What is the theoretical basis for the direct sales comparison approach to the market valuation?

What is the theoretical basis for the direct sales comparison approach to the market valuation?

Solution:  The direct sales comparison approach to the market valuation relies on value judgments made by w……………

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What main difficulty would you foresee in attempting to estimate the value of a 30-year old property by means of the cost approach?

Solution: The cost approach assumes that the market value of a new building is similar to that of constructing the building today. Of the two methods available for estimating cost, appraisers normally use the repro…………

The cost approach to market valuation does not work well in markets that are overbuilt. Explain.

Solution:  In an overbuilt market, the market value of an existing property is frequently less than the constru…

What is meant by functional obsolescence?  Could a new building suffer from functional obsolescence?

Solution:  Functional obsolescence refers to a building’s loss in value resulting from changes in tastes, technical innovations, or market standards.  Typically, functional obsolescence is associated with a bui…………….

Why is an estimate of the developer’s fair market profit included in the costs estimate?

Reproduction cost has been estimated as $350,000 for a property with a 70-year economic life.  The current effective age of the property is 15 years. The value of the land is estimated to be $55,000.  What is the estimated market value of the property using the cost approach, assuming no external or functional obsolescence?

Contrast self-contained appraisal reports, summary appraisal reports, and restricted appraisal reports.

Solution: A self-contained appraisal report includes all the detail and information that were used by the appraiser to derive his or her estimate of market value or the other conclusions within the report. A summary appr…………….

You are appraising a single-family residence located in the Huntington neighborhood at 4632 NW 56th Drive. The property is being acquired by a mortgage applicant and you have been asked to appraise the property by the lender. Seven potential comparable sales were initially identified. However, three of these seven were highly similar to the subject property in their transactional, physical and locational characteristics.  You therefore decided to exclude the other four transactions from the comparable set.