Texas Real Estate Exam Prep: Property Value Appraisal Flashcards

Texas Real Estate Exam Prep: Property Value & Appraisal Flashcards

Market ValueThe price of appraisal which a seller would sell a property.Highest and Best UseThe legal use that gives the greatest return in money and/ or amenities. High and best use can be considered the most important detail by an appraiser.Income ApproachMethod is used for income-producing properties. The highest weighted criteria for an appraiser using this approach is the Net Annual Income, which may also be called Net Operating Income or NOI.`Principle of ContributionThe value of a part is determined by its contribution to the total value of the property rather than by its cost.AppraisalIs the opinion of value given by the appraiser.Principal of Increasing and Decreasing Returns Invest in property whenever each dollar invested will return a dollar or more of increased value and stop when each dollar invested returns less than a dollar in value. The result of over-improving a property is also referred to as the Law of Diminishing Returns.assessed valueis the value of your property for tax purposes.Principle of ConformityStates that maximum value is found when properties are the same or have a reasonable degree of similarity. (Price range, amenities, size, etc.) Comparative Market Analysis (CMA)A comparison of the prices of recently sold homes that are similar to a listing seller's home in terms of location, style, and amenities.broker's price opinion (BPO)It's is a broker's written opinion of value. Its is often requested by an attorney or a relocation company rather than by a principal to the transaction.Cost ApproachIs used for unique properties, such as churches or government buildings. It is also used when there are no comparables for a particular property.Market Data ApproachIs used primarily in residential appraisals. It involves comparisons with known sales in the same area. An appraiser should have 3-5 sales no more than six months old. In using this approach, the appraiser will add to the value of comparables when the subject property has more amenities, and deduct from the comparables when the subject property has less In choosing comparables, the best choice will be the one with the least number of adjustments, regardless of cost.Four characteristics of valueDemand, Utility, Scarcity, Transferability (DUST)