Term
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Definition
| Also called historical or chronological age, this is the number of years that have elapsed since an original structure was built. |
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Term
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Definition
| Method of appraising vacant land. The allocation of the total sale price or appraised value of a property between land and building, either by using a ration or by subtracting a figure representing building value from the total price (or value). Also called the Allocation Method. |
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Term
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Definition
| The difference between an improvement's reproduction or replacement cost and its present value as of the date of the appraisal. LOSS IN VALUE THAT HAS ALREADY OCCURRED |
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Term
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Definition
| Average or typical building costs, usually from cost manuals; used, with appropriate refinements, to estimate cost of construction. |
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Term
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Definition
| The amount of capital recapture charged off on an owner's books. |
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Term
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Definition
| Municipal ordinance that regulates the type and quality of building materials and methods of construction permitted. |
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Term
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Definition
| Fire resistant, structural steel frame; fireproofing may be of concrete, masonry or sprayed on fire inhibitors (used in high-rise, large office and hotel buildings). |
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Term
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Definition
| Fire resistant, reinforced concrete (used in high-rise, large office buildings and parking structures). |
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Term
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Definition
| Fire resistant, concrete or masonry (brick too) with some wood and sheet metal (used in medium-sized 1 and 2 story commercial and industrial buildings such as suburban stores). |
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Term
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Definition
| Non-fireproof (combustible) wood frame with stucco, siding or veneer exterior walls (used mostly in residential, some commercial and industrial buildings). |
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Term
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Definition
| Estimating building costs by relating the costs to similar buildings |
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Term
| Comparative square foot method |
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Definition
| method of estimating construction costs, using typical square-foot costs for the type of construction being estimated. |
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Term
| Conditions, covenants, and restrictions (CC&Rs) |
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Definition
| Recorded deed restrictions that run with the land, usually initiated by the original subdivider. |
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Term
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Definition
| a form of legal ownership; each individual owns the airspace in his or her unit in fee simple, plus an undivided interest in the structural supports, building systems, and all common areas. |
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Term
| Construction Classification |
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Definition
| Type of Construction; a system that rates the basic frame, walls, and roof of a structure as to their relative fire resistance (CLASS A B C or D, Class A beginning most fireproof). |
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Term
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Definition
| Lot with frontage on two intersecting streets |
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Term
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Definition
| It involves estimating the replacement cost new of the improvements, deducting the estimated accrued depreciation, and then adding the market value of the land. |
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Term
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Definition
| Original price paid for a property, plus capital improvements less depreciation. (an accounting term) |
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Term
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Definition
| factor used in adjusting published construction cost figures to estimate current and local costs. |
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Term
| cost to cure method of depreciation |
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Definition
| method of estimating accrued depreciation (loss in value), on the cost to cure or repair observed building defects. |
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Term
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Definition
| lot located at or near the end of a dead-end street. |
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Term
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Definition
| items of physical deterioration or functional obsolescence that if repaired would add at least as much to the market value of the property as the cost of repairs. |
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Term
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Definition
| private limitations, set forth in the deed to a property, that dictate certain uses that may or may not be made of the property |
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Term
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Definition
| a loss in value from any cause |
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Term
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Definition
| method of adjusting comparable sales; adjustments are calculated from an analysis of the depreciated replacement cost for each differentiating feature. |
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Term
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Definition
| distance from the frontage of a lot to the rear lot line. |
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Term
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Definition
| method of describing a building by its construction purpose |
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Term
| development method (land development method) |
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Definition
| method of vacant land valuation; development costs are subtracted from estimated gross sales and, finally, developers profit are accounted for. The results provide an estimate of raw land value |
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Term
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Definition
| All of the costs that are directly involved with the physical construction of the structure, including labor, materials and equipment, design and engineering, and subcontractors fees. |
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Term
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Definition
| right, privilege, or interest that one party has in the land of another, created for a specific purpose by grant, agreement, or necessity |
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Term
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Definition
| loss in value that is cause by factors located outside the subject property; locational or environmental obsolescence. Almost always incurable because the cost to repair is usually very large. |
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Term
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Definition
| the estimated period over which the improvements will continue to contribute to the property value. |
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Term
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Definition
| relative age of a structure, considering its physical condition, utility and marketability |
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Term
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Definition
| rear lot, behind other houses or lots, with a long, narrow access road ( like a flagpole). |
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Term
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Definition
| boundary line or lot side that faces a street |
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Term
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Definition
| the combination of the usefulness and attractiveness of a property |
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Term
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Definition
