Appraisal Flashcards
Flashcards
land residual method
“A method of estimating land value in which the net operating income attributable to the land is isolated and capitalized to produce an indication of the land’s contribution to the total property.”
should be used in the appraisal of income producing properties.
basic income capitalization formula
Value = Income/Rate
ground rent capitalization method
“A method of estimating land value; applied by capitalizing ground rent at a market-derived rate. This method is useful when comparable rents, rates, and factors can be developed from an analysis of sales of leased land or other market sources.”
formula of value
income divided by a rate
Relative comparison analysis
a less precise application of the sales comparison method, but it reflects the imperfect nature of real estate markets.
Ranking analysis
a variant of relative comparison analysis, in which the comparable sales are ranked in ascending or descending order. Then the relative position of the subject is determined within the array.
land
- In law, the solid surface on the earth, as distinguished from water.
- One of the four agents of production in economic theory”
Site
“Improved land or a lot in a finished state so that it is ready to be used for a specific purpose.”
Cost Approach
The cost approach is sometimes referred to as the summation approach, although this term is generally considered somewhat outdated. The cost approach deals with two components, site and improvements, which are added together (i.e., summed) to produce a value indication.
Brownfields
“Real property for which the expansion, redevelopment, or reuse of the real estate may be complicated by the presence of environmental contamination that needs to be remediated to appropriate regulatory standards.”
6 Site Valuation Methods
SALES COMPARISON - Comparison with recents ales
- EXTRACTION - Subtracts estimated improvement value to arrive at land value
- ALLOCATION - Uses land-to-value ratios based on improved sale comparables
- SUBDIVISION DEVELOPMENT - Subtracts estimated development costs from discounted sale proceeds
- LAND RESIDUAL - Divides up and capitalizes the income between land and improvements
- GROUND RENT CAPITALIZATION - Capitalizes income from leased land
Types of Adjustments
When utilizing sales comparison, adjustments to the comparable sales may be made either on a quantitative or qualitative basis. Quantitative adjustments are usually made on a percentage or dollar basis.
qualitative basis
Relative comparison analysis
Ranking analysis
Quantitative adjustments
Sales Comparison Extraction Method Allocation Method Subdivision Development Method Land Residual Method Ground Rent Capitalization Method
Extraction Method
A method of estimating land value in which the depreciated cost of the improvements on an improved property is calculated and deducted from the total sale price to arrive at an estimated sale price for the land.”
Allocation Method
“A method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed.”
Mass appraisals
“1. The application of computer technology and statistical techniques to the solution of appraisal problems; used in assessment administration to derive value indications in the cost and sales comparison approaches and to perform other functions, e.g., assessment ratio analysis.
- A system of appraising property, usually only certain types of real property, that incorporates statistical analyses such as multiple regression analysis and adaptive estimation procedure to assist the appraiser in estimating value. (IAAO)”
Land Residual Method
“A method of estimating land value in which the net operating income attributable to the land is isolated and capitalized to produce an indication of the land’s contribution to the total property.”
five basic housing types
- Ranch - 1 story
- Cape Cod - 1-½ story
- Two-story
- Split level - multi levels
- Split entry (sometimes called a split foyer, bi-level, or raised ranch) - one story with finishedbasement (Note: Marshall & Swift refers to this type as a “two story bi-level”)
Style can be influenced by
- Type and texture of exterior finish
- Colors
- Roof style
- Roofing materials
- Window types
- Building shape
- Ornamental details
- Shutters
- Dormers
- Cupolas
- Corner boards
Types of Commercial Construction
- Class A - fireproofed steel frame
- Class B - reinforced concrete frame
- Class C - masonry or reinforced concrete
- Class D - wood or steel studs
- Class S - pre-engineered structural; members
Manufactured Home
“A factory-built house manufactured under the Federal Manufactured Home Construction and Safety Standards Act of 1976, commonly known as the HUD Code.”“A factory-built house manufactured under the Federal Manufactured Home Construction and Safety Standards Act of 1976, commonly known as the HUD Code.”
the manufactured home is constructed on a permanent steel chassis and has wheels and axles. It is meant to be hauled down the highway and arrives 100% finished. The sections are joined together at the site and it is complete. Most significantly, it is built to meet the HUD Code.
Modular Home
“A factory-built house built in compliance with a building code other than the HUD Code. This usually means that the home is constructed to the standards of the state or local building code used by the governmental unit where the house is to be located. Note that the California Factory-Built Housing Program uses the term factory-built housing (FBH) in place of the term modular home.”
built in sections, called boxes, which are lifted onto a truck and transported to the site. The boxes are lifted off with a crane, or rolled off, onto the foundation. Then the boxes have to be joined and finishing work performed at the site. A modular home is built to meet state and local codes, not the HUD Code.
Gross Living Area (GLA)
“Total area of finished, above-grade residential space; calculated by measuring the outside perimeter of the structure and includes only finished, habitable, above-grade living space. (Finished basements and attic areas are not generally included in total gross living area. Local practices, however, may differ).”
Gross Building Area
“Total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above grade area. This includes mezzanines and basements if and when typically included in the market area of the type of property involved.”
GBA is used in measuring 2- to 4-unit residential properties. It is also sometimes used in measuring commercial buildings, such as office buildings. It may include some unfinished areas or common areas such as hallways.
End of Page
http://websoilsurvey.nrcs.usda.gov/app/
Soil maps
Site Preparation - Legal Considerations
- Obtain a building permit
- Check applicable codes
- Building Codes
- Fire Codes
- Check environmental regulations
- Wetlands
- Protected areas
- Hazard areas
- Check flood plain
- Curb cut permit or driveway permit (if needed)
3 components of the foundation system
- The soil bed
- Footings
- Foundation wall or piers
Foundation System 3 purposes
It distributes the weight of the building over the ground, anchors the building to the ground, and protects the wood in the house structure from decay and insect attack.
keyway
a slot that was created in the top of the footing when it was poured.
Sill Plates
usually 2 x 6 or 2 x 8 wooden boards,depending on the size of the foundation wall. Before they go down ontop the foundation wall, there should be an insulation strip or sillsealer installed.
first piece of the wooden structure
Girders
the main support beams and are set in pockets that were formed in the top of the end walls of the foundation
Joists
horizontal structural members, placed on edge, which carry the house loads to girders and sills. The thickness, width and spacing are determined by the live loads placed on them. They commonly are 2 x 10’s or 2 x 12’s.
Subflooring
Until the 1970s, subflooring usually consisted of 1” x 6” tongue and groove boards laid diagonally for more strength. Today it is almost always 4’ x 8’ sheets of plywood or oriented strand board (OSB). One-half inch may be an acceptable minimum, but 5/8 inch or 3/4 inch is much more desirable.
Framing Systems
For over a thousand years, the framing system utilized was the post and beam system. This consists of large vertical posts that support horizontal beams. The posts and beams were joined together by various interlocking joints, such as mortise and tenon, and then secured by wooden pegs.
