Valuation and Market Analysis

Amenity

A feature that enhances and adds value to real estate

Arm's Length Transaction

A transaction that occurred under typical market conditions

Assemblage

The combining of two or more parcels of land

Balance

Condition in the real estate market with slightly more homes available than buyers

Buyer's Market

Situation in the housing market where buyers have a large selection of properties

Capitalization

Converting a property's income figure into an estimated value

Competitive Market Analysis

Determining the approximate market value of a home by comparing it to other properties

Comparable

Similar properties that have sold in a certain area

Contribution

The value a particular item or feature adds to a property

Demand

The need or desire for a specific good or service

Diminishing Returns

The added value of an additional feature is less than the cost

External Obsolescence

When something outside the property makes it less desirable

Functional Obsolescence

When a building is less desirable due to its design

Gross Income Multiplier

Used for commercial properties to estimate value based on annual income

Gross Rent Multiplier

Used for residential properties to estimate value based on rental income

Land

The actual dirt or soil on the ground

Market Price

The price at which a property sold in an actual transaction

Physical Deterioration

Wear and tear on something due to age or other forces

Plottage

Increase in value due to successful assemblage

Progression

Value of a home is helped by other homes in the area

Reconciliation

Analyzing values from different appraisal approaches to arrive at a final value estimate

Regression

Value of a home is held down by other homes in the area

Scarcity

Limited supply of real estate

Seller's Market

Situation in the housing market where sellers have many buyers

Square Foot Method

Method for determining the cost of a building based on cost manuals

Substitution

Buyer will not pay more for a home than a comparable substitute

Supply and Demand

Law of economics that affects prices based on the balance of supply and demand

Uniform Residential Appraisal Report

Standard appraisal report form used by lenders and appraisers