REAL200 Appraisal - Residential Property

Department of Business Studies: Real Estate

I. Course Number and Title
REAL200 Appraisal - Residential Property
II. Number of Credits
2 credits
III. Minimum Number of Instructional Minutes Per Semester
1500 minutes
IV. Prerequisites
REAL101 and REAL102 or permission of the Department of Business Studies
Corequisites
None
V. Other Pertinent Information
None
VI. Catalog Course Description
This course deals with basic appraisal concepts related to residential properties. Topics include, the nature of real property, the appraisal process, economic trends and neighborhood analysis, site analysis, building cost estimates, cost approach, income approach, sales comparison approach, reconciliation, and the appraisal report.
VII. Required Course Content and Direction
  1. Learning Goals:

    1. Coverage of materials will necessarily be broad and elementary.
    2. Basic principles and theories of land economics and property valuation are examined in broad context. The main thrust is one of instilling these concepts rather than one of dwelling on techniques and practices. However, the methodology of the appraisal process is fully developed and explained to the extent that the student should be able to perform simply.
    3. Problem analysis and clarity of thought are stressed.
    4. The entire range of property rights as developed by western man comes to play in the valuation process
    5. Specific areas of study include: site and area analysis, improvement costs, principles of depreciation and obsolescence, the economic background of value, the real estate market, financial aspects of real estate, capitalization processes, and the relevancy of each to present day and local conditions. Such pertinent matters as eminent domain (condemnation), land utilization, taxation, and to the problems of today''s market are examined within the overall context.
    6. The development in the student of a full and basic understanding of the scope and importance of the value concept as an economic phenomenon. In addition, many of the practical aspects of appraising are stressed in an effort to instill a proper balance. the actual execution of an appraisal on the part of the student serves as a valuable tool in molding the practical with the theoretical.
    7. To prepare the student to analyze real property as a vital and extensive element of our national wealth.
    8. To aid in the students'' understanding of the many and diverse factors that affect the valuation of all types of real estate.
  2. Planned Sequence of Topics and/or Learning Activities:

    1. Introduction to Appraising
    2. Nature and types of appraisals
      1. Definition of value
      2. Characteristics of real estate appraising
      3. Role of appraisals and appraisers
      4. Physical considerations of real estate
      5. Legal considerations of real estate
      6. Economic considerations of real estate
    3. Market Identification and Market Forces
      1. Definition and functions
      2. Market analysis and the price mechanism
      3. Economic theory of a competitive market
    4. Principles of Real Property Valuation
      1. Supply and Demand
      2. Highest and best use
      3. Substitution
      4. Contribution
      5. Increasing and decreasing returns
      6. Change
      7. Anticipation
    5. Area and Neighborhood Analysis
      1. National, regional, community and neighborhood
      2. Local market area analysis
      3. Physical, economic, political and sociological factors
      4. Neighborhood boundaries and forces on value
      5. Trends and forecasts in neighborhood analysis
    6. Site Analysis
      1. Physical considerations
        1. Site area and configuration
        2. Excess land
        3. Topography
        4. Improvements and utilities
      2. Economic considerations
        1. Appropriate units of comparison (SF, FF, acre)
      3. Locational consideration
        1. Access
        2. Hazards
          1. Environmental
          2. Toxic substance
        3. Nuisances
        4. Amenities
      4. Legal considerations
        1. Zoning and subdivision regulations
        2. Deed restrictions
        3. Flood plain restrictions
        4. Easements and encroachments
    7. Building Analysis
      1. Residential
        1. Architecture
        2. Design and layout
        3. Traffic pattern
        4. Room sizes
        5. Operating systems and equipment
      2. Commercial and industrial
        1. Building and structural components
      3. Elements of acceptability, marketability
        1. Physical condition
        2. Construction quality
        3. Effective age versus actual age
        4. Remaining economic life
        5. Functional deficiencies
        6. Functional defects
        7. Functional superadequacies
    8. Direct Sales Comparison Approach
      1. Rationale
        1. Valuation principles
        2. Market standards
        3. Adjustments process
      2. Data requirements and sources
        1. Sales verification
        2. Quality and quantity of data
      3. Elements of comparison
        1. Local market standards
        2. Time adjustments
        3. Location adjustments
        4. Physical adjustments
        5. Market justification and support
      4. Units of comparison
        1. Establishing common denominators
        2. Uses and limitations
    9. Site Valuation
      1. Reasons for separate valuation
      2. Basic rules and conditions
      3. Methods of site valuation
        1. Sales comparison analysis
        2. Allocation
        3. Land residual
        4. Land development
      4. Assemblage, plottage and surplus land
    10. Cost Approach
      1. Rationale and valuation principles
      2. Estimating cost new
        1. Replacement cost
        2. Reproduction cost
      3. Data requirements and sources
      4. Cost estimation
        1. Quantity survey method
        2. Unit-in-place method
        3. Trade breakdown method
        4. Comparative unit method
      5. Uses and limitations of cost services
      6. Estimation of accrued depreciation
        1. Nature of depreciation as based on market
        2. Effective age and remaining economic life
        3. Location analysis
      7. Types and causes of accrued depreciation
        1. Physical deterioration
        2. Functional obsolescence
        3. External depreciation
    11. Income Approach
      1. Rational and principles
      2. Income estimating and forecasting
      3. Income capitalization
    12. Reconciliation
      1. Review of approaches
      2. Validity of approaches
    13. The Appraisal Report
      1. Forms
      2. Narratives
    14. Professional Ethics and Standards of Practice
  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
The course consists of a series of lessons taken from the text. The instructor will, from time to time, insert outside materials as a supplement to this text to give added emphasis to some of the lessons. Must read all chapters in advance noted in outline. While emphasis will be on instructor's lectures, the student will be required to read these chapters to supplement not only the lectures, but the students own knowledge.

Review/Approval Date - 6/99