REAL 4000 uga test 3 Study Guide with Complete Solutions

REAL 4000 uga test 3 Study Guide with Complete Solutions Real estate appraisals - Answer️️ -Formal estimates of the value of a piece of land. Most are generated by lenders. Also generated by courts and buyers/sellers. Market value - Answer️️ -The most probable selling price of a property under normal market conditions. Investment value - Answer️️ -The value of the property to a particular investor. Market value and investment value are both...? - Answer️️ - Concepts. Meaning we never know what they truly are Transaction prices - Answer️️ -The amount actually payed for a piece of property in a completed transaction. Market analysis - Answer️️ -Goal is to understand local supply and demand and their impact on future prices. ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM UNIVERSITY OF NORTH TEXAS AT DALLAS 2 Highest and best use - Answer️️ -the highest and best use of a property is found to be: Legally permissible Physically possible Financially feasible maximally productive (the use that adds the most value) It also ignores existing improvements and takes into account the cost of converting the land to a new use. Three valuation methods - Answer️️ -The sales comparison approach The cost approach and the income approach you take the weighted average of the indicated values that come from all three approaches to get a single estimate of the properties value. ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM UNIVERSITY OF NORTH TEXAS AT DALLAS 3 Sales comparison approach - Answer️️ -Underlying concept is that the value of a piece of real estate can be determined by analyzing the sale price of similar properties. Elements of comparison - Answer️️ -The key determinants of value Location age size style etc. Value adjustments - Answer️️ -Transaction adjustments: differences in *property rights included *financing terms *market conditions Property adjustments: differences in *location *physical characteristics ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM UNIVERSITY OF NORTH TEXAS AT DALLAS 4 *Economic characteristics *Nonreality items Value adjustments for comps - Answer️️ -If the comp is superior to the subject then the transaction price is adjusted downward If it is inferior the transaction price is adjusted upward Cost Approach - Answer️️ -Based on the faulty assumption that cost of production is an indication of value. Is useful for setting an upper limit on the market value of the property and is used if no other data is availabl