Chapter 16: Appraisals Flashcards Preview

Real Estate- NJ (Mulroy) > Chapter 16: Appraisals > Flashcards

Flashcards in Chapter 16: Appraisals Deck (42)
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1
Q

Situs

A

The locations of a particular property and peoples preferences for particular locations. Remember location, location, location.

2
Q

Amenity

A

Some extra that contributes to owner satisfaction: clean air, view, etc.

3
Q

Capitalization rate

A

The rate of return a property produces on the owners investment.

4
Q

Cost approach

A

The process of estimating the value of property by adding to the estimated land value the appraiser’s estimate of the reproduction or replacement cost of the building, less depreciation. Ex appraisal of schools, churches.

5
Q

External Obsolescence

A

Reduction in a property’s value caused by factors outside the subject’s property such as social or environmental forces or objectionable neighboring property. This is always incurable.

6
Q

Functional Obsolescence

A

A loss of value to an improvement to real estate due to becoming out dated, often caused by age or poor design. It can be Curable & incurable.

7
Q

Sales Comparison Approach

A

The process of estimating the value of a property by examining and comparing actual sales of comparable properties.

8
Q

Functional Obsolescence: Curable

A

Outmoded fixtures, such as plumbing, are usually easily replaced.

9
Q

Functional Obsolescence: Incurable

A

Currently undesirable physical or design features that cannot be easily remedied.

10
Q

Highest & best use

A

That possible use of land that would produce the greatest net income and thereby develop the highest land value.

11
Q

Market Value

A

That probable price a ready, willing, able, and informed buyer would pay a ready, willing, able, and informed seller would accept without pressure.

12
Q

Market Price

A

The actual selling price of the property.

13
Q

Determing Reproduction or Replacement cost

A

Square Foot Method, Unit-in-place Method, Quantity-Survey Method, Index Method.

14
Q

Appraisals are required…

A

For all Federally related transactions (any transaction with a value of $250,000)

15
Q

Competitive Market Analysis (CMA)

A

Used by the broker or the salesperson to help the seller determined a listing price for the property. Also, to help the buyer in formulating an offer.

16
Q

Value

A

is the present worth of future benefits arising from the ownership of real property.

17
Q

Types of Value

A

Assessed Value
Insurable Value
Book Value
Salvage Value

18
Q

Assessed Value

A

A locally determined percentage of market value, which is used by municipality to establish a property tax

19
Q

Insurable Value

A

Replacement cost of a building minus the land value.

20
Q

Book Value

A

Value of an asset less depreciation.

21
Q

Salvage Value

A

Estimated value of an asset at the end of it’s economic life.

22
Q

Characteristics necessary of property to Value in Real Estate

A
"DUST:
D-Demand
U- Utility
S- Scarcity
T; Transferabiity
23
Q

Demand

A

Need supported n=by purchasing power.

24
Q

Utility

A

Capacity to satisfy human wants and needs.

25
Q

Scarcity

A

Finite Supply

26
Q

Transferability

A

Transfer ownership rights with relative ease.

27
Q

Substitution

A

The value of a property tends to set by the cost of purchasing an equally desirable and similar property.

28
Q

Supply and Demand

A

The price of a property increases if the supply decreases and decreases of the supply increases.

29
Q

Conformity

A

Maximum value is realized if the land use conforms to the existing neighborhood standards.

30
Q

Increasing and decreasing return

A

Improvements to land and structures produce a proportionate increase in value until some point beyond which the impact improvements begin to decrease

31
Q

Competition

A

High levels of profits attract competitors into an industry; increase in competition results in decreased profits through industry.

32
Q

Change

A

No economic or physical condition remains constant.

33
Q

Contribution

A

The value of any component of property consists of what is addition contributes to the value of the property.

34
Q

Anticiption

A

Value can increase or decrease in anticipation of some future benefit or detriment that will affect the property..

35
Q

Balance

A

Is achieved when adding improvements and structures that will increase the property value.

36
Q

Regression

A

The principle between dissimilar properties: the worth of the better property is affected adversely by the presence of the lesser-quality property.

37
Q

Progression

A

The worth of lesser property tends to increase if it is located among better properties.

38
Q

Market date approach (Sales Comparison approach)

A

A value estimate is obtained by comparing the subject property with resent sales of comparables..

39
Q

Income approach

A

The process of estimating the value of an income-producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life.

40
Q

Amenities

A

The tangible and non-tangible neighborhood benefits beyond the property’s boundaries descriptions.

41
Q

Capitalization

A

A mathematical process for estimating a property’s value using a proper rate of return on investment and anticipated annual net income.

42
Q

Comparables

A

Sold properties listed in the appraisal report generally equivalent to the subject property.