What is value
What is the appraisers process?
1. Defines the problem, what rights, real estate and value are being considered. Opinion of Value at that point in time between two able and willing parties that want to sell and buy. 2.Preliminary Survey 3.Appraisal Plan 4.Collects information (macroeconomic climate,area economic data,specific info about the property in question (tittle,record,physical,improvements) 5.COMPS from past 6 months 6.Highest and best use analysis 7.Value the land
What is the principal of competition?
A rising demand for real estate will cause profits to rise-competition begins. Competition increases supply, which drives down the price.
Arms length sale
A willing seller not under pressure to sell A willing buyer not under compulsion to buy
When are appraisals required?
ALL federal related real estate transactions secured by RE and for any non secured RE transaction over $250,000
What is contribution?
Additional investment in a piece of property measured by the increase in value
What is the estimate of value known as?
Appraisals
Who estimates what buyers will pay for RE?
Appraisers
What is substitution?
Buyers will not pay more for something than they have to pay for a comparable good.as a result property owners cant charge more for their property than the properties surrounding them are worth
What are the 4 things that might impact an appraisers estimate of value?
D.U.S.T Demand- the # of people who want to buy the property and are actually able to do so Utility-How useful the property is. Supply/Scarcity-The more plentiful something is the less it is worth Transferability- Must be free from clouds on tittle,
What is a free market in RE?
Economic system based on supply and demand
Increasing/decreasing returns
Even if you spend money to improve a property, it doesnt mean it will increase the value. This is a form of substitution. If you spent too much its over-improvement and if you spent too little its under-improvement
What are the 4 stages of the life cycle property goes through?
Growth,stability,decline,revitalization
What is The Sales Comparison Approach
It compares the subject property (the property being valued) to other comparable properties in the same location that sold within the last 6 months.
What is the principal of consistent use?
Land cannot be valued based on one best use, while the improvements are based on another best use.
What is the difference between market price and market value?
Market value is just an estimate of what a property should sell for, not a fact. Market price is what the property actually did sell for.
Are real estate agents aloud to create appraisals?
No just comparative analyses COMPS
How do real estate values change?
Real estate values are cyclical and change over time in response to the general economic climate,interest rates, inflation, employment, ect.
What are the 3 methods to valuing RE?
The Sales Comparison Approach The Income Approach (Investment Value) The Cost Approach
What is market price?
The actual amount paid in the market
What is anticipation?
The benefit a property owner expects to receive over their lifetime of ownership of the property.
Who determines RE value?
The buyer and the market in general
Who records insurable value?
The comprehensive loss underwriting exchange CLUE records past consumer claims that are used in homeowners insurance underwritting
What is depreciation?
The decrease in a property value caused by substitution
What is liquidation value?
The foreclosure value of a property
What is conformity?
The idea that maximum value is achieved when a piece of property is more or less in line with the surrounding properties
What is appreciation?
The increase in property value caused by substitution
What is balance?
The notion that value is created and maintained among the amount and location of types of real estate. For instance a loss in value might occur if there are fewer services and agencies than a community needs. or more than a community can support.
What is market value?
The price a ready willing able buyer would pay and a seller would accept in arms length transaction (fair market value)
What is assessed value?
The tax value of a property
Cost
The total cost to build a property
What is the principal of highest and best use?
The use that is going to bring the highest value to real estate.It's current use is not relevant to its best use
What is investment value?
The value of a property for investors.
value in use
The value to a specific user of the property
What is USPAP? Uniform Standards of Professional Appraisal Practice
They govern appraisers appraisal licences
How does USPAP regulate appraisal reports?
Tittle XI Financhial Institutions, Reform,Recovery and Enforcement Act of 1989 FIERREA
What is value?
Value is how much a ready, willing and able buyer is willing to pay for something and a willing and informed seller will accept.
Plottage value
an increase in value associated with assemblage (the combination of multiple small pieces of land into one large parcel)
How much is property worth?
its only worth what a buyer will pay for it
What is the sales comparison approach is directly related to what?
the quality and amount of sales data available. The sales comparison approach is known as the market approach to property valuation. An appraiser locating similar properties to the property being appraised.When there are more homes on the market it is easier to find similar propertites