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  • Police Power

    Government right to regulate and control the character and use of property for the health, safety and general welfare of the public

    Zoning

    Local laws to control land use

    Master Plan

    A comprehensive guidline for the long term physical development of a particular area- mixed land use is designed to meet the needs of future residents

    Non-Conforming Use

    A permissible use under former rules that is now prohibited- automatically granted when zoning regulations change

    Variance

    Permission to violate current zoning regulations- obtained by a hearing

    Buffer Zone

    An area of land separating one land use from another incompatible such as residential from commercial

    Building Codes

    Regulations regarding specific construction requirements- plumbing, electrical, etc.

    EIS

    Environment Impact Statement- A study done to determine the effect of a proposed project on a community

    Eminent Domain

    The right of government to take private property for public use

    Condemnation

    The action of the government in taking private property under the right of eminent domain

    Inverse Condemnation

    The action of an individual trying to force the government to buy his property

    Taxation

    The right of government to tax real property

    Ad Valorem

    According to value- real property taxes are ad valorem taxes

    Assessed Value

    Property value for tax purposes
    Tax rate x Assessed value= Tax

    Mill

    A tax rate per $1,000. (Assessed Value/1,000 x mills=tax)

    Assessment Rolls

    Books showing the assessed value of all properties in the tax district

    Special Assessment

    A tax levied against only those property owners who benefit from a government improvement such as curbs, or sidewalks

    Municipal Improvement District

    An area within a municipality that is taxed for a specific improvement- unlike a special assessment, property owners were permitted to vote for the improvement district to be created

    Escheat

    The right of the government to take real property if an owner dies without a will and with no heirs or no kindred

    Riparian Rights

    The right to use water from a river or stream that borders a property

    Littoral Rights

    The right to use water from a lake or ocean that borders a property

    Prior Appropriation

    A theory of water law starting the first landowner to claim riparian rights has the exclusive right to take all the water for specific beneficial uses

    Appropriative rights

    Water rights under prior appropriation

    C,C & R's

    Deed covenants, conditions and restrictions are private controls of land use, development, methods and materials for construction, including style and appearance requirements in some cases

    Declaration of Restrictions

    The recorded document outlining the C, C & R's for a particular area of land

    HOA Regulations

    Deed restrictions for condominium complexes

    Injunction

    A court order to cease, stop, or refrain from actin- can be used to enforce c,c & r's

    Market Value

    The price a willing seller will sell for and a willing buyer will pay when neither is acting under exceptional pressure- most probable price

    Value

    An estimate of the future benefits to be derived from a property

    Price

    What one must pay for a property- usually very close or equal to market value

    Cost

    An estimate of past expenditures

    D.U.S.T.

    The four basic characteristic of value-
    demand
    utility
    scarcity
    transferability

    CMA

    Competitive Market Analysis- A range of value for a provided by a licensee to help a seller determine a realistic price- also called comparative market analysis

    BOV

    Broker's )pinion of Value- similar to a CMA used by a relocation firm, bank or attorney- also called BPO (Broker's Price Opinion)

    Appraisal

    An opinion of value

    Market Data Approach

    An appraisal used primarily on residential properties- it involves company the subject property to recent sales to determine a value- also called sales comparison approach

    Comparable

    A recently sold property similar to a property being valued

    Income Approach

    An appraisal used to determine the value of a property that produces income or rent, also called capitalization method (Net Annual Income= Rate of Return x Market Value)

    Capitalization

    The conversion of income into an indication of value

    Capitalization Rate

    The rate of return on an income producing property

    Net Annual Income

    Yearly gross rents less gross expenses

    GRM

    A factor based on location and rent- a price per monthly rent used to give an initial estimate of value for a residential rental property

    GIM

    A factor based on location and rent- a price per annual rent used to give an initial estimate of value for a commercial property

    Cost Approach

    An appraisal used to determine the value of unique property- one with no comparable and no income (Land + Building Reproduction Cost - Depreciation = Value)

    Reproduction Cost

    The cost to exactly duplicate a building

    Replacement Cost

    The cost to build a building similar size and purpose using today's methods and materials

    Physical Deterioration

    Depreciation due to ordinary wear and tear - durable - little impact on an appraisal

    Functional Obsolescence

    Depreciation due to factors in the property that do not meet expectations of buyers

    Economic Obsolescence

    Depreciation due to factors outside the property also called external obsolescence or environmental obsolescence

    Highest and Best Use

    The legal use of property giving the greatest return in money or amenities

    Principle of Substitution

    No person is justified in paying more for a property when a similar property can be purchased for less - sets an upper limit on price

    Principle of Conformity

    Maximum value is found when there is a reasonable degree of similarity or homogeneity

    Principle of Increasing and Decreasing Returns

    Invest in property whenever each dollar invested will return a dollar more of increased value and stop when each dollar invested returns less than a dollar in value- do not over-improve a property

    Principle of Contribution

    The value of a part is determined by its contribution to the total value of the property rather than by the cost of the part

    Principle of Regression

    Lower valued properties in the neighborhood lead to a decline in value of a subject property

    Principle of Progression

    Higher valued properties in the neighborhood lead to an increase in value of a subject property

    Principle of Competition

    Increased competition results in decreased profits for current providers

    Principle Of Change

    Appraisers must make adjustments for changes in market conditions and time

    Principle of Anticipation

    Pricing today based on the expectation of future appeal and/or benefits

    Assemblage

    Combining several parcels of land into one larger tract

    Plottage

    The increased value resulting from the combining of several parcels of land into one larger tract

    Reconciliation

    The final step in the appraisal process using weighted averages to determine an exact number

    USPAP

    Uniform Standards of Professional Appraisal Practice- Appraiser's Rules

    Chronological Age

    The actual age of a property

    Effective Age

    The condition of a property measured in years

    Deferred Maintenance

    Postponed maintenance on property that results in increased physical depreciation (Wear and Tear)

    Life Cycle

    The stages of growth and development of a community-
    Grow
    Stabilize
    Decline
    Revitalize

    Up and Coming Neighborhood

    A neighborhood in the revitalization stage of the life cycle

    Square Footage

    The finished space of a structure measured by the exterior walls

    Gross Area

    The area of a building under the roof- includes unfinished areas

    Setback

    The amount of space required between the lot line and the building line

    Straight line method

    Depreciation of equal annual installment amounts

    Depreciated Value

    cost less the depreciation

    Module

    A unit of prefabricated housing- offset constuction

    Collateral

    Something of value pledge as security for a loan

    M.A.I

    Member Appraisal Institute- designation earned by a licensed appraiser

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