DAY 11 — Appraisal

What is market value?

Price property would sell for under normal conditions

What is market price?

Actual selling price

What is assessed value?

Value for property taxes

What is cost approach?

Value = land + cost to build − depreciation

What is income approach?

Value based on income property generates

What is sales comparison approach?

Compare property to similar recently sold homes

When is cost approach used?

New buildings or unique properties

When is income approach used?

Rental or investment properties

Appraiser must be…?

Licensed and impartial

What is reconciliation in appraisal?

Combining all approaches to determine final value

What is depreciation?

Loss in value due to wear & tear or age

Functional obsolescence = ?

Value lost due to outdated design/features

Economic obsolescence = ?

Value lost due to outside factors (neighborhood decline)

Replacement cost = ?

Cost to build similar property with modern materials

Reproduction cost = ?

Cost to build exact replica

Why study appraisals?

Test asks about market value, approaches, depreciation

Quick tip: remember three approaches

Cost, income, sales comparison

Market value vs assessed value?

Market = fair price; Assessed = for taxes

What is the definition of highest and best use in real estate?

The legal, possible, and most profitable use of a property

What are the three main appraisal approaches?

Cost approach, income approach, and sales comparison approach