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39 Cards in this Set
- Front
- Back
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accrued depreciation |
Loss in a property's value resulting from physical deterioration, external depreciation, and functional obsolescence. 304 |
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anticipation |
The appraisal principle holding that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property. 301
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appraisal |
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. 290 |
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Appraiser Independence Requirements (AIR) |
Regulations issued by Fannie Mae that must be followed by appraisers to ensure accurate and objective appraisals. 290 |
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assemblage |
The combining of two or more adjoining lots into one larger tract to increase their total value. 302 |
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broker's price opinion (BPO) |
An opinion of real estate value commissioned by a bank or an attorney and provided by a broker. 292
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capitalization rate |
The rate of return a property will produce on the owner's investment. 307 |
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change |
The appraisal principle that holds that no physical or economic condition remains constant. 301
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competition |
Edit. The appraisal principle stating that excess profits generate competition. 301
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conformity |
The appraisal principle holding that the greater the similarity among properties in an area, the better they will hold their value. 301 |
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contribution |
The appraisal principle stating 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. 301
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cost approach |
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. 304
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depreciation |
Edit (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, a deduction for tax purposes taken over the period of ownership of income property, based on the property's acquisition cost. 305, 429 |
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economic life |
The number of years during which an improvement will add value to land. 307
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external obsolescence |
Incurable depreciation caused by outside factors (i.e., those that are off the property) 307 |
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functional obsolescence |
A loss of value to an improvement to real estate arising from problems of design or utility. 306
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gross income multiplier (GIM) |
A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value; usually used for commercial property. 309
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gross rent multiplier (GRM)
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The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value; usually used for single-family residential property. 309
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highest and best use |
The legally permitted and physically possible use of a property that would produce the greatest net income and, thereby, develop the highest value. 301
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income approach |
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. 307
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law of diminishing returns |
Point at which additional property improvements do not increase the property's income or value. 302
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law of increasing returns |
Applies as long as money being spent on property improvements produces an increase in the property's income or value 302
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market data approach |
Also known as the sales comparison approach. An estimate of value obtained by comparing property being appraised with recently sold comparable properties. 303
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market value |
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale. 300 |
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net operating income (NOI) |
The income projected for an income-producing property after deducting anticipated vacancy and collection losses and operating expenses. 307 |
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physical deterioration |
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. 306
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plottage |
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot. 302
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progression |
An appraisal principle that the value of a lesser quality property is favorably affected by the presence of a better-quality property. 302
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reconciliation |
The final step in the appraisal process, in which the appraiser considers the estimates of value received from the sales comparison, cost, and income approaches to arrive at a final opinion market value for the subject property. 309
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regression |
An appraisal principle that the value of a better-quality property is affected adversely by the presence of a lesser-quality property. 302
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sales comparison approach |
The process of estimating the value of a property by examining and comparing sales and listings of comparable properties. 303
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sales price |
The amount of money paid to a seller for the product sold.
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substitution |
Edit An appraisal principle 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. 302
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supply and demand |
Edit 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. 8 |
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Uniform Standards of Professional Appraisal Practice (USPAP) |
A set of standards developed by the Appraisal Foundation that details information required for a property appraisal. 291
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value |
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. |
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The characteristics of value |
Demand Utility Scarcity Transferability 300 |
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Market value: opinion of a property's worth. Opinion of value based on an analysis of data. Market price: the asking, offer, or sales price of a property |
Market value vs Market Price 300 |
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Income Approach |
Gross Income Vacancy Expenses Net operating income 307 |
