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35 Cards in this Set

  • Front
  • Back
Absorption rate
the rate a property will sell out or lease ulp
financial additions or subtractions to make a comparable equal to the subject
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)
Deed restriction
a private restriction on use contained in or referenced in a deed
Depreciated cost
the indicated value of improvments by subtracting depreciation from cost
Developer's profit
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)
Development period
time from conception to sell out or lease up
Direct capitalization
valuing by applying a mulitplier or capitalization rate to an income stream without expressing expected value or income change in the future
Discounted cash flow analysis
a yield capitalization technique that brings anticipated future cash flows to present value with a discount or yield rate
the right to use property
valuing land by subtracting improvement value from total value
Gross income
potential income if 100% occupied
Ground rent
money paid for lease of land
Ground rent capitalization
valuing land with an income approach where market rent of the land is divided by an appropriate land capitalization rate
raw or improved site
Land residual
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
Marketing period
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
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
Off-site improvements
improvements located outside the property boundaries
On-site improvements
improvements located within the property boundaries
Operating income
money that flows from real estate ownership
Net operating income (NOI)
EGI minus expenses
Net sales proceeds
sale price less closing costs
the area that a government or person has a right to use for roadways or ingress or egress
Sales comparison
one of the 3 approaches to value where the sale price(s) of comparables +/- adjustments = value of the subject
land improved & ready for its intended use
Site improvements
improvments to land such as utilities that make it ready for its intended use
Subdivision development
an approach to value vacant land or a subdivision by using DCF analysis over the construction &/or marketing stage of a subdivison sell-out
Unit price
the value of an individual lot or tract in a development
Yield capitalization
valuing by expressing yield requirements, & income and value change over time
public restriction on use of property by the exercise of police power
Land valuation techniques
1. Sales comparison
2. Allocation (%)
3. Extraction ($)
4. Land residual- direct capitalization
5. Ground rent capitalization - direct capitalization
6. Subdivision analysis - DCF (Yield capitalization
Allocation (%)
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 $21,000
Extraction ($)
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
Ground rent
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