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