Real Estate Appraisal
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Accrued Depreciation | Loss in value resulting from the property's physical deterioration, external depreciation (decrease in price), and functional obsolescence.
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Anticipation | The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property
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Assemblage | The combining of two or more adjoining lots into one larger tract to increase their total value.
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Appraisal | An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value
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Broker's Price Opinion (BPO) | An opinion of real estate value commissioned by a bank or an attorney and provided by a broker.
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Capitalization Rate | The rate of return a property will produce on the owner's investment.
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Change | The appraisal principle that holds that no physical or economic condition remains constant
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Competitive Market Analysis (CMA) | A comparison of the prices of recently sold homes that are similar to a listing seller's home in terms of location, style, and amenities.
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Competition | The appraisal principle that states that excess profits generate competition
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Conformity | The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.
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Contribution | The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value.
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Cost Approach | The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building, less depreciation
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Depreciation | In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence, and external obsolescence
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Economic Life | The number of years during which an improvement will add value to the land.
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External obsolescence | Incurable depreciation caused by factors not on the subject property, such as environmental, social, or economic factors
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Functional obsolescence | A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.
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Gross Income Multiplier (Gim) | A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value
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Gross Rent Multiplier (GRM) | The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value.
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Highest And Best Use | The possible use of a property that would produce the greatest net income and, thereby, develop the highest value.
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Income Approach | The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.
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Law Of Increasing Returns | Law that applies as long as money being spent on improvements produces an increase in income or value
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Law Of Diminishing Returns | Law that applies at the point where additional improvements do not increase income or value.
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Market Value | The most probable price that a property would bring in an arm's-length transaction under normal conditions on the open market.
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Net Operating Income (NOI) | The income projected for an income-producing property after deducting losses for vacancy and collection and operating expenses
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Physical deterioration | A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.
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Plottage | The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.
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Progression | An appraisal principle that states that, between dissimilar properties, the value of the lesser-quality property is favorably affected by the presence of the better-quality property.
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Reconciliation | The final step in the appraisal process, in which the appraiser combines the estimates of value received from the sales comparison, cost, and income approaches to arrive at a final estimate of market value for the subject property.
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Regression | An appraisal principle that states that, between dissimilar properties, the value of the better-quality property is affected adversely by the presence of the lesser-quality property.
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Replacement Cost New | The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.
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Reproduction cost | The construction cost at current prices of an exact duplicate of the subject property.
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Sales Comparison Approach | The process of estimating the value of a property by examining and comparing actual sales of comparable properties
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Sales Prices | The amount of money paid to a seller for a product bought
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State-certified Residential Real Property Appraiser | May perform any appraisal that is not to be used in a federally related financial transaction and may perform appraisals for use in a federally related financial transaction without regard to transaction value.
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State-certified General Real Property Appraiser | May appraise any type of property for any purpose in Georgia.
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State-licensed Real Property Appraiser | May perform any appraisal that is not to be used in a federally related financial transaction and may perform appraisals for use in a federally related financial transaction in which the value of the transaction does not exceed $1 million.
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Substitution | An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.
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Supply And Demand | The appraisal principle. Because appraising is based on economic concepts, this principle recognizes that real property, like any other commodity, is subject to the influences of the marketplace.
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Uniform Standards of Professional Appraisal Practice (USPAP) | A set of standards that details information required in an appraisal of residential property. This report is required by many government agencies.
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3 Types of Depreciation | Physical, Functional and External obsolescence
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Depreciation is most often determined by | The Straight Line Method
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The Straight Line Method | Properties Cost / # of years of expected economic life
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Capitialization Rate | Net Income / Salesprice
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Determining Value | Income / Rate
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Determining Rate | Income / Value
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Determining Income | Value x Rate
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Gross Rent Multiplyer | Salesprice / Monthly Income
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Gross Income Multiplyer | Salesprice / Annual Income
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Three basic Valuation Techniques | Sales Comparison, Cost and Income Approach
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Two types of Appraisal Data | General, Specific Data
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jozie723
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