Appraisal Methods and Adjustments

These flashcards cover key terms and concepts related to appraisal methods, adjustments, and property valuation used in real estate.

Comparable property

A property used as a standard of comparison to estimate the value of another property.

Adjustments

Changes made to the sale price of a comparable property to reflect differences between it and the subject property.

Financing terms adjustment

An adjustment made for the type or terms of financing used in a property sale.

Market conditions adjustment

An adjustment for changes in property values over time due to market fluctuations.

Location adjustment

An adjustment made based on the geographical area where the property is located.

Physical characteristics adjustment

An adjustment reflecting differences in size, condition, or features of properties.

Non-realty items adjustment

An adjustment for personal property or items not included in the real estate transaction.

Legal characteristics

Factors affecting property value that pertain to zoning or legal restrictions.

Effective age

The age a property appears to be based on its condition, as opposed to its actual age.

Accrued depreciation

The difference between the replacement cost of a property and its market value due to various factors.

Physical deterioration

Loss in property value due to wear and tear, aging, or other physical conditions.

Functional obsolescence

Decline in property value due to changes in design preferences or utility.

External obsolescence

Loss in value resulting from external factors outside of the property itself.

Replacement cost

The cost to replace a property with a similar utility and features.

Reproduction cost

The cost to construct an exact replica of a property.

Weighted price

A price adjusted according to predetermined significance or importance in the appraisal process.

Sales Comparison Approach

An appraisal method that compares the property being valued to similar properties that have sold recently.

Cost Approach

An appraisal method that estimates the value of a property based on the cost to construct a similar structure.

Estimated value of site

The calculated worth of the land on which a property is situated.

Indicated value

The estimated value derived from the application of different valuation approaches.

Depth of investigation

The extent to which comparable sales are analyzed to derive property value.

Timestamp analysis

Reviewing changes in property values over time related to past sales.

Estimate of market value

An assessment of the probable price a property would sell for in the current market.

Monthly rate of increase

The rate at which property values are expected to rise each month.

Holding Period Yield (HPY)

The percentage return from property value increase over a holding period.

Indicated opinion of value

The value appraisers believe a property is worth.

Appraiser's judgment

The professional assessment of property worth based on evidence and market conditions.

Sales price

The final agreed price at which a property is sold.

Transaction price adjustments

Monetary values added or subtracted from the initial sale price based on various factors.

Economic life

The period during which the property is expected to remain useful or profitable.

Transaction adjustments

Changes made to the sale price of a comparable due to specific buyer-seller transaction conditions.

Appraisal assignment

The job given to an appraiser to estimate the value of a specific property.

Legal characteristics adjustment

Adjustments made for legal issues affecting property value like zoning laws or easements.

Market data analysis

Examination of property sales data to discern trends and values.

Improvement contributions

Adjustments reflecting the impact of property improvements on value.

Trended values

Values adjusted for inflation or market changes over time.

Appreciation

An increase in property value over time.

Depreciation

A decrease in property value due to various influencing factors.

Competitive properties

Other properties on the market that compete with the subject property.

Market segmentation

Dividing markets into distinct groups of potential buyers with similar needs.

Valuation models

Mathematical frameworks used to calculate the value of properties.

Adjustment factors

Specific percentages or amounts used to adjust a comparable sale price.

Cost approach estimates

Calculations made to determine the value of a property through cost calculations.

Financial calculator

Instrument used to compute finance-related equations and values.

Average monthly change

The average rate of increase or decrease in property values per month.

Adjusted sale price

The price of a comparable property after applying all necessary adjustments.

Sales price trends

Patterns observed in the changes of sale prices in a given market.

Price indices

Statistical measures used to track changes in price levels over time.

Real estate appraisal

The process of developing an opinion of value for real property.

Market analysis

The assessment of property demand, supply, and pricing trends in a given market.