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Real Estate 306 End of Chapter Practice CH12, Principals of Real Estate -- Test #1 problem | Questions And Answers Latest {} A+ Graded | 100% Verified$13.48
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Real estate appraisals - Formal estimates of the value of a piece of land.
Most are generated by lenders.
Also generated by courts and buyers/sellers.
Market value - The most probable selling price of a property under normal market conditions.
Investment value - The value of the property to a particular investor.
Market value and investment value are both...? - Concepts. Meaning we never know what they truly are
Transaction prices - The amount actually payed for a piece of property in a completed transaction.
Market analysis - Goal is to understand local supply and demand and their impact on future prices.
Highest and best use - the highest and best use of a property is found to be:
Legally permissible
Physically possible
Financially feasible
maximally productive (the use that adds the most value)
It also ignores existing improvements and takes into account the cost of converting the land to a new
use.
, Three valuation methods - The sales comparison approach
The cost approach
and the income approach
you take the weighted average of the indicated values that come from all three approaches to get a
single estimate of the properties value.
Sales comparison approach - Underlying concept is that the value of a piece of real estate can be
determined by analyzing the sale price of similar properties.
Elements of comparison - The key determinants of value
Location
age
size
style
etc.
Value adjustments - Transaction adjustments: differences in
*property rights included
*financing terms
*market conditions
Property adjustments: differences in
*location
*physical characteristics
*Economic characteristics
*Nonreality items
Value adjustments for comps - If the comp is superior to the subject then the transaction price is
adjusted downward
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