Chapter 19: Real Estate Appraisal

Why Brokers need Appraisal knowledge

A distinct area of specialization within the world of real estate professionals. Appraisal provides a clear understanding about the markets response to a subject property. Real estate licenses must be aware of the fundamental principles evaluation in order to complete an accurate and effective comparable market analysis that seller clients in arriving at selling price for their home.

Appraisal

The act or process of developing an opinion of value. An appraisal report is the written or oral communication of an appraisal. Typically, appraisal reports for lenders, for example, are written in a uniform format.

Appraiser

A person trained to provide valuation services compente

Regulation of appraisal activities

USPAP

Associate real estate trainee appraiser

Certified residential real estate appraiser

Certified general real estate appraiser

Competitive Market Analysis

Brokers price opinion (BPO)

Value

DUST

Market value

Market value versus market price

Market value versus cost

Basic principles of value

Anticipation

Change

Competition

Conformity

Contribution

Highest and best use

Increasing and diminishing returns

Plottage

Regression

Progression

Substitution

Supply and demand

Three approaches to value

The sales comparison approach

The cost approach

Reproduction cost

Replacement cost

Cost approach basis

Determining reproduction or replacement cost new

Square foot method

Unit in place method

Quantity survey method

Index method

Depreciation

Physical deterioration

Functional obsolescence

External obsolescence

Straight line method

Economic life

The income approach

Net Operating income (NOI)

Capitalization rate

gross income multipliers

Gross rent multipliers

Reconciliation

The appraisal process