Chp 18 Real Estate Appraisal

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IQ
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230008
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Chp 18 Real Estate Appraisal
Updated:
2013-08-14 16:28:21
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Real Estate
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Real Estate
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  1. Loss in value resulting from the property’s
    physical deterioration, external depreciation (decrease in price), and
    functional obsolescence.
    Accrued depreciation
  2. The appraisal principle that holds that value
    can increase or decrease based on the expectation of some future benefit or
    detriment produced by the property.
    Anticipation
  3. An estimate of the quantity, quality, or value
    of something. The process through which conclusions of property value are
    obtained, also refers to the report that sets forth the process of estimation
    and conclusion of value.
    Appraisal
  4. The combining of two or more adjoining lots into
    one larger tract to increase their total value.
    Assemblage
  5. an opinion of real estate value commissioned by
    a bank or attorney and provided by a broker.
    Broker’s Price Opinion (BPO)
  6. The rate of return a property will produce on
    the owner’s investment.
    Capitalization rate
  7. The appraisal principle that holds that no
    physical or economic condition remains constant.
    Change
  8. A comparison of the prices of recently sold
    homes that are similar to a listing seller’s home in terms of location, style,
    and amenities.
    Competitive Market Analysis (CMA)
  9. The appraisal principle that states that excess
    profits generate competition.
    Competition
  10. The appraisal principle that holds that the
    greater the similarity among properties in an area, the better they will hold
    their value.
    Conformity
  11. The appraisal principle that states that the
    value of any component of a property is what it gives to the value of the whole
    or what its absence detracts from that value.
    Contribution
  12. The process of estimating the value of a
    property by adding to the estimated land value the appraiser’s estimate of the
    reproduction or replacement cost of the building, less depreciation.
    Cost approach
  13. (1) In appraisal, a loss of value in property
    due to any cause, including physical deterioration, functional obsolescence,
    and external obsolescence. (2) In real estate investment, an expense deduction
    for tax purposes taken over the period of ownership of income property.
    Depreciation
  14. The number of years during which an improvement
    will add value to the land.
    Economic life
  15. Incurable depreciation caused by factors not on
    the subject property, such as environmental, social, or economic factors.
    External obsolescence
  16. A loss of value to an improvement to real estate
    arising from functional problems, often caused by age or poor design.
    Functional obsolescence
  17. A figure used as a multiplier of the gross
    annual income of a property to produce an estimate of the property’s value.
    Gross Income Multiplier (GIM)
  18. The possible use of a property that would
    produce the greatest net income and, thereby, develop the highest value.
    Highest and best use
  19. The process of estimating the value of an
    income-producing property through capitalization of the annual net income
    expected to be produced by the property during its remaining useful life.
    Income approach
  20. Law that applies when at the point where
    additional improvements do not increase income or value.
    Law of diminishing returns
  21. Law that applies as long as money being spent on
    improvements produces an increase in income or value.
    Law of increasing returns
  22. The most probable price property would bring in
    an arm’s length transaction under normal conditions on the open market.
    Market value
  23. The income projected for an income-producing
    property after deducting losses for vacancy and collection and operating
    expenses.
    Net operating income (NOI)
  24. A reduction in a property’s value resulting from
    a decline in physical condition; can be caused by action of the elements or by
    ordinary wear and tear.
    Physical deterioration
  25. The increase in value or utility resulting from
    the consolidation (assemblage) of two or more adjacent lots into one larger
    lot.
    Plottage
  26. An appraisal principle that states that, between
    dissimilar properties, the value of the lesser quality property is favorably
    affected by the presence of the better-quality property.
    Progression
  27. The final step in the appraisal process, in
    which the appraiser combines the estimate of value received from the sales
    comparison, cost, and income approaches to arrive at a final estimate of market
    value for the subject property.
    Reconciliation
  28. An appraisal principle that states that, between
    dissimilar properties, the value of the better quality property is affected
    adversely by the presence of the lesser-quality property.
    Regression
  29. The construction cost at current prices of a
    property that is not necessarily an exact duplicate of the subject property but
    serves the same purpose or function as the original.
    Replacement cost
  30. The construction cost at current prices of an
    exact duplicate of the subject property.
    Reproduction cost
  31. A process of estimating the value of a property
    by examining and comparing actual sales of comparable properties.
    Sales comparison approach
  32. An appraisal principle that states that the
    maximum value of a property tends to be set by the cost of purchasing an
    equally desirable and valuable substitute property, assuming that no costly
    delay is encountered in making the substitution.
    Substitution
  33. The appraisal principle that follows the
    interrelationship of the supply of and demand for real estate. Because
    appraising is based on economic concepts, this principle recognizes that real
    property is subject to the influences of the marketplace as with any other
    commodity.
    Supply and demand
  34. A set of standards that details information required
    of an appraisal of residential property. The Uniform Residential Appraisal
    Report is required by many government agencies.
    • Uniform Standards of Professional Appraisal
    • Practice (USPAP)
  35. The power of a good or service to command other
    goods in exchange for the present worth of future rights to its income or
    amenities.
    Value

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