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  • ABSTRACTION

    1. ___________________ - method of finding land value in which all improvement costs (less depreciation) are deducted from sales price. also called extraction.

    ACTUAL AGE

    2. ________________ - the number of years elapsed since the original structure was built, sometimes referred to as historical or chronological age.

    AGE- LIFE METHOD OF DEPRECIATION

    3. _________________________ - a method of computing accrued depreciation in which the cost of a building is depreciated at a fixed annual percentage rate; also called the straight-line method.

    PRINCIPLE OF ANTICIPATION

    4. ______________________ - the principle that the purchase price of property is affected by the expectation of its future appeal and value.

    APPRAISAL

    5. ____________________ - an estimate of quantity, quality, or value; the process through which conclusions of property value are obtained; also refers to the report setting forth the process of estimating value.

    APPRAISAL REPORT

    6. ______________________ - an appraiser's written opinion to a client of the value south for the subject property as of the date of appraisal, giving all details of the appraisal process.

    ARM'S-LENGTH TRANSACTION

    7. _______________________ - a transaction in which both buyer and seller act willingly and under no pressure, with knowledge of the present conditions and future potential of the property, and in which the property has been offered on the open market for a reasonable length of time and there are no unusual circumstances.

    PRINCIPLE OF BALANCE

    8. _______________________ - the appraisal principle that states that the greatest value of a property will occur when the type and size of the improvements are proportional to each other as well as to the land.

    BAND OF INVESTMENT

    9. _____________________ - a method of developing a discount rate based on (1) the rate of mortgage interest available, (2) the rate of return required on equity, and (3) the dept and equity share in the property. A variation of this method is used to compute an overall capitalization rate.

    BUILDING CAPITALIZATION RATE

    10. ___________________- the sum of the discount and capital recapture rates for a building.

    BUILDING RESIDUAL TECHNIQUE

    11. ____________________________ - a method of capitalization using net income remaining to building after interest on land value has been deducted.

    CAPITALIZATION

    12. ________________ - the process employed in estimating the value of a property by the use of an appropriate capitalization rate and the annual net operating income expected to be produced by the property.

    CAPITALIZATION RATE

    13. _____________________ - the percentage rate applied to the income a property is expected to produce to derive an estimate of the property's value; includes both an acceptable rate of (yield) and return of the actual amount invested (recapture).

    CAPITAL RECAPTURE

    14. ______________ - the return of an investment; the right of an investor to get back the amount invested at the end of the term of ownership or over the productive life of the improvements.

    PRINCIPLE OF CHANGE

    15. ___________________ - the principle that no physical or economic condition ever remains constant.

    COMPARABLES

    16. ____________________ - properties that are substantially equivalent to the subject property.

    PRINCIPLE OF COMPETITION

    17. _______________________ - the principle that a successful business attracts other such businesses, which may dilutes profits.

    PRINCIPLE OF CONFORMITY

    18. _____________________ - the principle that buildings should be similar in design, construction, and age to other buildings in the neighborhood to enhance appeal and value.

    PRINCIPLE OF CONTRIBUTION

    19. ___________________ - the principle that any improvement to a property, whether to vacant land or a building, is worth only what it adds to the property's market value, regardless of the improvement's actual cost.

    COST APPROACH

    20. __________________ - the process of estimating the value of a property by adding the appraiser's estimate of the reproduction or replacement cost of property improvements, less depreciation, to the estimated land value.

    CURABLE DEPRECIATION

    21. _____________________ - a depreciated item that can be restored or replaced economically.

    DEED RESTRICTIONS

    22. ________________ - provisions in a deed limiting the future uses of the property. Deed restrictions may take any forms: they may limit the density of buildings, dictate the type of structures that can be erected, and prevent buildings from being used for specific purposes or used at all. Deed restrictions may impose a myriad of limitations and conditions affecting the property rights appraised.

    DEMOGRAPHY

    23. ___________________ - the statistical study of human populations, especially in reference to size, density and distribution. Demographic information is of particular importance to people involved in market analyses and highest and best use analyses in determining potential land uses of sites.

    DEPRECIATION

    24. ______________ - for appraisal purposes, loss in value due to any cause including physical deterioration, functional obsolescence, and external obsolescence.

    ECONOMIC LIFE

    25. _________________ - the period of time during which a structure may reasonably be expected to perform the function for which it was designed or intended.

    EFFECTIVE AGE

    26. ________________- the age of a building based on the actual wear and tear and maintenance, or lack of it, that the building has received.

    ENCROACHMENT

    27. ___________________ - A building, wall, or fence that extends beyond the land of the owner and illegally intrudes on land of an adjoining owner or a street or an alley.

    EXTERNAL OBSOLESCENCE

    28. _________________ - loss of value from forces outside the building or property, such as changes in optimum land use, legislative enactments that restrict or impair property rights, and changes in supply-demand relationships

    FEE SIMPLE

    29. _________________ - the greatest possible estate or right of ownership of real property, continuing without time limitation, sometimes called fee or fee simple absolute.

