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37 Cards in this Set
- Front
- Back
absorption rate
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The estimated time required to sell or lease property within a designated area at its fair market value.
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ad valorem
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Real estate taxes imposed on property based on its assessed value.
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appraisal
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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)
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An agent’s opinion of a property’s fair market value based on comparable sales.
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capital gain
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On resale of a capital item, the amount by which the net sale proceeds exceeding the price paid for the property. Used for income tax computations. Capital gains are called short- or long-term based upon length of holding period after acquisition. Capital gains are taxed at lower rates than other types of gains and ordinary income.
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capitalization approach
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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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comparable sales
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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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comparison approach
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A method for comparing a given property with similar or comparable surrounding properties; also called market comparison.
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economic life
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The period of time over which a property will yield a return on capital invested to own it.
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economic obsolescence
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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
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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
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Factors that must be present for real estate to have value: demand, utility, scarcity and transferability.
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fair market value (FMV)
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The price a reasonable, unpressured buyer would pay for property on the open market.
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financial analysis
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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
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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
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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
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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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home energy audit
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An audit conducted by a Home Energy Rater evaluating the energy efficiency of the home.
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home inspection
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A non-invasive examination of the mechanical, electrical and plumbing systems of a dwelling, as well as the components of the structure, such as the roof, ceiling, walls, floors and foundations.
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income approach
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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
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An aspect of the principle of change, recognizing the effect of physical, economic, government and social changes on real estate value.
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loan-to-value ratio (LTV)
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A ratio stating the outstanding mortgage balance as a percentage of the mortgaged property’s appraised value.
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market comparison
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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
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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
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The cost of an action that is forgone in choosing to take an alternative action, usually a consideration when making one investment over another.
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physical life
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The total number of years a building is presumed to potentially exist in a productive capacity.
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principles of value
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The application of several appraisal principles to arrive at a final value. The basic principle is substitution.
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quantity survey
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The most detailed method of the cost approach in appraisal. This is generally done by contractors when bidding a project.
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reconciliation
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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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regression, Principle of
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A real estate valuation theory which holds the worth of a greater valued property is negatively affected by the close proximity of numerous lesser valued comparable properties.
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replacement cost
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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
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A measure of annual income or profits on a sale in relation to capital invested.
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site valuation
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The appraised valuation of the ground (site) separate from any structure (improvement) that may be on the site.
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unearned incremental increase
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An increase in the value of the property due to outside influences separate from any action by the property owner.
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vacancy rate
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The percentage of a building's space that is not rented over a given period.
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value
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The present worth stated in dollars of the future benefits arising out of the ownership of a property.
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yield
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The interest earned by an investor on an investment (or by a bank on the money it has loaned). Also, called return.
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