REE-4103 Lecture 29: Ch 29 Valuation Notes

• School: FSU
• Department: Risk Management/Insurance, Real Estate and Legal Studies
• Course: REE-4103
• Professor: Stephen A Bailey

Document Summary

Identify all forms of depreciation recognized by the market: charge only once for each form of depreciation. Market extraction method: measures accrued depreciation directly from the market by analyzing comp sales from which depreciation can be extracted, steps to estimate depreciation, 1. Make adjustments to comps to obtain market value as of date of sales of comp: 3. The land value of a comparable is subtracted from its selling price to find the depreciated value of the improvements: 4. The depreciated value is subtracted from the reproduction costs of the improvements to find the dollar amount of depreciation: 5. The dollar amount of depreciation is divided by the age of the improvements to find the depreciation rate, expressed as a percent of total depreciation per year: 6. If the depreciation rate is fairly consistent for at least several comparables, the appraiser applies that percent, multiplied by the age of the su(cid:271)je(cid:272)t p(cid:396)ope(cid:396)t(cid:455)"s i(cid:373)p(cid:396)o(cid:448)e(cid:373)e(cid:374)ts, to the (cid:396)ep(cid:396)odu(cid:272)tio(cid:374) cost of those improvements.