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32 Cards in this Set
- Front
- Back
appraisal |
An individual's opinion of a property's value on a specific date, documented in an appraisal report. |
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broker price opinion (BPO) |
An agent's opinion of a property's fair market value based on comparable sales. |
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capitalization approach |
An appraisal method used by an appraiser to arrive at a property's value based on the present worth of a property's future net operating income. |
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capitalization rate (cap rate) |
The annual rate of return on investment produced by the operations of an income property or sought by an investor on the investment of capital. The ___ ____ is calculated by dividing the net operating income by the price asked or offered for income property. |
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comparable sales (comps) |
Sales of properties recently sold which have similar characteristics as the subject property being evaluated and are used for analysis in the appraisal of the subject property. |
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depreciation |
Loss of property value brought about by age, physical deterioration or functional or economic obsolescence. The term used to account for the annual tax-free return of capital invested in improvements over the life of the improvements, as a reduction in the property's cost basis. |
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economic life |
The period of time over which a property will yield a return on capital invested to own it. |
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economic obsolescence |
A loss in value of a property due to external factors and not the condition of the property itself. |
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effective age |
The physical age of a property based on the condition of the structure, distinct from its chronological age. |
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elements of value |
Factors that must be present for real estate to have value: demand, utility, scarcity and transferability. |
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ethics |
That branch of fiduciary science, idealism, justness, and fairness, which treats of the duties which a member of a profession or craft owes to the public, client or partner, and to professional brethren or members. Accepted standards of right and wrong fiduciary conduct, behavior or duty. |
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fair market value (FMV) |
The price a reasonable, unpressured buyer would pay for property on the open market. |
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financial analysis |
The consideration of the durability, quantity and quality of income and expenses generated and incurred by an income-producing property. |
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functional obsolescence |
A loss of value due to adverse factors within the structure which affect the utility of the structure, and thus its value and marketability. |
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gross rent multiplier (GRM) |
A factor which, when multiplied by the gross income of a property, produces an estimate of the property's value. |
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highest and best use |
An appraisal phrase addressing the use of a property which is most likely to produce the greatest net return on the land and/or buildings over a given period of time. |
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income approach |
One of three methods of the appraisal process applied to income producing property to develop the appraiser's opinion of value. |
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influences on value |
An aspect of the principal of change, recognizing the effect of physical, economic, government and social changes on real estate value. |
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loan-to-value ration (LTV) |
A ratio stating the outstanding mortgage balance as a percentage of the mortgaged property's fair market value. The degree of leverage. |
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market comparison |
An appraisal method used by an appraiser to arrive at a property's value by a comparison of recent sales prices of similar properties, adjusted for differences in the properties. |
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narrative report |
A summary of all factual materials, techniques and appraisal methods used by the appraiser in establishing the value of a property. This is the most thorough type of appraisal report. |
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opportunity cost |
The cost of an action that is forgone when choosing to take an alternative action, usually a consideration when making one investment over another. |
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physical life |
The total number of years a building is presumed to potentially exist in a productive capacity. |
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principles of value |
The application of several appraisal principles to arrive at a final value. The basic principle is substitution. |
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reconciliation |
The final step in the appraisal process. Placing weight on the alternative value conclusions, to arrive at a final value decision. |
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replacement cost |
The cost to replace a structure with one having utility equivalent to that being appraised, but constructed with modern materials and according to current standards, design and layout. |
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return on investment (ROI) |
A measure of annual income or profits on a sale in relation to capital invested. |
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site valuation |
The appraised valuation of the ground (site) separate from any structure (improvement) that may be on site. |
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value |
The present worth stated in dollars of the future benefits arising out of the ownership of a property. |
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absorption rate |
The estimated time required to sell or lease property within a designated area at its fair market value. |
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ad valorem tax |
Real estate taxes imposed on property based on its assessed value. |
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vacancy rate |
The percentage of a building's space that is not rented over a given period. |