Appraisal 5 Approaches to Value

Approaches to Value 1

100

the value of an improved property is estimated by adding the estimated land value and the estimated cost new of the improvements less depreciation. 

The cost approach 

200

The cost approach can be applied to both of these for tax purposes.

Personal property and real property 

300

combines all of the construction costs into one unit of measure that is applied to the size of the subject property. 

square foot method 

400

this is the cost as of the date of appraisal of providing a new object that will provide the same utility as the subject.

Replacement cost

500

administrative expenses, professional fees, construction financing, construction insurance, property taxes during construction, and marking sales, and lease-up costs are examples of...

Indirect costs

Approaches to Value 2

100

Uses direct evidence of the market's opinion of the value of a property. 

The comparative sales approach 

200

functional obsolescence that, when corrected, is less than the economic benefit resulting therefrom.

curable

300

Expenditures for permits, materials and labor, contractor's overhead and profit are examples of...

Direct costs

400

Rental income as expected by the buyer to the property

Anticipated rent

500

Exposed for sale on the open market, both parties seeking to maximize their gains, reasonable time allowed to find a buyer, no collusion or "love and affection" between the parties. (these are examples of)

Open Market Transaction 

Approaches to Value 3

100

a loss of value from any cause.

Depreciation 

200

this approach is most appropriate for construction work in progress, and for other property that has experienced little physical deterioration, is not misplaced, is neither over- nor underimproved, and it not affected by other forms of depreciation or obsolescence. 

the cost approach 

300

Although highly accurate, this method is too time consuming for regular use, as it requires all necessary materials and labor for a project be identified and priced. 

Quantity survey method

400

calls for identical materials and quality of workmanship.

Reproduction costs. 

500

The order to necessary to properly adjust a comparative sales price. 

Financing, time, physical comparability. 

Approaches to Value 4

100

This makes the cost approach less reliable because it is difficult to estimate.

Depreciation.

200

reflects the cost at the time of a property's original construction or acquisition. 

Historical costs.

300

The rational of this approach is that buyers and sellers are guided by the prices paid for similar properties.

Comparative Sales Approach 

400

not generally subject to depreciation.

Land

500

Documentary transfer tax

(sale price/$500) x 0.55

Approaches to Value 5

100

This should be done to the comparable property, not the subject property 

Adjustments 

200

functional obsolescence that cost more than the resulting economic benefit. 

incurable 

300

total costs of installing a common unit of construction are applied to the number of units in the project. 

Unit-in-place method

400

this method requires the conversion of an income stream into a present value estimate. 

The income approach 

500

estimated by dividing the effective age of the improvement by it's estimated economic life.

Straight-Line or Age-Life Method