Fundamentals of Real Estate Appraisal,9781419505188

Fundamentals of Real Estate Appraisal

by ;
Edition: 9th
ISBN13: 9781419505188
ISBN10: 1419505181
Format: Paperback
Pub. Date: 2005-10-06
Publisher(s): Kaplan Publishing
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Summary

This best-selling textbook provides a strong foundation for understanding today's ever-changing appraisal marketplace. The new edition explores relevant legislation, key environmental considerations, and the increasing role of technology in the industry.

Table of Contents

Preface ix
About the Authors xi
Acknowledgments xiii
The Appraisal Profession
1(16)
Overview
1(1)
The Appraiser's Work
1(4)
Qualifications of an Appraiser
2(1)
Exercise 1.1
3(1)
Assignments Available
3(1)
Employment Opportunities
4(1)
Appraiser Compensation
5(1)
Exercise 1.2
5(1)
Licensing and Certification
5(1)
Firrea
6(1)
Appraiser Licensing
6(1)
The Appraisal Foundation
7(1)
Other Federal Regulation
7(2)
Fair Housing
7(1)
Environmental Concerns
8(1)
Professional Standards of Practice
8(1)
Exercise 1.3
8(1)
Professional Societies
9(2)
The Modern Appraisal Office
11(3)
Summary
14(1)
Achievement Examination 1
15(2)
Real Estate and Its Appraisal
17(24)
Overview
17(1)
Basic Concepts
17(4)
What Is a Real Estate Appraisal?
17(1)
Real Estate and Real Property
18(2)
Personal Property
20(1)
Exercise 2.1
21(1)
Legal Descriptions of Land
21(4)
Lot and Block System
21(1)
Metes and Bounds System
22(1)
Rectangular Survey System
23(1)
Exercise 2.2
24(1)
Legal Rights and Interests
25(3)
Freehold Estates
25(1)
Nonfreehold Estates
26(1)
Other Interests
27(1)
Forms of Property Ownership
28(6)
Individual Ownership
28(1)
Co-Ownership
29(3)
Other Forms of Ownership
32(1)
Special Forms of Ownership
33(1)
Exercise 2.3
34(1)
Transfer of Title
34(2)
Types of Deeds
34(2)
Recordation
36(1)
Exercise 2.4
36(1)
Summary
36(1)
Achievement Examination 2
37(4)
The Real Estate Marketplace
41(18)
Overview
41(1)
The Market for Real Estate
41(8)
Characteristics of Real Estate Markets
42(1)
Market Analysis
43(1)
The Cost of Credit
43(1)
How Real Estate Is Financed
44(1)
Elements that Create Value
45(2)
Influences on Real Estate Value
47(2)
Exercise 3.1
49(1)
Basic Value Principles
49(6)
Anticipation
49(1)
Balance
50(1)
Change
50(1)
Competition
50(1)
Conformity, Progression, and Regression
51(1)
Contribution
51(1)
Externalities
51(1)
Four Agents of Production
52(1)
Growth, Equilibrium, Decline, and Revitalization
52(1)
Highest and Best Use
52(1)
Law of Increasing Returns and Law of Decreasing Returns
53(1)
Opportunity Cost
53(1)
Substitution
53(1)
Supply and Demand
54(1)
Surplus Productivity
54(1)
Conclusion
54(1)
Exercise 3.2
54(1)
Summary
55(1)
Achievement Examination 3
56(3)
The Appraisal Process
59(16)
Overview
59(1)
Steps in the Appraisal Process
59(3)
Beginning the Appraisal Process
62(5)
Purpose and Use of the Appraisal
62(1)
Interest(s) to Be Appraised
62(1)
Date of the Opinion of Value
63(1)
Limiting Conditions
63(4)
FHA Appraisals
67(1)
Valuation Approaches
67(4)
Sales Comparison Approach
68(1)
Cost Approach
69(1)
Income Capitalization Approach
69(2)
Exercise 4.1
71(1)
Relationship of Approaches
71(2)
Exercise 4.2
72(1)
Summary
73(1)
Achievement Examination 4
73(2)
Building Construction and the Environment
75(30)
Overview
75(1)
PART I: PLANNING AND DESIGN
76(1)
Regulation of Residential Construction
76(1)
Plans and Specifications
76(2)
Building Measurement
77(1)
House Styles
78(1)
Traditional Styles
78(1)
Contemporary Styles
78(1)
House Types
78(5)
Orientation: Locating the House on the Site
83(2)
Topography
83(1)
Facing to the South
83(1)
View
84(1)
Exercise 5.1
84(1)
PART II: CONSTRUCTION DETAILS
85(1)
Foundations
85(2)
