1. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties1 New York Real Estate for Salespersons, 5th e By Marcia Darvin Spada Cengage Learning

2. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties2 Chapter 12 The Valuation Process

3. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 3 Chapter 12 Key Terms  Appraisal  Assessed value  Comparative market analysis  Cost/direct cost/indirect cost  Cost approach  Depreciation  Evaluation  Functional obsolescence  Income approach  Insured value  Investment value  Market value

4. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 4 Chapter 12 Key Terms (continued)  Mortgage value  Plottage  Price  Sales comparison approach  Valuation  Value in use

5. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 5 Types of Value $ Market $ Investment $ Insurance $ Value in use $ Assessed $ Mortgage Most appraisals estimate market value

6. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 6 Evaluation Marketability studies Supply-and- demand studies Highest and Best use studies Land utilization studies Feasibility studies

7. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 7 Market Value, Price and Cost Price Purchaser pays; Buyer accepts Cost Dollar expenditure for property Direct cost Labor and materials Indirect costs Support items for project Market value Ideal value for property Comparison

8. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 8 Comparative Market Analysis (CMA)  Analysis of the competition that a property will face upon sale attempts  Properties currently on the market  Recently sold properties  Expired listings  Withdrawn listings

9. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 9 Residential Market Analysis Residential Market Analysis Assets/ drawbacks Terms Market value range Competing properties Expired properties Buyer Appeal Market Position

10. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 10 Appraisal Approaches to Value Appraisal Unbiased estimate of value as of a certain date  Sales comparison  Cost  Income

11. © 2013 All rights reserved. Chapter 12 Valuation Process and Pricing Properties 11 Appraisal Reporting Narrative Report Uniform Residential Appraisal Report (URAR) Reconciliation