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Real Estate CH 7
Terms in this set (26)
In cost appraisal, the identification and measurement of reductions in the current market value of a property from today's reproduction cost.
Additions or subtractions from a comparable sale price or cost which are required to make the comparable property more directly comparable to the subject property.
An unbiased written estimate of the fair market value of a property.
The document the appraiser submits to the client and contains the appraiser's final estimate of market value, the data upon which the estimate is based, and the calculations used to arrive at the estimate.
Arms- length transaction
A transaction between two parties that have no relationship with each other and who are negotiating on behalf of their own best interests. A fairly negotiated transaction and reasonably representative of market value.
Properties similar to the subject property used in the sales comparison approach to calculate a single indicated value for the subject property.
Elements of comparison
The relevant characteristics used to compare and adjust the sale prices of the comparable properties in the sales comparison approach.
Losses of property value caused by forces or conditions beyond the borders of the property. The losses are deducted from a building's reproduction cost in the cost approach to estimating market value.
Losses in value of a building relative to its reproduction cost because the building is not consistent with modern standards or with current tastes of the market.
Highest and best use
The use of a property found to be (1) legally permissible, (2) physically possible, (3) financially feasible, and (4) maximally productive.
The final value estimate for the subject property resulting from application of one of the major approaches in the appraisal process.
The value of the property to a particular investor, based on his or her specific requirements, discount rate, expectations, and so on.
The relationship between supply and demand for a particular type of real estate in a local market at a specified point in time.
The price a property should sell for in a competitive market when there has been a normal offering time, no coercion, arm's-length bargaining, typical financing, and informed buyers and sellers.
Items of personal property.
Loss of value of a building from its reproduction cost, resulting from wear and tear over time.
Five sale price adjustments made to comparable property transactions prices: location, physical characteristics, economic characteristics, use, and nonrealty items.
The process of forming a single point estimate from two or more numbers. It is used widely in the appraisal process. For example, in the sales comparison approach to develop a single indicated value from several final adjusted sale prices of comparables, and in final reconciliation to develop a final estimate of value from two or more indicated values.
Estimation of the rate of property appreciation through statistical examination of properties that have sold twice during the sample period. Normally, the analysis is by statistical regression.
The cost to build a new building of equal utility to an existing building that is not an exact physical replica of the existing building.
The cost to build a new building that is exactly like an existing building in every physical detail.
Restricted appraisal report
Provides a minimal discussion of the appraisal with large numbers of references to internal file documentation. If the client just wants to know what the property is worth and does not intend to provide the appraisal to anyone for use or reference, a restricted report may be sufficient.
The property for which an appraisal of fair market value is produced.
In an appraisal, adjustments to comparable property transaction prices that concern the nature and terms of the deal.
The prices observed on sold properties.
Uniform Standards of Professional Appraisal Practice (USPAP)
Rules governing the appraisal process and reporting of appraisals that are developed by the Appraisal Standards Board of the Appraisal Foundation. Appraisers are obligated by law to follow these rules and guidelines.
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