Valuation Flashcards
Location of the property
Situs
method determining the value of property using
CMA
Certified market analysis
Informal estimate of value
Market Analysis
DUST
Acronym for the four determinants value: demand, utility, scarcity, and transferability
Expectation of benefits to be derived in the future
Anticipation
The active demand for real estate in short supply
Competition
The principle that properties that are similar in style, size, quality, etc. will maintain a hiqher value
Conformity
The value of a particular component of a property.
Contribution
Conditions outside the property which affect the value of the property.
Externalities
The use which will bring the highest price for a particular property.
Highest and Best Use
The effect that inferior and superior properties in the same vicinity have on each other. The superior property will add value to the inferior property and the inferior property will decrease the value of the superior one.
Progression
Regression
When two commodities are similar, the one with the lowest price will attract the greatest demand. The basis for the sale comparison approach
Substitution
If there is a difference in value in two similar properties, the difference is attributed to the land or location.
Surplus Productivity
Method of estimating value by calculating the cost to build it.
Cost Approach
The cost at current prices to replace a building with one of equivalent utility
Replacement Cost
The cost at current prices to produce an exact duplicate of a building.
Reproduction Cost
Loss in value due to wear and tear
Physical Depreciation
Loss in value due to outdated design or technology.
Functional Depreciation
Loss in value to due conditions outside the property.
External Depreciation
Any type of depreciation in which the amount of money spent to correct the deficiency is less than the resulting increase in value.
Curable Depreciation
Any type of depreciation in which the amount of money spent of correcting the deficiency is greater than the resulting increase in value
Incurable Depreciation
The apparent age of the property based on the condition of the property
Effective Age
The period of time over which a property may be expected to be useful.
Economic Life
A technique for estimating the value of property by comparing it to similar properties in the same area
Sales Comparison Approach
Estimates the present worth of a property’s expected future income; used for rental property.
Income Approach
I/R=V
A rough estimate of the value of rental property based on gross rents; use monthly rent for residential, yearly for commercial
Gross Rent Multiplier
GRM X rent = value
Additional time within which to pay a debt, from the time of default to the actual foreclosure sale
Equitable Right of Redemption
