Valuation & Market Analysis Flashcards
A tangible or intangible feature that enhances and adds value to real estate.
Amenity
A transaction that occurred under typical conditions in the marketplace where each of the parties were acting in their own best interests.
Arm’s Length Transaction
The combining of two or more parcels of land into one larger parcel.
Assemblage
A condition that exists in the real estate market when there are slightly more homes available than buyers.
Balance
A way to convert a property’s income figure into an estimated value.
Capitalization
A situation in the housing market when there are many homes available for sale, but few buyers.
Buyer’s Market
Recently sold properties with similar characteristics (size, room count, design, utility, etc.) that are in close proximity to the property being appraised.
Comparables
The need or desire for a specific good or service by others.
Demand
A “rule” that says a particular item or feature of a home is only worth what it actually adds in value to that piece of property.
Contribution
When a building is less desirable because of something inherent in the design of the structure.
Functional Obsolescence
Law that says beyond a certain point, the added value of an additional feature, addition, repair, etc. is less than the actual cost of the item.
Diminishing Returns
When something outside the control of a property makes it less desirable.
External Obsolescence
A number derived from comparable rental property in an area, which then used to estimate the value of a piece of real estate. The GMRM is only used for one to four unit residential properties. COMPARE: Gross Income Multiplier, which is a variation used for commercial properties that uses annual income.
Gross Rent Multiplier (GRM)
The actual dirt or soil on the ground. From a legal standpoint, also refers to everything under the ground to the center of the earth, and everything over the land into the air (within limits to allow for air traffic).
Land
A variation of the GMRM which is used for commercial properties, but uses annual income figures.
Gross Income Multiplier (GIM)
An increase in value by successful assemblage, usually due to a change in use.
Plottage
Actual wear and tear on something due to age, the elements or other forces.
Physical Deterioration
The price that a piece of real estate sold for in an actual transaction.
Market Price
A principle that says the value of a home is held down by the other homes in an area. (Usually said about the “best” home in the “worst” area.)
Regression
The appraisal process of analyzing the values derived from the different appraisal approaches to arrive at a final value estimate or opinion.
Reconciliation
A principle that says the value of a home is helped up by the other homes in an area. (Usually said about the “worst” home in the “best” area.)
Progression
Method for determining the cost of a building that relies on cost manuals (and is sometimes called the cost manuals method).
Square Foot Method
A situation in the housing market when a large number of buyers are looking for housing in an area of limited availability.
Seller’s Market
A physical characteristic of real property that says there is a limited supply of real estate; the perceived supply of a good or service relative to the demand for the item.
Scarcity
Competitive Market Analysis - A method of determining the approximate market value of a home by comparing the subject property to other homes that have sold, are presently for sale, or did not sell in a given area.
CMA
Law of economics that says for all products, goods and services when supply exceeds demand, prices will fall and when demand exceeds supply, prices will rise.
Supply and Demand
A “rule” that says an informed buyer will not pay more for a home than a comparable substitute.
Substitution
Uniform Residential Appraisal Report - A standard appraisal report form used by lenders and appraisers because it has been developed and approved by secondary mortgage market players Fannie Mae and Freddie Mac.
URAR
