Valuation & Market Analysis - Chapter 5

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Author:
nleggett
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241672
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Valuation & Market Analysis - Chapter 5
Updated:
2013-10-20 11:34:53
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Valuation Market Analysis
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Chapter 5
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  1. Help determine a listing price from sold & for sale properties
    (CMA) Competitve Market Analysis
  2. More detailed, used by 3rd party to provide a basis for negotiation to determine a list price
    (BPO) - Brokers Price Opinion
  3. The present worth of future benefits arising from the ownership of real property
    Value
  4. Characteristics for a property to have value in real estate market
    • (DUST) - 
    • 1. Demand - need support by purchasing power
    • 2. Utility - Capacity to satisfy human wants and needs
    • 3. Scarcity - Finite Supply 
    • 4. Transferanility - Transfer ownership rights with relative ease
  5. Most profitable use to which a property may be adapted, given legal constraints
    Highest & Best Use
  6. Value of property set by cost of purchasing an equally desirable and similar property
    Subsitution
  7. Maximum value realized if if land use conforms to existing neighborhood standards
    Conformity
  8. Improvements to land & structures produce increase or decrease in value
    Increasing and Decreasing Return
  9. Hgh levels of profits attract competitors
    Competition
  10. No economic or physical condition remains constant
    Change
  11. Value of any component of property consist of what its additions contribute to value of whole property
    Contribution
  12. Value Increases or decreases in anticipation of some future benefit or detriment
    Anticipation
  13. Combining contigous property, increasing the value
    Plottage
  14. Actual combining the properties into one is
    Assemblage
  15. Principle between dissimilar properties, worth of better is affected by presence of lesser quality property
    Regression
  16. Worth of lessen property increases if among better properties
    Progression
  17. Based on Principle of Substitution
    Cost Approach
  18. steps of Cost Aproach
    • 1. Estimate the land 
    • 2. Estimate the replacement cost of improvements
    • 3. Estimate Depreciation 
    • 4. Deduct depreciation from Replacement cost 
    • 5. Add land value to depreciated cost of improvements
  19. Wasting assests, such as building
    Depreciation
  20. Sales Comparison or Direct Sales ("Arms length")
    Market/Data approach
  21. Based on present value of rights to future income
    Income Capitalization Approach
  22. Net income ./. Capitalization Rate = value
    formula for Capitalization Rate
  23. Sales Price ./. Monthly Rental Income =
    GRM
  24. Sales price ./. Annual Rental Income =
    GIM
  25. Tangible and Intangible neighboritiehod Benefits
    Amenities
  26. Mathemeaticla Process for estimating a properties value using a proper rate of return on investment & anticipated annual net income
    Capitalization
  27. Rate of Return a property will produce on the owners investment
    Capitalization Rate
  28. Sold properties in appraisal report equivalent to subject property
    Comparables
  29. Final Step of Appraisal process, Combining all 3 approches to arrive at final Estimate
    Reconciliation
  30. Property being appraised
    Subject Property
  31. URAR
    Uniform Residential Appraisal Report

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