Value In Real Estate Flashcards
Non-Fungible Commodity
What does fungible mean? Is it a kind of mushroom? No, Makayla, fungible just means something that can be exactly replaced by another item. No two tracts of land are exactly alike because no two lots can occupy exactly the same space. Each parcel of land is an object that has no precise equal or substitute.
Immobility
Durability (indestructibility)
Uniqueness (non-homogeneity)
The actual land itself – the tract or lot that an individual purchases – is immovable. Nobody’s loading an entire slice of earth, down to the molten core, into a pickup truck and driving it across town. This characteristic is called immobility.
Land can’t be destroyed, and it doesn’t wear out. There is no “usable life” to land. Even if you let it get overgrown, poison it with toxic chemicals, or blast a giant hole in it, it’s still there, and could still potentially have value.
The physical location of a lot or parcel is an integral feature of its identity. Because land occupies a specific site that no other piece of land may also occupy, it is unique unto itself and not interchangeable with an exact substitute.
What is the difference between assemblage and plottage?
Assemblage is combining plots. Plottage is the resulting increase in value.
situs, is
The desirability of a location
Market value
Appraised value
Assessed value
Market value is the price for which a property will theoretically sell under fair, normal conditions.
The appraised value of a property is the value determined by a licensed real estate appraiser.
The assessed value is the value placed on a property by a governmental unit for use in calculating property taxes.
Principle of anticipation
Principle of contribution
Principle of substitution
Principle of change
Principle of conformity
Principles of regression and progression
Principle of competition
Certainly, here are shorter definitions for each principle:
- Anticipation: Property value is influenced by future potential and expected benefits.
- Contribution: The value of a feature depends on how much it adds to the property’s overall value.
- Substitution: Buyers won’t pay more when similar properties are available for less.
- Change: Property value fluctuates due to economic, social, and environmental factors.
- Conformity: Maximal value is achieved when a property fits in with its neighborhood.
- Regression and Progression: Nearby property values can impact a property’s value.
- Competition: Property value is affected by market competition and availability of similar properties.
Yes, just like the moon, the real estate market waxes and wanes in cycles. The real estate market’s phases include:
Recession 🌘
Recovery 🌗
Expansion 🌖
Hyper supply 🌕
Certainly, here are shorter definitions for each phase of the real estate market cycle:
- Recession (🌘): Property values decline, demand drops, and an oversupply of properties occurs due to economic downturns.
- Recovery (🌗): Property values stabilize and gradually rise as economic conditions improve.
- Expansion (🌖): Strong growth in property values and demand, often accompanied by new construction and development.
- Hyper Supply (🌕): An excessive boom phase marked by speculative development and an oversupply of properties, potentially leading to a market correction.
Which party is usually responsible for choosing the appraiser?
The lender is usually responsible for choosing the appraiser. This is done to ensure that the appraiser won’t be biased towards either party and so the lender will know the true value of the home before lending the money.
Who Appraises the Appraisers?
FIRREA
Here are the steps to completing an appraisal:
State the objective.
List the data needed.
Gather and record data.
Determine the highest and best use.
Estimate the land value.
Estimate value using applicable approaches to appraisal.
Reconcile the final value estimate.
Complete and present the value report.
Certainly! Here’s a fun way to remember each step of completing an appraisal with emojis:
- 🎯 State the objective: Set your appraisal goal like an archer aiming for a bullseye.
- 📊 List the data needed: Imagine creating a grocery list, but you need data instead of groceries. 🛒
- 📋 Gather and record data: Pretend you’re a detective collecting clues and jotting them down in your notepad. 🕵️♂️📝
- 🏆 Determine the highest and best use: Think of yourself as a real estate visionary, seeking the “crown jewel” use for the property. 👑💎
- 🌍 Estimate the land value: Picture a tiny globe representing the land you’re appraising and put a price tag on it. 🌐💰
- 📈 Estimate value using applicable approaches to appraisal: Imagine using different tools (like a calculator, telescope, and magnifying glass) to estimate value creatively. 🧮🔭🔍
- ⚖️ Reconcile the final value estimate: Imagine balancing on a tightrope with values on one side and estimates on the other. 🤹♂️
- 📊 Complete and present the value report: Picture yourself as a reporter on TV, delivering the final appraisal news with enthusiasm! 📺🎙️
These emojis should help you remember the appraisal steps in a fun and memorable way!
The gross rent multiplier (GRM) is
the ratio of the price of a real estate investment to its annual rental income BEFORE accounting for expenses such as property taxes, insurance, and utilities.
In real estate transactions involving financing, to whom does the appraiser send the final appraisal?
The final appraisal is sent to a lender. The appraisal will then be reviewed by the underwriter to make sure it was done properly, and it will be checked to ensure it meets the lender’s standards.
what words must never be put into a cma
value, worth, appraisal
Steps to Creating a CMA
Evaluate the neighborhood.
Evaluate the subject property.
Find comparables.
Compare and adjust selected comparables.
Establish a listing price range.
cost approach
The appraiser is essentially solving for the value of the subject property by figuring out how much it would cost to build a very similar property on a very similar piece of land.
Obsolescence is
a property’s loss of value due to economic or functional factors.
