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| Federally related Transaction |
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Definition
| real estate related financial transaction that a federal financial institutions regulatory agency(FFIRA) has either contracted for, or regulates, and requires the services of an appraiser. |
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| In appraisal trans value is the loan amount. In other instances it can be market value. |
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| Uniform Standards of Professional Appraisal Practice(USPAP) |
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| All appraisals for federally related transactions must be in writing and conform to USPAP. All appraisals performed by Real Estate appraisers and licensees must also conform to USPAP. |
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| value used as a basis for property taxation . |
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| estimate of money required to replace a structure in the event of some catastrophic event such as fire. |
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| personal price an investor would pay, given the investor's own financing requirements and income tax situation. |
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| value associated with a rapid sale. example: amount of money a house will bring in a foreclosure sale. |
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| value of a income producing property or business characterized by a significant operating history. |
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| estimated amount for which improvements can be sold at the end of a structure's useful life. |
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| price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. |
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| totsl expenditure required to bring a new improvement into existence plus the cost of the land |
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| Amount of money actually paid in a transaction. |
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| ...of a good or service is determined by its ability to command other goods or services in exchange. |
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| Occurs when an owner invests more money in a structure than the owner can reasonably expect to recapture. |
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| 4 Characteristics of Value |
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| (DUST)Demand, Utility, Scarcity, Transferability |
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| The most profitable use to which a property may be put. Use must be: legally permissable, physically possible, financially feasible. |
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| to estimate the value of property. |
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| Process of weighting the estimates of value derived from the sales comparison, cost, and income approaches to arrive at a final estimate of market value |
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| Sales Comparison approach |
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Definition
| A method for estimating the market value of a property by comparing similar property's to the subject property. |
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| Cost Depreciation Approach |
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Definition
| A method for estimating the market value of a property based on the cost to buy the site and to construct a new building on the site, less depreciation. |
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| cost to build an exact duplicate of a structure. |
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| cost to replace a structure having the same use and functional utility as the subject property, but using modern available or updated material. |
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| loss in value caused by things such as wear and tear, poor design, or the structure's surrounding's(proximity) |
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| total depreciation that has accumulated over the years. |
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| a building component has been added or repaired and the owners are able to get their money back in added value. |
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| Ordinary wear and tear caused by use. lack of maintenance, exposure to the elements, and physical damage. |
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| Anything inferior due to operational inadequacies, poor design, or changing tastes and preferences. |
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| Any loss in value due to influences originating outside the boundaries of the property, such as an expressway adjacent to a residential subdivision or deterioration of the neighborhood. |
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| Age indicated by a structure's condition and utility. |
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| total estimated number of years that the structure is expected to contribute to the property's value. |
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Term
| income capitalization approach |
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Definition
| A method for estimating the market value of a property based on the present and future income the property can be expected to generate. |
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Term
| Potential Gross Income (PGI) |
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Definition
| The total annual income a property would produce with 100% occupancy and no collection or vacancy losses. |
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| The resulting amount when vacancy and collection losses are subtracted from potential gross income. |
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| Vacancy and Collection Losses |
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| A deduction from potential gross income for (1)current or expected future space not rented due to tenant turnover and (2) loss from uncollected rent due from delinquent tenants. |
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Term
| Net Operating Income (NOI) |
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Definition
| Resulting amount when all operating expenses are subtracted from effective gross income. |
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| The worth of a property to a particular investor based on the investor's desired rate of return, risk tolerance, etc.. |
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| A rule of thumb for estimating the market value of income producing residential property; The ratio to convert rental income into market value . |
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| Combining of two or more adjoining properties into one tract; the process of consolidating properties. This is usually done to increase the usability and value of the resulting consolidation. |
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| The added value as a result of assembling (combining)two or more properties into one large parcel. |
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| The principal that the value of an inferior property is enhanced by its association with superior properties of the same type. |
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| The principal that the value of a superior property is adversely affected by its association with an inferior property of the same type. |
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| refers to people's preferences, both physical and economic, for a certain area owing to factors such as weather, job opportunities, and transport facilities. |
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