Podcast
Questions and Answers
What does real estate appraisal assess?
What does real estate appraisal assess?
Which principle relates to the reasonable, probable, and financially feasible use of property?
Which principle relates to the reasonable, probable, and financially feasible use of property?
What is considered when assessing the value of land?
What is considered when assessing the value of land?
What increases the value of land?
What increases the value of land?
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What serves as proof of land ownership?
What serves as proof of land ownership?
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What is a machine in the context of real estate?
What is a machine in the context of real estate?
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What is High and Best Use mainly used for in decision making?
What is High and Best Use mainly used for in decision making?
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Which factor affects the value of land based on its nature?
Which factor affects the value of land based on its nature?
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What is the main purpose of real estate appraisal?
What is the main purpose of real estate appraisal?
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Which component is not considered as part of a property's value computation?
Which component is not considered as part of a property's value computation?
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Study Notes
Utility and Market Value
- Added utility enhances property value and provides a business advantage.
- Upgraded lifestyles contribute to increasing market value of properties.
Physical Factors
- Natural and manmade structures attached to the property positively impact deliverables.
- Sufficient space for parking can be a significant advantage in property appraisal.
Time Value
- Property value tends to increase over time.
- Using the cost approach, land value typically appreciates while building value may depreciate.
Market Value Computation
- Accurate market value calculation involves fair cost assessment, ensuring transparency for stakeholders.
Machinery Appraisal
- Machinery and equipment depreciate due to age and usage, leading to potential disposal of old units.
- Reduced productivity from aging machinery can affect business operations.
- Maintenance costs should be factored into machinery budgeting.
Depreciation
- Straight-line method of depreciation anticipates value reduction over time.
- Longer usage correlates with a lower value.
Recapture Rate
- A higher recapture rate indicates a greater likelihood of reclaiming or purchasing property.
Gate and Fence Computation
- The cost of gates and fences varies and should be tracked separately for accurate appraisals based on size and costs.
Location Factors
- Superior location can add an estimated 20% or more to property value.
- Formula for calculating market value per square meter considers comparable value plus the location premium.
Utility Factors
- Functional traits can contribute an additional 20% or more to property value.
- Market value formula incorporates utility traits into calculations.
Physical Traits
- Characteristics such as land appearance can lead to a reduction in property value by up to 10%.
Time Element in Appraisal
- Time can increase property value; an estimated annual increase of 5% is common.
- Formula accommodates accumulated percentage increases over time, impacting the market value.
Cost Approach in Value Computation
- The cost approach accounts for depreciation in property value assessments.
- Reproduction cost estimates current costs to duplicate a property.
- Replacement cost estimates current expenses using modern materials and standards for utility equivalents.
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Description
Test your knowledge on factors that affect the market value of a property, such as utilities, physical attributes, and time. Learn about how added features and structures can enhance a property's value.
