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35 Cards in this Set
- Front
- Back
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Absorption rate
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the rate a property will sell out or lease ulp
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Adjustments
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financial additions or subtractions to make a comparable equal to the subject
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Allocation
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use of a % to value a site; often used in residential (e.g. residential lots in an area sell for 20% of total property value)
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Deed restriction
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a private restriction on use contained in or referenced in a deed
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Depreciated cost
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the indicated value of improvments by subtracting depreciation from cost
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Developer's profit
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money necessary to attract capital, labor, and land to the construction of improvements (it may be expressed as a % including land value, but is only attributable to the improvements)
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Development period
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time from conception to sell out or lease up
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Direct capitalization
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valuing by applying a mulitplier or capitalization rate to an income stream without expressing expected value or income change in the future
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Discounted cash flow analysis
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a yield capitalization technique that brings anticipated future cash flows to present value with a discount or yield rate
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Easement
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the right to use property
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Extraction
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valuing land by subtracting improvement value from total value
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Gross income
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potential income if 100% occupied
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Ground rent
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money paid for lease of land
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Ground rent capitalization
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valuing land with an income approach where market rent of the land is divided by an appropriate land capitalization rate
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Land
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raw or improved site
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Land residual
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valuing land by separating net income into return to the building & return to land, then dividing the income to the land by a rate to land
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Marketing period
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the length of time that a property should be on the maket in the future, at a certain price before selling; the time starts from the date of the appraisal and ends when the property is closed
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Offers
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consideration made for a property whether listed or not. As opposed to a listing which is a posting of property for sale usually at a specific price
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Off-site improvements
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improvements located outside the property boundaries
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On-site improvements
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improvements located within the property boundaries
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Operating income
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money that flows from real estate ownership
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Net operating income (NOI)
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EGI minus expenses
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Net sales proceeds
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sale price less closing costs
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Right-of-way
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the area that a government or person has a right to use for roadways or ingress or egress
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Sales comparison
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one of the 3 approaches to value where the sale price(s) of comparables +/- adjustments = value of the subject
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Site
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land improved & ready for its intended use
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Site improvements
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improvments to land such as utilities that make it ready for its intended use
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Subdivision development
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an approach to value vacant land or a subdivision by using DCF analysis over the construction &/or marketing stage of a subdivison sell-out
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Unit price
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the value of an individual lot or tract in a development
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Yield capitalization
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valuing by expressing yield requirements, & income and value change over time
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Zoning
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public restriction on use of property by the exercise of police power
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Land valuation techniques
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1. Sales comparison
2. Allocation (%) 3. Extraction ($) 4. Land residual- direct capitalization 5. Ground rent capitalization - direct capitalization 6. Subdivision analysis - DCF (Yield capitalization |
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Allocation (%)
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1. houses are selling for $100,000
2. lot values are $20,000 3. the % is 20% 4. the subject house is $105,000 5. the lot value is is $105,000 x 20% or $21,000 |
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Extraction ($)
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1. property sold for $300,000
2. improvements would cost $200,000, new 3. improvements are 90% depreciated 4. lot is similar to subject and is worth $300,000 - (200,000 x (1-90%)) = $280,000 |
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Ground rent
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1. market rent = $$.50 psf/year
2. rate to land = 10% 3. subject = 3 acres 4. land value = (3 x 43,560 x .50)/.10 = $653,400 |
