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25 Cards in this Set
- Front
- Back
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which method fails to recognize substantial changes in future cash flows or property values?
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direct capitalization
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an estimate of the cost of producing an improvement similar to the subject is known as
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replacement cost
ie. office building |
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what is the most common problem with the cost approach?
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depreciation
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what are the 3 methods of calculating land value?
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sales comp approach
allocation extraction |
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the cost approach becomes less relevant when?
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improvements are older
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the principle of __________ states that the cost of an improvement must be in proportion to the value of the site?
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contribution
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what are the 2 externalities of the cost approach?
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labor shortages
increase in building material prices |
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the point at which a property reaches a profitable and sustainable level of occupancy is known as
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stabilization
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when is the cost approach easiest to develop?
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when improvements are new or nearly new.
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the cost of building an exact replica of the subject building is known as
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reproduction cost
ie. historic building, library |
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the difference between an improvement cost and the value of the improvement
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depreciation
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what are the 3 cost estimating methods?
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comparative unit method (most common)
unit-in-value method quantity survey method (most detailed, used in new construction) |
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what are the 3 recognized methods of estimating depreciation?
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-market extraction method
- economic age life method -breakdown method |
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curable physical deterioration is known as _________?
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deferred maintenance
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what are causes of functional obsolescence?
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poor floor plans
house to small/large for the lot 3 story office building with NO elevator |
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total economic life _________ as improvements age.
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increases
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which depreciation method eliminates the problem of estimating the denominator of the age life ratio
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market extraction method (most common)
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the difference of smallest and largest value is
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range
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helps determine which data is relevant and which is not
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coefficient of variation
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what breakdown method is difficult when used for what two ways?
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long lived improvements
external obsolescence |
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the process of transforming raw data into information that helps an appraiser solve a problem related to value
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statistical analysis
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most frequent value
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mode
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middle value
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median
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condominium v cooperatives
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condo- own air space
coop- own stock |
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current market value of the property
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fair value
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