Termite Protection
86(1)
Radon Gas
86(1)
Exterior Structural Walls and Framing
87(3)
Exterior Walls
89(1)
Insulation
89(1)
Roof Framing
90(1)
Exterior Trim
90(1)
Exterior Windows and Doors
91(4)
Types of Windows
92(1)
Types of Doors
93(2)
Interior Walls and Finishing
95(1)
Plumbing
95(2)
Plumbing Fixtures
96(1)
Water Heater
97(1)
Heating and Air-Conditioning
97(1)
Electrical System
98(3)
Power Requirements
99(1)
Electric and Magnetic Fields
99(1)
Exercise 5.2
100(1)
Summary
101(2)
Achievement Examination 5
103(2)
Data Collection
105(28)
Overview
105(1)
Step 1: State the Problem
105(2)
Property Rights Conveyed
106(1)
Exercise 6.1
107(1)
Step 2: List the Data Needed and the Sources
107(1)
Step 3: Gather, Record, and Verify the Necessary Data
107(1)
The Data Source List
107(6)
Kinds of Data Needed
108(4)
Exercise 6.2
112(1)
Data Forms
113(9)
Neighborhood Data
113(2)
Exercise 6.3
115(2)
Site Data
117(2)
Exercise 6.4
119(1)
Building Data
119(2)
Exercise 6.5
121(1)
Data for Sales Comparison Approach
122(7)
Recent Sales
123(1)
Similar Features
124(1)
Financing Terms
125(2)
Arm's-Length Transactions
127(1)
Sources of Data
128(1)
Exercise 6.6
129(1)
Summary
129(1)
Achievement Examination 6
130(3)
Site Valuation
133(16)
Overview
133(1)
Separate Site Valuations
133(5)
Cost Approach
133(1)
Assessments and Taxation
134(1)
Condemnation Appraisals
134(1)
Income Capitalization
134(1)
Highest and Best Use
134(4)
Exercise 7.1
138(1)
Site Data
138(1)
Environmental Concerns
139(1)
Methods of Site Valuation
140(5)
Exercise 7.2
141(1)
Exercise 7.3
142(2)
Exercise 7.4
144(1)
Summary
145(1)
Achievement Examination 7
146(3)
The Cost Approach--Part I: Reproduction/Replacement Cost
149(20)
Overview
149(1)
Cost Approach Formula
149(1)
Reproduction Cost versus Replacement Cost
150(2)
Exercise 8.1
151(1)
Determining Reproduction/Replacement Cost
152(13)
Index Method
152(1)
Exercise 8.2
153(1)
Square-Foot Method
153(4)
Exercise 8.3
157(1)
Unit-in-Place Method
157(5)
Exercise 8.4
162(1)
Quantity Survey Method
163(2)
Exercise 8.5
165(1)
Summary
165(1)
Achievement Examination 8
166(3)
The Cost Approach--Part II: Depreciation
169(26)
Overview
169(1)
Accured Depreciation
169(16)
Age-Life Method
173(2)
Exercise 9.1
175(1)
Observed Condition Method
175(2)
Exercise 9.2
177(1)
Capitalized Value Method
178(1)
Exercise 9.3
179(1)
Market Extraction Method
179(1)
Exercise 9.4
180(1)
Itemizing Accrued Depreciation
180(2)
Exercise 9.5
182(1)
Exercise 9.6
182(1)
Cost Approach Using the URAR Form
183(1)
Exercise 9.7
184(1)
Summary
185(1)
Achievement Examination 9
185(10)
The Sales Comparison Approach
195(26)
Overview
195(1)
Step 3: Gather, Record, and Verify the Necessary Data (Continued)
195(4)
Comparison Grid
195(4)
Step 4: Determine Highest and Best Use
199(1)
Step 5: Estimate Land Value
200(1)
Step 6: Estimate Value by Sales Comparison Approach
200(15)
Data Analysis
200(4)
Exercise 10.1
204(1)
Exercise 10.2
205(4)
Exercise 10.3
209(1)
Net Adjustments
209(3)
Exercise 10.4
212(1)
Value Estimate
212(1)
Exercise 10.5
212(3)
Application of Sales Comparison Approach
215(1)
Summary
215(1)
Achievement Examination 10
216(5)
The Income Capitalization Approach
221(20)
Overview
221(1)
The Income-Based Approaches to Appraisal
221(1)
Income Capitalization and the Principle of Anticipation
221(1)
Potential Gross Income
222(6)
Rent
222(2)
Exercise 11.1
224(1)
Outside Economic Factors
225(1)
Other Income
225(1)
Exercise 11.2
226(1)
Gross Income and Gross Rent Multipliers
226(2)
Exercise 11.3
228(1)
Effective Gross Income
228(2)
Exercise 11.4
229(1)
Net Operating Income
230(7)
Classification of Operating Expenses
230(1)
Expenses for Accounting Purposes versus Expenses for Appraisal Purposes
230(1)
