Chapter 18: Real Estate Appraisal
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12 terms
Terms | Definitions |
|---|---|
 Anticipation | Appraisal principle that holds that value can increase or decrease based on the expectation that some future event may or may not occur |
| Assemglage | Combining of two or more adjoining lots into one larger tract to increase their total value |
| Conformity | Appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value |
| Cost Approach | Process of estimating property value by adding to estimated land value the appraiser's estimate of the cost of the building new, less depreciation |
| Economic Life | Number of years during which an improvement will add value to the land |
| Functional Obsolescence | Loss of value to an improvement to real estate because of functional problem, often caused by changing tastes or poor design |
| Highest and Best Use | Possible use of a property that would produce the greatest net income and thereby develop the highest value; making an office building where a parking lot once stood |
| Market Value | Most probable price a property would bring in an arm's length transaction under normal market conditions on the open market; market price is what is actually paid |
| Progression, Regression | Value of properties near a better property see their values rise; the opposite is regression; a rundown property will negatively affect neighboring properties |
| Reproduction Cost | Construction cost at current prices of an exact duplicate of the subject property; i.e., using slate shingles on the roof instead of equally effective fiberglass shingle |
| Square-Foot Method | Appraisal method of estimating building cost; multiplying number of square feet in the improvement by cost per square foot of recently constructed similar properties |
| Supply and Demand | Interrelationship of availability of properties and desire for those properties; real estate is affected by marketplace just like most commodities |
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