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44 Cards in this Set
- Front
- Back
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Quantitative adjustments |
Dollar/Percentave |
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Qualitative adjustments |
Employ inferior/superior |
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Re-evaluation lease |
Lease that provides for periodic rent adjustments |
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Value |
Income/Rate |
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Cost approach |
Most applicable in new/proposed construction, with same highest/best use |
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Cost approach #2 |
Optimized when buildings/new additions are being considered |
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Direct costs |
Expenses for the labor and materials used in the construction of improvements |
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Entrepreneurial incentive |
Looking forward |
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Entrepreneurial profit |
Looking back |
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Physical deterioration |
Wear and tear |
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Depreciation |
Difference between market value and it’s replacement costs |
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Fixed expenses |
Do not vary with occupancy, taxes/insurance |
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Replacement costs |
C;eliminates need |
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External obsolescence |
Diminished value because of factors outside the property |
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Comparative unit method |
Includes a cost amount based on price per square foot |
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Units of comparison |
Used by appraisers for meaningful unit related sales dates |
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Land value is estimated as if |
Improvements were not there |
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The 4 methods of land evaluation |
Sales comparison, land residual, allocation, market extraction |
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Sales comparison approach |
Market value of a site, most reliable procedure for estimating land |
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Land is valued by using |
Price/square foot, razed |
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Allocation |
Ratios |
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The ground rent capitalization technique converts |
Income attributes to a site to a lump sum value estimate |
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The subdivision development analysis technique |
Very applicable when the main criterion of value is the number of lots to be developed |
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Valuing vacant land using sales comparison |
Based on historic sales of similar properties |
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Listings and offers |
Can be used as comparables |
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Comparable are always |
Adjusted to the subject |
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Economic principle stating “The value of a property tends to be set by price paid to acquire by similar utility and desirability |
Substitution |
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You are analyzing a sale, in which a $10,000 adjusted market only allows $4,000. |
$4,000 |
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Adjustment that involves financing |
Seller financing |
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A comp sold 26 months ago, with a 3% straight line, what is adjustment |
26/12x0.3=6.5 |
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Elements of comparison are the |
Characteristics that cause prices to vary |
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Appraisal comparisons for properties |
Commercial-3 residential 1 |
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Units of comparison |
Reduce sales/lease data to meaningful unit related prices |
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Order of adjustments |
PFCEMP |
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Cash equivalent sale price = |
Value - (Mortgage-Points) answer is 87,600 |
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Is mortgage amortization an operating expense? |
No, neither is depreciation |
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Fixed expenses |
Do not vary on occupancy |
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The subject property is 450k |
Answer-D the appraiser does not need to compensate |
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PGI |
No vacancy, max income |
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EGI |
PGI -Vacancy/Collection losses |
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NOI |
EGI-Operating expenses |
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Which economic principle is income capitalization to cost income approach? |
Anticipation |
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A property sold for $550k |
Cap rate is 10.75 |
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Cap rate formula |
Ratio of first years income to purchase price |