| the reasonable and probable use of a property that will support the highest present value of the land |
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Term
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Definition
| cost of a property at the time it was constructed or purchased. |
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Term
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Definition
| permanent structure or other development that becomes part of the land |
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Term
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Definition
| building defects or problems that would cost more to repair than the anticipated value increase from such repair. |
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Term
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Definition
| method of estimating construction costs; adjusts the original costs to the current cost level by a multiplier obtained from a published cost index. |
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Term
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Definition
| all of the time and money costs involved in a construction project that are not directly involved with construction itself. Examples are loan fees, interest, legal fees, and marketing costs. |
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Term
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Definition
| lot with frontage on only one street |
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Term
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Definition
| lot that has several other lots backing onto its side yard |
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Term
| long lived, incurable physical deterioration |
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Definition
| loss in value attributable to the major components of the building, when age is the major contributing factor and the cost of repair would exceed the value that would be added to the structure by the repair. |
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Term
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Definition
| a building that is the wrong type or use for its location; an example of functional obsolescence. |
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Term
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Definition
| ordinary physical and functional loss that improvements suffer |
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Term
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Definition
| difference between cost new and the amount of depreciation |
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Term
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Definition
| wear and tear from use, age, the weather, neglect, lack of maintenance, and/or vandalism. |
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Term
| planned unit development (PUD) |
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Definition
| a project consisting of individually owned parcels of land, with a common area and facilities owned by an association of which the owners of all parcels are members. |
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Term
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Definition
| the combining of two or more parcels together for increased utility. Also referred to as assemblage. The term plottage is used to denote plottage value. |
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Term
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Definition
| the increase in utility or unit value that is created by joining two or more parcels together into one large ownership. |
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Term
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Definition
| real estate values are constantly changed by social, economic, and political forces in society. |
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Term
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Definition
| maximum value results when properties in a neighborhood are relatively similar in size, style, quality, use, and/or type. |
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Term
| principle of consistent use |
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Definition
| requires that land and improvements be appraised on the basis of the same use |
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Term
| principle of substitution |
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Definition
| when a property can be easily replaced by another. The property is worth no more than what it would cost to produce or buy a substitute property with same utility. no unnecessary delay should be encountered in obtaining the substitute property |
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Term
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Definition
| classification or rating based on basic structural integrity, materials, finishes, and special features |
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Term
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Definition
| process for arriving at a cost estimate for new construction, involving a detailed estimate of the quantities of raw materials used, the current price of each material, and installation costs. Also called the builder's breakdown cost method. |
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Term
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Definition
| Replacement cost, less all forms of depreciation |
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Term
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Definition
| Replacement cost, less normal depreciation |
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Term
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Definition
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Term
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Definition
| The estimated cost to construct, at current prices, a building WITH UTILITY EQUIVALENT to the building being appraised, using modern materials and current standards, design, and layout. |
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Term
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Definition
| The estimated cost to construct, at current prices, an EXACT duplicate, or replica, of the building being appraised, using the same materials, construction standards, design, layout, and quality workmanship, EMBODYING ALL THE SUBJECTS DEFICIENCIES< SUPER-ADEQUACIES, AND OBSOLESCENCE |
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Term
| Sales Data Method of Depreciation |
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Definition
| Method of estimating depreciation, where in building values abstracted from sales are compared to current costs new |
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Term
| straight line method of depreciation |
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Definition
| method of estimating depreciation, in which the loss in value of a building is assumed to be the ratio of its age (or effective age) to its total useful or economic life. |
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Term
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Definition
| lot suffers from danger of speeding cars; but seldom sell for lower price; commercial parcels may sell at a premium |
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Term
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Definition
| method of estimating installed costs |
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Term
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Definition
| method of describing the property's general use |
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Term
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Definition
| in zoning, a legal exception to the use, type, density, or other allowable feature of the normal permitted development or use of a specific site. |
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Term
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Definition
| adding the depreciated replacement cost of the improvements to the value of the land as estimated from a market or economic study. The cost approach is also known as the SUMMATION approach because of the addition step involved in the process |
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Term
| 3 Major Types of Accrued Depreciation |
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Definition
1. Physical Deterioration (curable and incurable)
2. Functional Obsolescence (curable and incurable)
3. Economic (external) obsolescence (curable and incurable) |
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Term
| The important site characteristics are divided into 2 types |
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Definition
1. physical
2. legal and locational |
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Term
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Definition
| The best unit of comparison in the analysis of sales; but its relative importance is dependent on both use and zoning requirements |
