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NE Real Estate
NE Real Estate Unit 16
| Term | Definition |
|---|---|
| value | goods in exchange for the present worth of future rights to income or amenities |
| uniform standards of professional appraisal practice (USPAP) | appraisal foundation details information required for a property appraisal |
| sales comparison approach | estimating the value of a property by examining and comparing sales & listings of comparable properities |
| supply and demand | RP us subject to the influence of the marketplace based on economic concepts |
| subsitution | purchasing an equally desirable and valuable substitute property; no costly delay is encountered |
| sales price | money paid to a seller |
| reconciliation | estimate of value received from the sales comparison, cost, and income approaches to arrive at a final opinion for marketplace |
| law of increasing returns | money spent on property improvements increases income or value of property |
| accrued depreciation | loss in property's value resulting from physical deterioration, external depreciation, and functional obsolenscene |
| anticipation | holding that value can increase or decrease on expectation of some future benefit or detriment produced by property |
| appraisal | estimate of the quantity, quality or value of something; conclusions of property value |
| appraiser independence requirements (AIR) | regulations issued by fannie mae to ensure accurate and objective appraisals |
| assemblage | 2 or more adjoining lots into 1 larger tract |
| broker's price opinion (BPO) | value commissioned by a bank or an attorney by a broker |
| capitalization rate | rate of return a property |
| change | appraisal principle holds that no physical or economic condition remains constant |
| competition | appraisal principle states excess profits generate competition |
| conformity | Appraisal Principle (AP) holding states that the more the similarities amongst properties in the area the better hold their value will have |
| contribution | AP states the value of any component of a property either gives or detracts from the whole value |
| depreciation | loss of value in property due to any cause |
| economic life | # of years during which an improvement will add value to land |
| external obsolescence | depreciation caused by factors not on the subject property (environmental or economic factors) |
| functional obsolescence | loss of value to an improvement to RE from design problems or utility |
| gross rent multiplier (GRM) | gross monthly income of property (single family homes) |
| highest and best use | produce the greatest net income and develop the highest value |
| income approach | income-producing property thought capitalization of the annual net income |
| law of diminishing returns | point at which additional property's improvements don't increase the property's income or value |
| market data approach (sales comparison approach) | estimate of value based off of appraised recently sold comparable properties |
| market value | most probable price that a property would bring in on an open market |
| net operating income (NOI) | income projected for an income-producing property after deducting anticipated vacancy and collection losses and operating expenses |
| physical deterioration | reduction in a property's value resulting from a decline in physical condition |
| plottage | increase in value or utility due to consolidation of two or more lots |
| progression | AP states that the value of a lesser-quality property is favorable affected by the presence of a higher-quality property |
| property inspection waiver (PIW) | fannie mae's desktop underwritter will do the searching; first and last names of borrowers on earlier and present loan match, consider PIW |
| gross income multiplier (GIM) | gross annual income of a property to produce an estimate of the property's value |
| cost approach | adding the estimated land value to appraises estimate of the reproduction or replacement cost of the building, less depreciation |
| regression | AP state that the value of a higher-quality property is adversely affected by the presence of a lesser-quality property |
Created by:
SevitaM
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