Term
| market comparison approach |
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Definition
- become familiar with physical features and amenities of the property.
- locate 3 to 5 comparables that have sold within 6 months under similar mkt conditions.
- collect info on each comp sale: Date, price, finance terms, location, description.
- verify price and terms of comp sales
- make adjustments for the differences in propertie (garage, landscaping, etc).
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Term
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Definition
- Estimate land as vacant
- estimate new construction cost of similar building (reproduction, replacement, square foot method)
- less estimated depreciation
- physical (wear and tear)
- functional obsolescence - outmoded equipment, old design
- curable depreciation (can be fixed at reasonable cost)
- incurable depreciation
- economic obsolescence (loss of value due to external forces)
4. indicated value of building 5. appraised property value by cost approach. |
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Term
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Definition
| income and expense forecasting - look at past 3 to 5 years of income. Divide expected yearly return after expenses, by the required rate of return. |
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Term
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Definition
| competitive market analysis is a listing tool that considers similar homes that have sold recently, homes presently on the market, and homes that were listed for sale but didn't sell. CMA shows the seller what the house is expected to sell for, and helps the agent decide whether to accept the listing. |
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Term
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Definition
- homes for sale now
- homes sold in past 12 months
- expired past 12 months
- FHA and VA appraisals - tend to lag behind mkt
- buyer appeal - location, extras, special financing
- marketing position - why are sellers selling? how soon must they sell, will they help finance? will they pay for appraisals?
- list of property's high and low points
- selling costs
- shows seller what to expect in terms ofsales price and the amount of cash to be expected from sale.
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