UNIT 11 - VALUATION & APPRAISAL Flashcards
Value
present worth of rights to future benefits that come from property ownership
purpose of appraisal
defines how the appraisal process will be laid out
intended use of appraisal
decides which report type is most appropriate
market value
objective value, determined by data.
value in use (utility value)
usefulness of the property to a specific user
DUST (value)
Demand (effective demand)
Utility (functional utility)
Scarcity
Transferability
thoroughfare condition
width of streets, traffic congestion, and condition of pavement
principle of substitution
basis of the appraisal process, where value is set by the cost of getting an equally desirable substitute.
principle of conformity
more that structures are in harmony with one another, the more valuable each of those structures.
principle of highest and best use
reasonable use of real property at the time of the appraisal, which is most likely to produce the greatest net return to the land/building over a given period of time.
principle of progression
value of an inferior property will be worth more because of the presence of greater value properties nearby
principle of regression
opposite of progression
principle of balance
value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium.
principle of anticipation
value is created by the expectation of future benefits
principle of contribution
worth of an improvement as well as what it adds to the entire property’s market value, regardless of the actual cost of the improvement.
curable depreciation
loss in value that is economically feasible to correct
incurable depreciation
physically impossible to cure or too expensive to be worth curing.
straight-line method
assumes a building will decline in value the same amt each year until nothing is left.
capitalization
the process of calculating a property’s present worth on the basis of its capacity to continue producing an income stream
plottage increment
the increase in value when several smaller parcels are combined together into one larger parcel
amenities
features that add value to a property
utility
the ability of a property to satisfy a need or desire, such as shelter, income, or amenities.
improvements
any buildings or structures on a lot
economic rent
reasonable rental expectancy if the property were available for renting at the time of its valuation
obsolescence
may be caused by external or economic changes and decreases the usefulness of property or causes deterioration
depth table
A depth table is a table used by real estate appraisers to show land values in percentages based on variations in the depth of the lot. Typically used for commercial properties.
