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Appraisal2
Appraisal
Question | Answer |
---|---|
Capitalization | The conversion of income into an indication of value |
Capitalization rate | The rate of return on an income producing property |
Net Annual Income | Yearly gross rents less gross expenses |
GRM | A factor based on location and rent a price per monthly rent used to give an initial estimate of value for a residential rental property |
GIM | A factor based on location and rent-a price per annual rent used to give an initial estimate of value for a commercial property |
Cost Approach | An appraisal used to determine the value of unique property-one with no comparables and no income (Land+Building Reproduction Cost-Depreciation=Value) or (Land+Building Replacement- Depreciation= Value) |
Reproduction Cost | The cost to exactly duplicate a building |
Replacement Cost | The cost to build a building of similar size and purpose using today's methods and materials |
Physical Deterioration | Deprciation due to ordinary wear and tear- curable-little impact on an appraisal |
Functional Obsolescence | Depreciation due to factors in the property that do not meet the expectations of buyers |
Economic Obsolescence | Depreciation due to factors outside the property also called external obsolescence or environmental obsolescence |
Highest and Best use | The legal use of property giving the greatest return in money or amentities |
Principle of Substitution | No person is justified in paying more for a property when a similiar property can be purchased for less-sets an upper limit on price |
Principle of Conformity | Maxium value is found when there is a reasonable degree of similarity or homogeneity |