General Market Analysis Highest & Best Use
(McKissock) Questions with Complete
Solutions
Forces Affecting Local Real Estate Governmental, Environmental, Economic, Social
It is important to consider these market influences since they affect the highest & best use of the
subject property.
Concentric Ring Growth Pattern Can be used to explain growth patterns around major
employment centers
Market analysis The classification and study of current supply & demand conditions in a
particular area for a specific type of property. Further, the market analysis develops the
supportable basis for determining highest & best use, vacant or improved.
Conformity An economic principle which states that property value is maximized when
the characteristics of a property are in conformance with market expectations and demands.
,General Data Relates to information appropriate for many properties which include all
four economic forces (Social, Economic, Environmental, Governmental)
Opportunity Cost An economic principle; the income lost by not choosing an alternative.
Primary Data Data that has been compiled for a specific purpose and has not been collated
or merged with others. Primary data relates to specific markets in which the property is located &
may include specific sales information, surveys of buyers' preferences, absorption statistics for
the assignment, and competitive inventory surveys.
Residual Income The amount of money an investor retains after the debt is paid.
Examples include before-tax cash flow or an equity dividend
Specific Data Relates to information used directly in the analysis of the subject property
while encompassing the comparables used in the valuation process.
Surplus Productivity An economic principle; it is the net income that remains after the
costs of labor, capital, and entrepreneur profit have been paid and which is attributable to the
value of the land
,Anticipation The present worth of revenue or other benefits expected in the future. While
many influences affect purchasers & sellers in arriving at a purchase price, the principal of
anticipation is perhaps the most important.
Ex: For a residential owner-occupied property, benefits might include tax reductions, equity
accumulation instead of rent, quite enjoyment, or other amenities.
Ex: For an income-producing property, the value is the anticipation of net income from the
operation of assets plus any profit from the eventual sale of the property
Balance Achieved when numerous factors exert proportional influence on value. In other
words, favorable factors include the four agents of production: land, labor, capital, and
entrepreneurial profit. For all types of real estate, the most profit is created when these different
agents of production are in balance or when these factors create the best return on investment in
the land.
Although the agents of production might be in balance, the most important combination is the
land & the improvements. The improvements add the most value to the property when the
improvements represent the highest & best use of the property.
, Conformity A principle which states that property value is maximized when the
characteristics of a property are in conformance with market expectations & demands. It applies
to both private preferences & governmental regulations.
The more a property & its components are in harmony with the surrounding properties, the
greater the contributory value.
The Law of Diminishing Returns States that if a feature, repair, addition, or other
improvement will increase real property value, there is a point where a more elaborate feature, a
more expensive repair, a larger addition, or a more significant improvement will no longer add
value commensurate with its coes.
Rasters Typically used to represent variables that are continuous over space, such as
terrain elevations or land cover
Desktop GIS GIS application classified into 3 functionality categories: GIS Viewer, GIS
Editor, & GIS Analyst
Mobile GIS GIS application used for field data collection
(McKissock) Questions with Complete
Solutions
Forces Affecting Local Real Estate Governmental, Environmental, Economic, Social
It is important to consider these market influences since they affect the highest & best use of the
subject property.
Concentric Ring Growth Pattern Can be used to explain growth patterns around major
employment centers
Market analysis The classification and study of current supply & demand conditions in a
particular area for a specific type of property. Further, the market analysis develops the
supportable basis for determining highest & best use, vacant or improved.
Conformity An economic principle which states that property value is maximized when
the characteristics of a property are in conformance with market expectations and demands.
,General Data Relates to information appropriate for many properties which include all
four economic forces (Social, Economic, Environmental, Governmental)
Opportunity Cost An economic principle; the income lost by not choosing an alternative.
Primary Data Data that has been compiled for a specific purpose and has not been collated
or merged with others. Primary data relates to specific markets in which the property is located &
may include specific sales information, surveys of buyers' preferences, absorption statistics for
the assignment, and competitive inventory surveys.
Residual Income The amount of money an investor retains after the debt is paid.
Examples include before-tax cash flow or an equity dividend
Specific Data Relates to information used directly in the analysis of the subject property
while encompassing the comparables used in the valuation process.
Surplus Productivity An economic principle; it is the net income that remains after the
costs of labor, capital, and entrepreneur profit have been paid and which is attributable to the
value of the land
,Anticipation The present worth of revenue or other benefits expected in the future. While
many influences affect purchasers & sellers in arriving at a purchase price, the principal of
anticipation is perhaps the most important.
Ex: For a residential owner-occupied property, benefits might include tax reductions, equity
accumulation instead of rent, quite enjoyment, or other amenities.
Ex: For an income-producing property, the value is the anticipation of net income from the
operation of assets plus any profit from the eventual sale of the property
Balance Achieved when numerous factors exert proportional influence on value. In other
words, favorable factors include the four agents of production: land, labor, capital, and
entrepreneurial profit. For all types of real estate, the most profit is created when these different
agents of production are in balance or when these factors create the best return on investment in
the land.
Although the agents of production might be in balance, the most important combination is the
land & the improvements. The improvements add the most value to the property when the
improvements represent the highest & best use of the property.
, Conformity A principle which states that property value is maximized when the
characteristics of a property are in conformance with market expectations & demands. It applies
to both private preferences & governmental regulations.
The more a property & its components are in harmony with the surrounding properties, the
greater the contributory value.
The Law of Diminishing Returns States that if a feature, repair, addition, or other
improvement will increase real property value, there is a point where a more elaborate feature, a
more expensive repair, a larger addition, or a more significant improvement will no longer add
value commensurate with its coes.
Rasters Typically used to represent variables that are continuous over space, such as
terrain elevations or land cover
Desktop GIS GIS application classified into 3 functionality categories: GIS Viewer, GIS
Editor, & GIS Analyst
Mobile GIS GIS application used for field data collection
