16234 Lecture Notes - Lecture 7: Dishwasher, Land Values, Flood Insurance
Document Summary
Replacement cost and summation methods of valuation (lecture #7) Use of summation: determining the added value of improvements in the absence of land sales land tax & rating, determining the rate of depreciation of improvements for market values, determining the value of special uses property. Services: fittings (removable without damage to the. Improvements: cost and value do not always equate to the same amount, particularly as improvements age. Main point of difference between cost equaling value is depreciation. Sources of physical depreciation include breakage, deferred maintenance, effects of age on construction material, and normal wear and tear. Functional/technological: loss in value to an improvement resulting from functional problems caused by age or poor design. Functional obsolescence might be likely if a property has a one-car garage in a 4 bedroom house. Economic: can occur because of factors extraneous to the property. Examples include change in flight patterns, zoning changes, murder in the neighborhood, proximity to an abandon gas station.
