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Managing Broker > VALUATION AND MARKET ANALYSIS > Flashcards

VALUATION AND MARKET ANALYSIS Flashcards

1
Q

Looks to the future for value

A

ANTICIPATION

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2
Q

A document that gives an estimate of fair market value; for lenders, owners, etc.

A

APPRAISAL

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3
Q

Refers to an agreement arrived at under no undue pressure

A

ARMS-LENGTH AGREEMENT

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4
Q

The total value of combined properties exceeds total value of individual properties; also referred to as a plottage increment

A

ASSEMBLAGE

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5
Q

An approach to value best used on income producing properties such as shopping centers, apartment complexes, etc. This approach uses the net operating income and a capitalization rate to estimate the value. Also referred to as the income approach.

A

CAPITALIZATION APPROACH

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6
Q

Actual Age

A

CHRONOLOGICAL AGE

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7
Q

High profits attract competition

A

COMPETITION

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8
Q

(CMA) What an agent uses in trying to find a value for a piece of property; a residential agent analyzes sold properties, currently for sale properties, and expired listing properties in an effort to determine a range of value for a particular piece of property

A

COMPETITIVE MARKET ANALYSIS

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9
Q

Properties should conform to the neighborhood to maintain the greatest value

A

CONFORMITY

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10
Q

Value of improvement is equal to what it adds to total value

A

CONTRIBUTION

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11
Q

An approach to value best used on special purpose properties, such as churches and hospitals; the approach values a property by determining the current replacement cost, less depreciation, plus the current land value

A

COST APPROACH

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12
Q

A way to determine current replacement cost by taking the cubic footage (length times width times height) of a property times a cost per cubic foot

A

CUBIC FOOT METHOD

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13
Q

Money spent on improvement does not add at least that much or more to the total value

A

DECREASING RETURNS

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14
Q

An element of value; must be wanted

A

DEMAND

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15
Q

Number of years item is profitable; economic life is shorter than the physical life

A

ECONOMIC LIFE

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16
Q

A form of depreciation due to problems outside the property lines; e.g., owning a house next to a factory or sewage treatment plant; also referred to as external obsolescence

A

ECONOMIC OBSOLESCENCE

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17
Q

Apparent age based on condition; generally less than chronological age

A

EFFECTIVE AGE

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18
Q

The annual gross income for a property less a vacancy rate; used with the income approach

A

EFFECTIVE GROSS INCOME

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19
Q

A form of depreciation due to problems outside the property lines; e.g., owning a house next to a factory or sewage treatment plant; also referred to as economic obsolescence

A

EXTERNAL OBSOLESCENCE

20
Q

A form of depreciation due to problems inside the property lines; does not function the way modern properties do; e.g., outhouses, pumps for water, etc.

A

FUNCTIONAL OBSOLESCENCE

21
Q

The possible annual gross income for a property; used with the income approach

A

GROSS INCOME

22
Q

(GRM); This is a form of the income approach used to estimate the value of a rental property. The gross rent multiplier is computed by taking a rental properties sale price and dividing by the rent charged.

A

GROSS RENT MULTIPLIER

23
Q

The use of a property that provides greatest net return on land

A

HIGHEST AND BEST USE

24
Q

An approach to value best used on income producing properties such as shopping centers, apartment complexes, etc. This approach uses the net operating income and a capitalization rate to estimate the value. Also referred to as the capitalization approach.

A

INCOME APPROACH

25
Q

Money spent on improvement adds at least that much or more to the total value

A

INCREASING RETURNS

26
Q

An approach to value best used on residential property and vacant land; uses comparable properties to estimate values

A

MARKET DATA APPROACH

27
Q

NOI; the annual gross income for a property less a vacancy rate and operating expenses; used with the income approach

A

NET OPERATING INCOME

28
Q

Used with the income approach, the operating expenses include all operating costs, such as utilities, maintenance, salaries, etc. The one expenses NOT considered is the debt service (mortgage payments).

A

OPERATING EXPENSES

29
Q

A form of depreciation due to peeling paint, sagging floors, etc.

A

PHYSICAL DETERIORATION

30
Q

Number of years item is physically sound

A

PHYSICAL LIFE

31
Q

The total value of combined properties exceeds total value of individual properties; also referred to as assemblage

A

PLOTTAGE INCREMENT

32
Q

A way to determine current replacement cost by pricing the rebuilding item by item; every brick, board, etc.

A

QUANTITY SURVEY METHOD

33
Q

Allows owners of investment property to deduct a percentage of the cost of the property each year from their taxable income; also referred to as tax depreciation

A

RECAPTURE

34
Q

(Correlation) The final step in the appraisal process; this reconciles differences from among three different approaches to value to arrive at a final dollar amount for the appraisal

A

RECONCILIATION

35
Q

Using the cost of similar materials

A

REPLACEMENT COST

36
Q

Using the exact replica cost

A

REPRODUCTION COST

37
Q

An element of value; must be a limited supply

A

SCARCITY

38
Q

A way to determine current replacement cost by taking the square footage (length times width) of a property times a cost per square foot; appraisers use outside dimensions in determining square footage

A

SQUARE FOOT METHOD

39
Q

The first step in the appraisal process; this defines the purpose of the appraisal

A

STATE THE PROBLEM

40
Q

A method of depreciation where one depreciates equal amounts each year; what appraisers use

A

STRAIGHT LINE METHOD DEPRECIATION

41
Q

A property is only worth what one can get another one for just like it

A

SUBSTITUTION

42
Q

Allows owners of investment property to deduct a percentage of the cost of the property each year from their taxable income; also referred to as recapture

A

TAX DEPRECIATION

43
Q

An element of value; seller must be able to give to buyer

A

TRANSFERABILITY

44
Q

A way to determine current replacement cost by pricing the rebuilding by units; concrete, roof, etc.

A

UNIT-IN-PLACE METHOD

45
Q

An element of value; must be useful

A

UTILITY

46
Q

An item goes down in value due to age, wear and tear, etc.

A

VALUE DEPRECIATION

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