation, use, and tax benefits
What is evaluation?
It’s the study of the nature, quality, or utility of certain property interests where a value estimate is not necessarily required
What is allocation?
A typical ratio of land value to total value derived from comparable properties and applied to the subject
What is extraction?
Land value that’s estimated by deducting the depreciated cost of improvements on a property from the total sale price of the property
What is a subdivision development analysis?
It deducts costs and profit from estimated gross sale prices of subdivided and finished lots and net sales proceeds are discount to present value
What is land residual
Where the net operating income attributed to the land is capitalized at market rates to obtain land value
What is ground rent capitalization?
Where ground rent of the subject is capitalized at market rates
What is exchange value?
Results from comparing the property to other similar properties on the open market. This is the type of value that real estate agents are concerned with
What is reproduction value?
Based on the cost of constructing a precise duplicate of the subject property’s improvements, assuming current construction costs
What is replacement value?
Based on the cost of construction a functional equivalent of the subject property’s improvements, assuming current construction costs
