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41 Cards in this Set

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Allocation
a % of total value to the land. Often used in residential (e.g. land is 20% of the total value of the house).
Capitalization rate
a relationship of income to value. Income divided by value (or sales price)
Cash flow
money, over time to a given financial position often used for money to the equity position
Comparable sales
sales used and analyzed to indicate a value for a subject property
Competitive supply & demand data
that portion of a market that competes with a subject property or market
Cost approach
one of the 3 approaches to value: reproduction or replacement cost minus depreciation plus site value
Date of the value estimate
the date the value is valid, often date of last inspection, but it may be a future value (prospective) or past value (retrospective)
Definition of the appraisal problem
may narrowly be used to coincide with the value definition used or broader to also encompass the funtion of the appraisal or specific instruction to the appraiser
Definition of value
the value definition that puts constraints on the value derived & reported. Usually the value definition used by appraisers is market value, but there are numerous variations of the definition that could change the value appraised. Other defiitions include use value, investment value, and going concern value
Direct capitalization
valuing by using a single cash flow to overall value generally in one step without expressing yield rate or income patterns
Discount rate
a yield rate used to bring a series of cash flows to present value
Extraction
$ amount to land from total property. Sale price minus building value.
Final value estimate
the reconcile point estimate or range of value from an appraisal
General data
all data that is not specific data (subject & comparables), or region, city, & neighborhood
Ground rent capitalization
an income approach to value land where the market or contract rent is divided by an appropriate capitalization rate
HBU of land as though vacant
the use that results in the highest dollar value for the site as if sold vacant
HBU of property as improved
the use that results in the highest dollar value of an improved property as if sold as improved
Identification of property rights
the process of identifying the property rights that are appraised out of the entire potential bundle of rights
Income capitalization approach
one of the 3 major approaches to value whereby the projected income stream or single income is processed to value using some multiplier or rate of return
Income multiplier
a relationship of sale price divided by a single year's income; e.g. PGIM (SP/PGI), EGIM (SP/EGI), NIM (SP/NOI)
Limiting conditions
a statement in a report to protect the appraiser & client
Land residual technique
an income approach to valuing land where the NOI in the property is divided into NOI to building & NOI to land. The NOI to land is divided by a land capitalization rate to indicate value
Land value estimate
the value of the land, usually as though vacant & available to be put to its HBU
Preliminary analysis
the step after defining the problem where the appraiser determines the scope of the assignment & necessary data
Present value
value today; often referred to the value after discounting cash flows
Range of value
the probable value from the lowest to the highest indication
Reconciliation of value indications
the conclusion of a value or value range from a larger value range or from 3 approaches to value
Report of the defined value
oral or written communication of an appraisal
Restricted appraisal report
one that complies with SR 2-2(c); the key word is "state"; it is the least detailed report
Sales comparison approach
one of the 3 major approaches where value is derived from sale price of comparable(s) +/-adjustment(s)
Scope of the appraisal
the extent of the data collection process & analysis, appraiser determines, not client
Selection & collection of data
choosing data that is best suitable to indicate a value for the subject
Self-contained appraisal report
one that complies with SR 2-2(a); the key word is "describe"; the most detailed report
Specific data
data related to the subject and comparables
Subdivision analysis
valuation of a subdivision usually based upon a DCF where the PV of retail values over time minus expenses minus profit, is discounted
Summary appraisal report
one that complies with SR 2-2(b); the key word is "summarize"; it is less detailed, but more detailed than a restricted report
Trends
series of related changes brought about by chain of causes and effects
Use or function of the appraisal
it is why the appraisal is ordered or the appraiser employed e.g. mortgage loan, condemnation
Valuation process
systematic procedure to answer question about real property value
Yield capitalization
processing to value by either discounting or using a rate or multiplier that expresses the income & reversion over time in the derivation of the rate or multiplier
Yield rate
a rate of return "on" investment; used to discount a series of cash flow over time; an IRR, interest rate on a loan, and discount rate are all yield rates (as opposed to an overall capitalization rate or mortgage constant which are income or capitalization rates that include the component of a yield rate & capital recapture rate)