REAL201 Appraisal - Commercial Property

Department of Business Studies: Real Estate

I. Course Number and Title
REAL201 Appraisal - Commercial Property
II. Number of Credits
2 credits
III. Minimum Number of Instructional Minutes Per Semester
1500 minutes
IV. Prerequisites
REAL200 or permission of the Department of Business Studies
Corequisites
None
V. Other Pertinent Information
None
VI. Catalog Course Description
This course deals with appraisal concepts related to income producing properties. Topics include, real estate markets, impact of money and capital markets, highest and best use analysis, income capitalization, income and expense analysis, yield capitalization, cost and direct sales comparison, internal rates of return, and measures of investment performance.
VII. Required Course Content and Direction
  1. Learning Goals:

    1. Describe how the concept of property rights is involved in the process of valuation of commercial properties.
    2. Discuss how site and area, improvement costs, principles of depreciation and obsolescence, the economic background of value, the real estate market, financial aspects of real estate and capitalization are part of a commercial property appraisal.
    3. Review the concepts of eminent domain (condemnation) and land utilization.
    4. Execute a simple commercial property appraisal.
  2. Planned Sequence of Topics and/or Learning Activities:

    1. Market value versus investment value of property


    2. Methodology applied in market and feasibility studies


    3. Impact of Money and Capital Markets


    4. Highest and Best Use Analysis
      1. Economic theory
      2. Analysis of vacant sites
      3. Analysis of improved properties
      4. Mathematical tests
      5. Interim versus multiple use

    5. Income Capitalization
      1. Present and future benefits
      2. Rates of return
      3. Risk analysis
      4. Capitalization methods

    6. Gross Income and Expense types


    7. Direct Capitalization


    8. Yield Capitalization


    9. Cost and Direct Sales Comparison Approaches
      1. Apartment buildings
      2. Industrial buildings
      3. Commercial buildings
      4. Office buildings

    10. Internal rates of return and measures of investments performance
      1. Pay-back periods
      2. Net present value
      3. Debt coverage ratios
      4. Before and after tax considerations
  3. Assessment Methods for Core Learning Goals:

  4. Reference, Resource, or Learning Materials to be used by Students:

    See course outline for required textbook
VIII. Teaching Methods Employed
  • Lecture
  • Class discussion

Review/Approval Date - 9/99; Revised 3/05