Ch.8 real estate

Adjustments

Additions or subtractions from a
comparable sale price or cost which are required to make the comparable property more directly comparable to the subject property.

Accrued depreciation

In cost appraisal, the identification and measurement of reductions
in the current market value of a property from today's reproduction cost.

Appraisal

An unbiased written estimate of
the fair market value of a property.

Appraisal report

The document the appraiser submits to the client and contains the appraiser's final estimate of market value, the data upon which the estimate is based, and the calculations used to arrive at the estimate

Arm's-length transaction

A transaction between two parties that have no relationship
with each other and who are negotiating on behalf of their own best interests. A fairly negotiated transaction and reasonably representative of market value.

Comparable properties

Properties similar to
the subject property used in the sales comparison approach to calculate a single indicated value for the subject property.

External obsolescence

Losses of property value caused by forces or conditions beyond the
borders of the property. The losses are deducted from a building's reproduction cost in the cost
approach to estimating market value.

Final adjusted sale price

The price paid for a comparable property in the sales comparison approach, adjusted for all conditions and characteristics to approximate the subject property and the current date.

Functional obsolescence

Losses in value of a building relative to its reproduction cost because the building is not consistent with modern standards or with current tastes of the market.

Highest and best use

The use of a property
found to be (1) legally permissible, (2) physically possible, (3) financially feasible, and (4) maximally productive.

Indicated value

The final value estimate for
the subject property resulting from application of one of the major approaches in the appraisal process.

Investment value

The value of the property to a particular investor, based on his or her specific requirements, discount rate, expectations, and 3000.

Market-adjusted normal sale price

Normal sale price" adjusted for changes in market conditions between the date of sale and the date of appraisal of the subject property

Market value

The price a property should sell
for in a competitive market when there has been a normal offering time, no coercion, arm'slength
bargaining, typical financing, and informed buyers and sellers.

Nonrealty items

Items of personal property

Normal sale price

The transaction price of a
comparable property adjusted for nonmarket financing and non-arm's-length bargaining (conditions of sale).

Physical deterioration

Loss of value of a building from its reproduction cost, resulting from wear and tear over time.

Property adjustments

Five sale price adjustments made to comparable property transactions prices: location, physical characteristics, legal characteristics, use, and nonrealty items.

Reconciliation

The process of forming a single point estimate from two or more numbers. It is used widely in the appraisal process. For example, in the sales comparison approach to develop a single indicated value from several final adjusted sale prices of comparables,

Replacement cost

The cost to build a new building of equal utility to an existing building
that is not an exact physical replica of the existing building.

Reproduction cost

The cost to build a new building that is exactly like an existing building in every physical detail.

Subject property

The property for which an appraisal of fair market value is produced

Transaction price

The prices observed on sold properties.

Uniform Standards of Professional Appraisal
Practice (USPAP)

Rules governing the appraisal process and reporting of appraisals that are developed by the Appraisal Standards Board of the Appraisal Foundation. Appraisers are obligated by law to follow these rules and guidelines.