unit 16 Flashcards
definition of an appraisal
estatemate or opinion of market avalue supported by an analysis of relevant property data
appraisal licensing
they must be licesnsed or certified accordign to state law and in accordance with federal regulations
purpose and function of an appraisal
it is required for all federally related loans
it is not required in seller financing
help estimate market value on behalf of the lendor
CMA
is a broker opion of value
Market value
an estimate of what the market will pay
the most probable price that a properity should bring
market price
actual sale price of what someone actually paid
essential characteristics of value
demand
utility
scarcity
transferability
principals of value
highest and best use, anticipation supply and demand subsitution conformity contribution
what is highest and best use?
is the use that produces the highest value over time
What is supply and demand?
supply: numver of avialable properites
- price moves opposite of supply when supply goes up price goes down
demand: number of properites that will be purchased
- price moves with demand when the demand goes up the price goes up
what is subsitution?
it is the basis of the sales comparison approach and used in all the approaches
what is conformity?
regression: the value per square foot of overimproved property declines
progression: the value per square foot of underimproved property increases
contribution?
the value of an improvemtn is not what it costs to build but what it adds to the market value to the property
Sales comparison / market data approach
the most importatnt method for residential property and vacant land
it is the estimate of value base d on adjusted sale prices of similar properites that recently sold
Cost Approach
teh most improtant method for unique or special purpose properites cuh as churches ans chools
how mucht he cost to build new or replicate
