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66 Cards in this Set

  • Front
  • Back
Value
the relative worth of a thing expressed as money.
THE FOUR Characteristics of Value
1) UTILITY - must satisfy some want
2) SCARCITY - key element in supply and demand
3) TRANSFERABILITY - the ability to will, lease, give or sell.
4) EFFECTIVE DEMAND - must be a desire to own
PRICE
the actual amount paid by a particular buyer
COST
is the sum of dollars required to develop and / or build improvements on the land.
DIRECT COSTS
cost of labor and materials
INDIRECT COSTS
other costs incurred (contractors overhead, financing)
DEVELOPMENT COSTS
cost to create a project
CONSTRUCTION COSTS
the cost to build an improvement
REPLACEMENT COSTS
cost to creat a substitute building of equal utility
MARKET
Buyers and sellers interacting to exchange property.
OVERBUILDING
results when competitive contractors saturate the market
SUBSTITUTION
the value of property can not exceed the equivelent substitute available in the market
SUBSTITUTION is applied
to all three approaches
COMPETITION
occurs when supply and demand are out of balance. Example - when supply exceeds demand - sellers compete for buyers.
PRINCIPLE OF EXCHANGE
Supply and Demand are in constant flux
THE REAL ESTATE CYCLE - PATTERN OF CHANGING VALUES
-FOUR STAGES ARE......
1) Development
2) Maturity
3) Decline
4) Revitalization
Gentrification
Homes in lower class NH are purchased by middle class buyers regarding future benifits.
Principle of Balance
states that rate of return is max when 4 agents of production are in balance
Point of Diminishing Returns
Point when agents are in balance
Surpluss Productivity
Remaining income after all agents have been paid
Principle of Contribution
the cost of a component is = to the value
Highest & Best Use
Value of Property is determined by the most profitable use. *Must be legal use (ZONING).
Consistent Use
Requires both the land & property to valued for the same use
Conformity
values are enhanced when surrounding properties are similar (ie zoning reg)
Regression
when a much more luxurious home then surroundings decrease in value.
regression
modest home included in a nicer area.
Production
refers to the creation of wealth
four agents of production are:
1) Capital
2) Land
3) Labor
4) Coordination
Market value
type of value that is most often est. sometimes known as exchange value or value in exchange.
MARKET VALUE
the amount of cash or equivelent that is most likely to be paid on a given date in a fair market w/ arms length transaction.
Price
Amount actually paid for a property (could be the same as market value, can also be higher or lower.
Value in Use or Use in Value
Refers to the value of property when used for a particular purpose only. (Particular business operation) ie. Industrial Property, Agriculture.
Investment Value
Value to a particular Investor
Liquidation Value
Property must be sold is a limited amount of time.
Assessed Value
set by state taxing authorities for tax purposes (Ad Volorem)
Insurable Value
Value of prop for insuurance reimbursement
Going Concern
total value of an ongoing business
EXTERNAL FACTORS
1) Physical or Enviromental
2) Economic
3) Government
4) Social
Social Factors
Prestige, Recreation, Culture
Economic
Purchasing Power - local economy, interest rates, rents
Government (Political)
Taxes, zoning, rent control, envirenmenta restrictions
Physical (Environmental)
LOCATION - LOCATION - LOCATION!, climate, water..etc
Price
Amount actually paid for a property (could be the same as market value, can also be higher or lower.
Value in Use or Use in Value
Refers to the value of property when used for a particular purpose only. (Particular business operation) ie. Industrial Property, Agriculture.
Price
Amount actually paid for a property (could be the same as market value, can also be higher or lower.
Investment Value
Value to a particular Investor
Value in Use or Use in Value
Refers to the value of property when used for a particular purpose only. (Particular business operation) ie. Industrial Property, Agriculture.
Liquidation Value
Property must be sold is a limited amount of time.
Investment Value
Value to a particular Investor
Assessed Value
set by state taxing authorities for tax purposes (Ad Volorem)
Insurable Value
Value of prop for insuurance reimbursement
Going Concern
total value of an ongoing business
Liquidation Value
Property must be sold is a limited amount of time.
EXTERNAL FACTORS
1) Physical or Enviromental
2) Economic
3) Government
4) Social
Assessed Value
set by state taxing authorities for tax purposes (Ad Volorem)
Social Factors
Prestige, Recreation, Culture
Insurable Value
Value of prop for insuurance reimbursement
Economic
Purchasing Power - local economy, interest rates, rents
Going Concern
total value of an ongoing business
Government (Political)
Taxes, zoning, rent control, envirenmenta restrictions
EXTERNAL FACTORS
1) Physical or Enviromental
2) Economic
3) Government
4) Social
Physical (Environmental)
LOCATION - LOCATION - LOCATION!, climate, water..etc
Social Factors
Prestige, Recreation, Culture
Economic
Purchasing Power - local economy, interest rates, rents
Government (Political)
Taxes, zoning, rent control, envirenmenta restrictions
Physical (Environmental)
LOCATION - LOCATION - LOCATION!, climate, water..etc