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Arkansas Real Estate Chapter 11
Primmer for Exam Chapter 11
35
Real Estate & Planning
Undergraduate 1
07/20/2014

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Cards

Term
Appraiser
Definition
independent professional trained to provide an unbiased estimate of value in an impartial and objective manner
Term
CMA
Definition

Competitive Market Analysis 

 

an analysis of the property but it is not an appraisal and should not be presented as such

Term
BPO
Definition

Brokers Price Opinion

 

similar to CMA but includes more detailed information

 

brokers usually charge for a BPO even though it is not an appraisal 

Term
Anticipation
Definition
value created by the expectation that certain cvents will occur
Term
Change
Definition
the concept that possible / predictable events might change the marketplace for the subject property
Term
competition
Definition
the interaction of supply and demand
Term
Conformity
Definition
value is created when a property is in harmony with its surroundings
Term
Contribution
Definition
the value of any part of a property is measured by its effect on the value of the whole; i.e., what value does an improvement add to the property
Term

Highest & Best Use

 

HABU

Definition
the most profitable single use to which a property may be put
Term
PLEM
Definition

criteria to determine the HABU, highest and best use

 

     (1.) physically possible

     (2.) legally permitted

     (3.) economically or financially feasible

     (4.) most profitable or maximally productive

Term
What is the first item on an appraisal
Definition
State the Problem or why is the appraisal being conducted
Term
What is the last item on an appraisal?
Definition
Report the final value estimate
Term
Determining Value in the Market
Definition

DUST

 

Demand

Utility

Scarcity

Transferability

Term
Market Value
Definition
The most probable price a knowledgeable buyer is willing to pay, a knowledgeble seller is willing to accept for property in a competitive and open market, with neither party under duress
Term
Market Value
Definition
opinion of value based on an analysis of data
Term
Market Price
Definition
price the property actually sells for--the sales price
Term
Is Market Value & Cost synonymous
Definition
Perhaps on new construction but not generally on existing stock
Term
Increasing & Diminishing Returns
Definition

Increasing--when improvements add value equal to the cost

Diminishing --when improvements do not add value equal to the cost

Term
Plottage
Definition
consolidating of lots or plots that creates a value greater than the sum value of the lots before consolidated
Term
Regression and Progression
Definition
property values increasing or decreasing based on the presence of better or lesser value property
Term
Substitution
Definition
maximum value of a property tends to be set by how much it would cost to purchase an equally desirable and valuable substitute property
Term
Supply and Demand
Definition
value of a property depends on the number of properties available in the marketplace
Term
Three approaches to value
Definition

      (1.) sales comparison approach

      (2.) cost approach

      (3.) income approach

Term
Sales Comparison
Definition

same as comparables

 

comparison of the subject house to others in the area recently sold

 

considered the most reliable method

Term
Adjustments to Sales Comparison / Comparables Approach
Definition

     (1.) Property rights

     (2.) Financing concessions

     (3.) Market conditions

     (4.) Conditions of sale

     (5.)Market conditions since the date of sale

     (6.) Location

     (7.) Physical features and amenities

Term
Reproduction Cost
Definition
cost of constructing an exact duplication
Term
Replacement Cost
Definition
cost of replacing the property with a similar home but not an exact duplicate
Term
Determining reproduction or replacement cost
Definition

     (1.) square-foot method

     (2.) unit in place method

     (3.) quantity survey method

     (4.) index method

Term
CPA
Definition
if the comp is poorer,  ADD
Term
CBS
Definition
if the comp is better, substract
Term
Depreciation
Definition
Loss of value for any reason
Term
What are the three categories of depreciation
Definition

     (1.) physical deterioration

     (2.) functional obsolescence

     (3.) external obsolence

Term
Is external obsolence curable?
Definition
NO
Term
Is Functional Obsolence curable?
Definition
Many times
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