Valuation & Market Analysis - Chapter 5

Help determine a listing price from sold & for sale properties

More detailed, used by 3rd party to provide a basis for negotiation to determine a list price

The present worth of future benefits arising from the ownership of real property

Characteristics for a property to have value in real estate market

Most profitable use to which a property may be adapted, given legal constraints

Value of property set by cost of purchasing an equally desirable and similar property

Maximum value realized if if land use conforms to existing neighborhood standards

Improvements to land & structures produce increase or decrease in value

Hgh levels of profits attract competitors

No economic or physical condition remains constant

Value of any component of property consist of what its additions contribute to value of whole property

Value Increases or decreases in anticipation of some future benefit or detriment

Combining contigous property, increasing the value

Actual combining the properties into one is

Principle between dissimilar properties, worth of better is affected by presence of lesser quality property

Worth of lessen property increases if among better properties

Based on Principle of Substitution

steps of Cost Aproach

Wasting assests, such as building

Sales Comparison or Direct Sales ("Arms length")

Based on present value of rights to future income

Net income ./. Capitalization Rate = value

Sales Price ./. Monthly Rental Income =

Sales price ./. Annual Rental Income =

Tangible and Intangible neighboritiehod Benefits

Mathemeaticla Process for estimating a properties value using a proper rate of return on investment & anticipated annual net income

Rate of Return a property will produce on the owners investment

Sold properties in appraisal report equivalent to subject property

Final Step of Appraisal process, Combining all 3 approches to arrive at final Estimate

Property being appraised

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