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13 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Market value |
A seller might be forced to sell quickly due to personal for business reasons; an out-of-state buyer may not be well-informed about the local market; or a parent may sell below market value to a son or daughter. These factors demonstrate why property May transfer for less than market value. |
Page: 167 |
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Conformity |
A home is similar in style and construction to neighboring homes may have greater value than a home that is of a dissimilar style in construction to neighboring homes. |
Page: 168 |
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Plottage |
A city block consists of four lots of equal size. One lot has been on the market for more than a year or $200,000. A developer, not interested in the single lot, and forms the listing agent that he will pay $1,000,000 for the entire block.this process of merging lots under one ownership is known as assemblage.The resulting increase in value is referred to as plottage value. |
Page: 168 |
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Anticipation |
Investors buy property based on its future potential income; homebuyers buy property in anticipation of tax benefits as well as future appreciation. |
Page: 168 |
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Contribution |
I homebuyer ants and elaborate, expensive, freestanding garage to his home sight.when he put his house on the market or year later, he discovers that his house is worth much less than houses with attached garage is because buyers do not prefer freestanding garages. |
Page: 169 |
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Area Preference |
Underdeveloped land located in a very rural un-populated area will tend to cost far less then underdeveloped live in an urban or heavy populated area. |
Page: 169 |
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1: Adjustments |
And interior lot in a subdivision is generally more valuable than a perimeter lot situated near a busy highway. Therefore, if the differences exits between the subject and comparable properties, the appraiser must adjust the value of the comparable accordingly or the appraisers estimate will be less accurate. |
Page: 171 |
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2: Adjustments |
The appraiser must make an adjustment between two comparable properties if one sold through owner financing and the other did not. |
Page: 171 |
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Increasing Return |
Roof replacement might be a couple physical deterioration and one building (principle of increasing return), but incurable in another (principle of decreasing the), depending on the age and overall condition of each building, and/or durability of each location. |
Page: 173 |
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External Obsolescence |
External obsolescence may be caused by: a change in zoning that allows and undesirable industry to locate near a residential neighborhood; a deteriorating neighborhood that affects the value of all houses in the neighborhood, even one that is well-maintained; homes that lose value when I neighborhood is no longer serviced by public transportation; or a gas station that suffers when a new bypass redirects traffic. |
Page: 173 |
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Value Conclusion |
Cost (current prices) - accrued depreciation = Total building value + land value (site value) = Total Property Value. |
Page: 173 |
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Net Operation Income |
Gross income-vacancy & collection losses = Effective gross income (EGI) - Operating expenses = Net operating income (NOI). |
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Cap Rate |
Consider the following three comparables:
Comp #1: $15,600 (NOI) / $195,000 (Vlaue, SP) = 8% (cap rate)
Comp #2: $17,250 (NOI) / $230,000 (Value, SP) = 0.075 = 7.5% 9cap rate)
Comp #3: $16,000 (NOI) / $200,000 (Value, SP) = 0.08 = 8% (cap rate)
Using these comparables, and appraiser my estimate and 8% capitalization rate after making all adjustments and weighing the differences between the subject property and the comparable. If the subject property has no NOI of $18,000, and they selected cap rate is 8%, then the estimated market value for this property is $225,000 ($18,000 / 0.08 = $225,000). |
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