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Term
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Definition
| Refers to general parcel configuration and its relative dimensions; irregular or long and narrow shape may reduce site's utility |
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Term
Irregular vs Normal Physical Features
Advantages... Disadvantages |
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Definition
Advantage- potential view; privacy
Disadvantage- higher development cost and utility cost |
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Term
| Market or Direct Sales Comparison Method |
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Definition
Considered the most accurate method whether vacant or improved parcels
A. Locate similar land sales
B. Compare Sales to subject property
C. Make adjustments
D. Arrive at indicated value of the subject property |
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Term
| Two steps of allocation method |
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Definition
A. find sales of improved properties with similar site characteristics to the subject
B. allocate a proportion of the sales price to the land |
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Term
| Four primary methods of land valuation |
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Definition
1. Market or Direct sales comparison method 2. Abstraction or Allocation Method 3. Land Development 4. Land Residual Method
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Term
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Definition
| Use this method to estimate the value of vacant acreage that is ready for subdivision. This is a useful method when there are no sales of comparable acreage or when detailed analysis of the project is warrented. |
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Term
| Five Basic Steps in the cost approach |
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Definition
1. Estimating the value of the land as if vacant and available for use
2. Estimating the current cost to reproduce or replace the existing improvements
3. Deciding on appropriate amounts of accrued depreciation
4. Deducting the accrued depreciation from the cost new of improvements
5. adding the depreciated cost of the improvements to estimated land value to arrive at prop. value |
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Term
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Definition
1. historic cost
2. reproduction cost
3. replacement cost
4. trend cost |
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Term
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Definition
| actual cost as of a particular date updated to the current period. |
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Term
| the comparative square foot method |
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Definition
| cost of a particular building is estimated by applying the avg or typical sq ft cost of similar buildings |
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Term
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Definition
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Term
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Definition
| a type depreciation that is caused by a relative loss of building utility. Loss of utility means there is some feature of the building that is not useful as it cost would suggest. |
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Term
| Before performing the site inspection, you should: |
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Definition
Gather basic information about the site
Be sure you know the reasons for the site inspection
have a map or drawing of the site |
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Term
| The first important reason for inspecting and analyzing the site is |
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Definition
| estimate the highest and best use |
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Term
| An appraiser should identify and record the physical characteristics, the public and private restrictions, and the locational elements of a site. Which of the following is considered an aspect of location? |
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Definition
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Term
| What best describes the site in a PUD |
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Definition
| subdivided lot, plus appurtenant interest in the common areas |
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Term
| Highest and Best Use Must Have all four of: |
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Definition
Physically possible
legally permitted
economically feasible
maximally productive |
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Term
| The appraisers opinion of highest and best use should include: |
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Definition
| the highest and best use as if vacant and the highest and best use as presently improved |
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Term
| During the building inspection. to record data you will need: |
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Definition
| a checklist or appraisal form |
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Term
| some of the factors usually considered to influence the cost of construction are |
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Definition
| design or use type, construction classification, rating of quality |
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Term
| Good architectural design consists, in part, of |
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Definition
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Term
| Land value may be abstracted from the sales of improved property. The method is most useful: |
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Definition
In built up areas where little vacant land remains
As an alternative to the market method when comparable sales are not available. |
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Term
| The unit of comparison for vacant land appraisals is ideally |
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Definition
| The unit considered by the market to be most important |
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Term
| The cost estimates used in appraisals are what we describe as generalized economic costs. This means that they should reflect: |
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Definition
Cost levels on the date of value, not "book" costs or historic costs
Typical Costs to build such a building |
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Term
| From the appraisers point of view, replacement cost estimates are preferred over reproduction cost estimates because |
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Definition
they provide a direct rating of the market demand for the quality and design of a structure
they are less time consuming |
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Term
| The most practical and widely used method of estimating construction costs is |
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Definition
| the comparative square foot method |
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Term
| The cost-estimating method that is often used as a supplement to refine the square-foot method is called |
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Definition
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Term
| In accounting practice, depreciation is treated as |
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Definition
a theoretical loss in value
an expense before taxes |
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Term
| in appraisals depreciation can be defined as |
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Definition
actual loss in value compared to cost as if new
diminished utility compared to new |
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Term
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Definition
Estimate the value of the subject property
estimate the cost of the improvements less depreciation
subtract the depreciated cost of the improvements from the total estimated property value to derive an estimated land value for the subject property |
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Term
| INdex (Trended Historical Cost) Method Formula |
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Definition
| Original x Current year index/Historical year index = Current cost |
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Term
| Four Basic Methods of Estimating Cost |
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Definition
The comparative square foot method
unit in place method
index (trended historical cost) method
quantity survey method |
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Term
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Definition
historic cost
reproduction cost
replacement cost
trend cost |
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