    FUNCTIONAL OBSOLESCENCE

    30. ___________________ - defects in a building or structure that detract from its value or marketability, usually the result of layout, design, or other features that are less desirable than features designed for the same functions in newer property.

    GROUND LEASE

    31. ____________________ - a lease of land only on which the lessee usually owns the building or is required to build as specified by the lease. Such leases are usually long-term net leases; the lessee's rights and obligations continue until the lease expires or is terminated for default.

    GROUND RENT

    32. ________________ - rent paid for the right to use and occupy land according to the terms of a ground lease.

    HIGHEST AND BEST USE

    33. __________________ - the legally and physically possible use of land that is likely to produce the highest land (or property) value, it considers the balance between site and improvements as well as the intensity and length of uses.

    INCOME CAPITALIZATION APPROACH

    34. _________________ - the process of estimating the value of an income-producing property by capitalization of the annual net operating income expected to be produced by the property during its remaining economic life.

    INDEX METHOD

    35. ______________ - an appraisal technique used to estimate reproduction or replacement cost, the appraiser multiplies the original cost of construction by a price index for the geographic area to allow for price changes.

    LEASED FEE

    36. _________________ - the lessor's interest and rights in the real estate being leased.

    LEASEHOLD ESTATE

    37. _______________ - the lessee's right to possess and use real estate during the term of a lease. This is generally considered a personal property interest.

    MECHANIC'S LIEN

    38. _______________ - a lien created by statue that exist in favor of contractors, laborers, or material men who have performed work or furnished materials in the erection or repair of a building.

    METES AND BOUNDS DESCRIPTION

    39. _______________ - a method of legal description specifying the perimeter of a parcel of land by use of measured distances from a point of beginning along specified boundaries, or bounds, using monuments, or markers, as points of reference.

    MONUMENTS

    40. ________________ - natural or artificial objects used to define the perimeter of a parcel of land using the metes-and-bounds method of legal description.

    NON-CONFORMING USE

    41. __________________ - a once lawful property use that is permitted to continue after a zoning ordinance prohibiting it has been established for the area; a use that differs sharply from the prevailing uses in a neighborhood.

    OVERALL CAPITALIZATION RATE

    42. ________________ - a rate of investment return derived, by comparing the net income and sales prices of comparable properties.

    OVER IMPROVEMENT

    43. ___________________ - an improvement to property that is more than warranted by the property's highest and best use and thus not likely to contribute its cost to the total market value of the property.

    PERCENTAGE LEASE

    44. __________________ - a lease commonly used for commercial property that provides for a rental based on the tenant's gross sales at the premises. It generally stipulates a base monthly rental, plus a percentage of any gross sales exceeding a certain amount.

    PLOTTAGE VALUE

    45. ___________________ - the subsequent increase in the unit value of a group of adjacent properties when they are combined into one property in a process called assemblage.

    QUANTITY SURVEY METHOD

    46. __________________ - a method of finding the reproduction cost of a building in which the costs of erecting or installing all of the component parts of a new building, including both direct and indirect costs, are added.

    RECAPTURE RATE

    47. _________________ - the percentage of a property's original cost that is returned to the owner as income during the remaining economic life of the investment.

    REMAINING ECONOMIC LIFE

    48. ________ - the number of years of useful life left to a building from the date of appraisal.

    REPLACEMENT COST

    49. ____________________ - the current construction cost of a building having exactly the same utility as the subject property.

    REPRODUCTION COST

    50. ___________________ - the current construction cost of an exact duplicate of the subject building.

    SALES COMPARISON APPROACH

    51. ____________________ - the process of estimating the value of property through examination and comparison of actual sales of comparable properties; also called the direct market comparison or market data approach.

    SANDWICH LEASE

    52. _____________________ - the ownership interest of a sublease.

    SUBDIVISION DEVELOPMENT METHOD

    53. ____________________ - a method of valuing land to be used for subdivision development, it relies on accurate forecasting of market demand, including both forecast absorption (the rate at which properties will sell) and projected gross sales ( total income that the project will produce); also called the land development method.

    PRINCIPLE OF SUBSTITUTION

    54. ______________ - the basic appraisal premise that the market value of real estate is influenced by the cost of acquiring a substitute or comparable property.

    PRINCIPLE OF SUPPLY AND DEMAND

    55. ___________________ - a principle that the value of a commodity will rise as demand increases and/or supply decreases.

    UNDER IMPROVEMENT

    56. _________________ - an improvement that is less than a property's highest and best use.

    VALUE IN EXCHANGE

    57. ______________ - the value of goods and services in exchange for other goods and services, or money, in the marketplace; an economic concept of market value.

    ZONING

    58. _________________ - municipal or country regulation of land use within designated districts or zones. It is an application of a state's police power to regulate private activity by enacting laws that benefit the public health, safety, and general welfare. It may affect use of land, lot sizes, type of structure permitted, building heights, setbacks, and density.

    ZONING ORDINANCE

    59. ____________ - regulation of the character and use of property by a municipality or other government entity through the exercise of its police power.

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