An opinion of real property value based upon a factual analysis by a qualified (licensed) person with education and experience.
The orderly process of determining the fair market value of real property by: 1) defining the problem, 2) gathering the date, 3) applying the three methods of appraisal (cost approach, market comparison approach, income approach), and 4) correlating the information for a final estimate of value.
The concept that although changes may be imperceptible, neighborhoods are constantly changing. Population shifts and economic changes, along with many other variables, will constantly work to alter the value of property.
The appraisal principle that maintains the maximum value of a property is realized when a reasonable degree of similarity is present in the area where the property is located.
A lot with both the front and side facing different streets. Such a residential lot is generally more desirable because of its increased exposure to light and fresh air. A commercial lot benefits from better street access and exposure to traffic patterns.
A lot at the U-shaped end of a street. Even though they are narrower in the front and wider in the back, these lots are popular because the street itself makes the area exclusive.
A chart illustrating the principle that the greatest value exists in the front portion of the lot, and the value of the land decreases the further back from the street you go.
A lot with a long, narrow entrance, forming the shape of a flag. While it has limited frontage, such a lot can be very desirable if the odd shape is accompanied by a spectacular view in the back.
The linear measure of the front portion of a parcel facing a major street, walkway, lake, or ocean.
Highest and Best Use
The use of land that will bring the greatest economic return over a given time.
Not a corner lot, but an inside lot; the most common type of lot.
The least desirable type of lot because the back ends of other lots face one of its sides.
The price a property sells for, which may be higher or lower than its actual market value.
The highest price a willing buyer would pay and a willing seller accept, both being fully informed, and the property exposed for a reasonable period of time. This value may be different from the price a property can actually be sold for at a given time.
A general term describing people living or working together in an area of similar properties with similar social, economic, and political backgrounds.
Development of large parcels into smaller lots suitable for construction. This includes sidewalks, curbs, streets, sewers, streetlights, etc.
The real estate principle that a smaller, low-quality home will gain value if larger, nicer homes are being built in the neighborhood.
The real estate principle that a larger, nicer home will not enjoy its full value if it is located in a neighborhood of smaller, low-quality homes.
A general term for a lot or plot of land.
Supply and Demand
A principle of real estate appraisal suggesting that the value of property increases when there is more demand and a short supply in an area. Conversely, the value decreases when there is an abundant supply and less demand.
An interior lot facing down a street into traffic. Such a lot benefits from the view down the open street but suffers from additional traffic noise and on-coming headlights at night.
An insurance plan covering the major systems of a home such as electrical, heating, plumbing, and major appliances.