Notes

This lesson considered market indicators such as price and sales information, vacancy rates, and building permits in more depth. Potential sellers, potential buyers, lenders, and insurance companies all require the market value of real estate for listing, financing, and insurance purposes. The appraiser will give a detailed report of a property's value compiled on improvements and the condition of the property. In determining an appraised value, an appraiser will consider the purchase price of neighboring, recently-sold property comparable to the property being appraised; this is called the sales comparison approach. Using the cost approach to appraisal, an appraiser estimates the value of a property by separating out the land value and the value of all improvements on the property.

Before a permit to build is granted, the construction design must be approved and building code requirements met. Vacancy rate has to do with the absorptive power of the market to take in renters at lower prices while the vacancy rate is low and then to hike rental prices when the occupancy rate is too high, despite the real possibility of losing renters.