Condensed Chapter 12 Slides

Condensed Chapter 12 Slides - Chapter 12 Value Theory...

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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Chapter 12 Value Theory, Highest and Best use Analysis, and the Cost Approach
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Major Topics Value, Price and Cost Concepts Market Price Formation from Reservation Prices Traditional Methods of Valuation Newer Approaches to Value Highest and Best Use Defined Improved or unimproved (vacant) The Impact of Option Value When Cost approximates market value Methods to estimate cost new Methods to estimate accrued can depreciation Difficulties in estimating cost new and accrued depreciation Replacement versus reproduction cost
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Introduction to the Determination of Value Value concepts always theoretical in nature PRICE is usually factual in nature Value by nature is an opinion In the absence of a perfectly competitive market, there can be no certainty that the value sought is resolutely true or unchallengeable Cost is also factual in nature
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Definitions Subject Property Appraisal Cost Reservation Price or Investment Value Exchange Value or Most Probable Price Liquidation value Market Value Use Value Going Concern Value Equilibrium Value
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Price and Value Formation The shaded area is where actual transactions will occur and market prices will be formed through negotiation The distributions of buyers and sellers need not be equal in size
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Methods of Valuation Market or Sales Comparison Cost Approach Income Approach Statistical approaches based on multiple factor regression models with larger samples are essentially a variation on the market/ sales comparison approach to value
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“Real Estate Principles for the New Economy”: Norman G. Miller and
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Condensed Chapter 12 Slides - Chapter 12 Value Theory...

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