What is the quantity survey method?

In the cost-depreciation approach to valuation, the quantity survey method involves a detailed inventory of:

• all materials & products
• labor
• indirect costs

plus the builder’s profit, required to reproduce the building.

You need to know – Is a license required for a Broker’s Price Opinion?

A license is required for a Broker’s Price Opinion

You need to know – What is assessed value?

Assessed value is the amount that a county property assessor determines a property is worth for the purpose of levying ad valorem taxes

Property taxes are computed by multiplying the assessed value by the tax (often referred to as the millage) rate

You need to know – Do real estate licensees have to follow any appraisal rules?

Yes

Florida Statute 475 requires appraisers and real estate licensees to follow the Uniform Standards of Professional Appraisal Practice (USPAP for short)

Don’t forget that a CMA cannot be represented as an appraisal

You need to know – What is the sales comparison approach to valuation?

The sales comparison approach to valuation is based upon the principal of substitution and is one of the three main approaches to value

Used mainly for single family residential properties and vacant land, value is estimated by studying the sale price of similar (comparable) properties, and adjusting the comparables to the characteristics of the subject property

If a comparable is superior to the subject, the comparable value is adjusted downwards

If a comparable is inferior to the subject, the comparable is adjusted upwards

The adjusted prices of the comparable are reconciled into an estimated value of the subject using a weighted average

You need to know – What is the income capitalization approach to valuation?

The income capitalization approach to valuation is based upon the principal of substitution and is one of the three main approaches to value

Using the principle of anticipation, it measures value by the expectation of the income attributable to a property projected into the future

You need to know – What are the three approaches to valuation?

There are three main approaches to the valuation of real property:

1. Comparable Sales Approach
2. Cost-Depreciation Approach
3. Income Capitalization Approach

You need to know – What are vacancy and collection losses?

Vacancy and collection losses (often abbreviated as VCL) are used in the income capitalization approach to value

They are an estimate of the income that is lost through vacancies and rents that are not collected from tenants

Vacancy and collection losses are subtracted from potential gross income as part of the computation of effective gross income

You need to know – What is the appraisal principle of regression?

The appraisal principal of regression states that the value of a property is negatively affected by association with an inferior property of the same type

This principal tells us that the value of a high priced property will decrease in value towards the value of less expensive property in the same area

Along with the principal of progression (which has the opposite effect), the principal of regression leads to property prices moving towards a narrow band within the same area

You need to know – What is the appraisal principle of progression?

The appraisal principal of progression states that the value of a property is positively affected by association with a superior property of the same type

This principal tells us that the value of a low priced property will increase in value towards the value of more expensive properties in the same area

Along with the principal of regression (which has the opposite effect), the principal of progression leads to property prices moving towards a narrow band within the same area