Reconstructing the Operating Statement
231(2)
Exercise 11.5
233(1)
Applying the GRM to Residential Properties
234(1)
Income Approach Using the URAR Form
235(1)
Operating Statement Ratios
235(1)
Exercise 11.6
236(1)
Summary
237(1)
Achievement Examination 11
237(4)
Direct and Yield Capitalization
241(24)
Overview
241(1)
Direct Capitalization Formula
242(1)
Capitalization Rate
242(6)
Exercise 12.1
244(1)
Building a Capitalization Rate
244(1)
Selecting the Rate for Capital Recapture
245(1)
Selecting the Interest Rate by the Market Extraction Method
246(1)
Exercise 12.2
246(1)
Band of Investment Method---Mortgage and Equity Elements
246(1)
Relationship of Capitalization Rate and Risk
247(1)
Exercise 12.3
248(1)
Capitalization Techniques Using Residual Income
248(3)
Building Residual Technique
248(1)
Exercise 12.4
249(1)
Land Residual Technique
249(1)
Exercise 12.5
250(1)
Valuing the Land and Building as a Whole
250(1)
Exercise 12.6
250(1)
Yield Capitalization
251(1)
Value of One Dollar
251(2)
Annuity Method of Capitalization
253(5)
Building Residual Technique
255(1)
Exercise 12.7
256(1)
Valuing the Property as a Whole
256(2)
Exercise 12.8
258(1)
Recapture Rates
258(2)
Exercise 12.9
259(1)
Ellwood Tables
260(1)
Summary
260(1)
Achievement Examination 12
261(4)
Reconciliation and the Appraisal Report
265(24)
Overview
265(1)
Definition of Reconciliation
265(4)
The Process of Reconciliation
266(1)
Exercise 13.1
266(1)
Review of the Three Approaches
266(2)
Weighing the Choices
268(1)
Exercise 13.2
269(1)
Reconciliation Is Not . . .
269(1)
Types of Appraisals
270(1)
Types of Appraisal Reports
270(1)
Styles of Written Appraisal Reports
271(5)
Form Style Report
271(1)
Narrative Style Report
271(1)
Introduction
272(1)
Suppositions of the Appraisal
272(1)
Presentation of Data
273(1)
Data Analyses and Conclusions
274(1)
Supporting Material
275(1)
Exercise 13.3
276(1)
Sample Appraisal Report
276(4)
Form 2075
276(4)
Summary
280(1)
Achievement Examination 13
280(9)
Appraising Partial Interests
289(18)
Overview
289(1)
Types of Partial Interests
289(10)
Condominiums
289(1)
Planned Unit Developments
290(1)
Fannie Mae Form 1073: Individual Condominium Unit Appraisal Report
291(1)
Time-Share Projects
291(7)
Manufactured Homes
298(1)
Other Forms of Ownership
298(1)
Exercise 14.1
298(1)
Appraising Lease Interests
299(3)
Definition of Terms
299(1)
Creation of Lease Interests
300(1)
Exercise 14.2
301(1)
Leased Fee and Leasehold Valuations
302(3)
Exercise 14.3
304(1)
Summary
305(1)
Achievement Examination 14
306(1)
Appraisal Math and Statistics
307(30)
Overview
307(1)
Calculators
307(1)
Percents
308(4)
Converting Percents to Decimals
308(1)
Converting Decimals to Percents
308(1)
Percentage Problems
309(1)
Problem-Solving Strategy
310(2)
Exercise 15.1
312(1)
Interest
312(3)
Simple Interest
313(1)
Compound Interest
313(1)
Exercise 15.2
314(1)
Area and Volume
315(13)
Area of Squares and Rectangles
315(3)
Exercise 15.3
318(1)
Area of Triangles
319(2)
Exercise 15.4
321(1)
Area of Irregular Closed Figures
321(1)
Exercise 15.5
322(1)
Living Area Calculations
323(1)
Exercise 15.6
324(1)
Volume
324(3)
Exercise 15.7
327(1)
Statistics
328(4)
Population and Sample
328(1)
Organization of Numerical Data
328(1)
Measures of Central Tendency
329(1)
Measures of Dispersion
330(1)
Regression Analysis---An Old Technique with a New Use
331(1)
Summary
332(1)
Achievement Examination
332(5)
Appendix A State Real Estate Appraiser Licensing/Certification Boards 337(6)
Appendix B Web Sites 343(4)
Appendix C State Appraisal Requirements 347(2)
Appendix D Uniform Standards of Professional Appraisal Practice 349(32)
Glossary 381(14)
Answer Key 395(44)
Index 439

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