REAL ESTATE . APPRAISER SLD Cola LATEST EDITIONvl vin vari Xr xi ITT IV xv XVI, we BASIC ApPRATSAL. VAM OF CONTENTS Introduccion to Reat ent ste Valuation/ Appraisal Process Pp. of Propocty/General Real Estate tion Introduction to Human csography Dota Meseareh & Appeainal Methodology Basic Peineipies of Property value Market Data Approach Income Approach - Appraisal of Lease Interest : - Appraisal of Leasehold: (w/ tables) Cost Approach Investment Mathematics & Statistics Inspection, Identilicut ian, situ analysis and Map Reading Appraisal of Rawland for subdivision Purposes Appraisal of Machinery & Equip Appraise] Report Weiting laws Aflecting Property Value National Code of Ethics tor the Realty Service Practice : Department Administrative order No. 6 DAONo. 3 ' Appraisal of Real Property for Taxation Purposes "1 19 22 25 30 55. 61 79 a5 a7 94 105 12 118 124, 130 5h 18 2 24 29 39 45 60 78 84a, 26% 93 1048 nT 122 129 139nan NTRODUCTICN TO REAL ESTATE VALUATION A TO REAL ES | Definition of “Appraisar, “Valuation’, “Cost Zstimation” and “Bamings Forecast” In ordinary usage and according to the dict “appraisal” and “valuation” are B monary ronymous but the dictionary defin'tions are no: hread enough: in others they are not wuriently specific, Valuation ~ determination of the monetary value af the specified date of the J reperty rights encompassed in an ownership Aoprais2!-stated result of valuing a property, making 2 cost estimate, forecasting £2: ngs, OF any Combination of two or more of these stated results. An appraisal is HS «Re act of valuing, estimating cost, or forecasting earings. Earnings forecast ~ an estimate or forecast of the future net monetary retums, uenvable from something owed or considered as being owned. ‘Simply defined, appraisal, is an estimate or op:nion of value, where an estimate is NOT a a. State of value - b. Determination of value ¢. Fixing of value An appraisal is only one person's opinion of va'ue. Different appraisers may arrive al different estimates. The accuracy and usefulness of the value estimate depends on the appraiser's skill, experience and judgement Use and/or consumption of the owned entityPee una NATURE OF PROPERTY / GENERAL REAL ESTATE INFORMATION a Police Power boning © Powe? of Taxaticin 3. Building Cooe © Eminent Domain f Subdivision Reguiations 9 Escheat 2, Those imposed by Contracts a. Lease b. Usufruct ©. Right of Easement 4. Restrictions in usage in Contricts to Seu 3. Those imposed by the Grantor a. By will or testament By donation Kinds of ownership Bete owner of an undivided property interest . Co-owners of an undivided Property interest & Diverse owners of divided property interest 1 Property rights (property interest) 3 Benefits concomitant to something that is owned : 3. Something that is owned, or ‘A tangible thing, or aggregate of tangible thing, with or without regard to the ownership thereot, Nis that multiple meaning that gives rise to the misunderstanding. The ambiguities can be avoi it The property interest is an integral or integrated entity (calle here the primary | Property interests) may be held in: 1. Sole ownershipMAIR OF PROPERTY / GENERAL REAL ESTATE NFORMATION The benefits are undivided 2 property interest is undivided, and S The undivided property interest is a whole property interest 2 Co-ownership . ance Primary property interest & Sry ol'the Co-owmer's imerest can be held in sole ownership ©F co-ownership | 3. Diverse ownership, oif the entity is real estate The benefits are assorted into diferent kinds 5 __ The primary property interest is divided ‘and the aggregate of Proper fanls in the entity does not constitute a whole Property interest ©. The property interest of | each of the respective diverse imine s,s divided portion of the aggregate of property Fights in the entity and each is a whole property interest & Any of these whole prozerty interest ean be held in sole ‘ownership or co-ownership ‘combination of sole ownership and co-ownership - condominium * 3 __ he benefits are assorted into two kinds: each of the owners has the sole benefi and, jointly with th Co-ownership. its of the ownership of his own apartment } 'e other owners, the benefit that is held in b. The property interest of each of the owners is a combination consisting of a divided portion of the aggregate of property tights in the real estate and an undivided interest in thos that remain after the assignment of all the divided portions to their respective owners; each of the combinations is a whole Property interest but their aggregate is not, pee of Personal Property Se refer to movable items/objects not permanently affixed to real estate. Generally, y-rception, items remain personal property if they can be removed without serious’ ‘othe real estate or to the items themselves, ener emer ere ee eeBASIC CONCEPTS Gecgraphy's most fundamental principle is that 1 tocation of People, activities, and mavironments ca behavior and can help to solve human probleme location is important: the help to explain human Geography is the scientific study of the location of People and activities across the earth's surface and the reasons ‘or their distribution, Historical Development of Geography 1. Eratosthenes ~ used the word goograph the earth (wi : = 3 8 a 1 2 z 2 3. 2 < g 5 z s 8 2 describe the location of places, Aristotle - the earth is sphere, Ptolemy - wrote an eight volume Guide fo Geography; foreunner of the present geography. 5. Humboldt and Ritter - geographers should study human environment {elationships by concentrating on how the physical envronrvovt causes social development. aw Geparaphers identi the location of something in four ways-name site, situation and mathematics, : : 1. Toponym — nominal location or a place name given to a Portion of the earth's surface. 2 gern/sical character of the location. Important site characteristics lude climate, water sources, topography, soil and vegetation, 3. Situation ~ relative location of a place compared with olhey places; i.e, identify important buildings, streets and other landmarks to direct people to a desired location, 4. Mathematical location — absolute location on the earth's surface, describe Teeatding to 2 unique set of numbers known as latitudes and longitudes, Two imaginary lines, or arcs, known as Patallels and meridians, “Prime Meridian’ ~ 2 degree longitude at Greenwich, England, Numbers between 0-180 degrees either East or West of the prime meridian, Definitions: Township - a square, 6 miles long and 6 miles wide. A township is divided into 36 sections, each of which is 1 mile by 1 mile, Map ~ 2 ‘wo-dimensional (fal) representation of the earth's surface ora Portion of it. 3. Cartography - the science of making map. 4” Scale ~ relationship between the length of an object on a map and the length of the same feature on the earth's surface 5 Projections ~ the system used to tansler locctoins ‘on the earth's surface to locations on a map. 8. Special distibution — the errangement of the phenomenon across the cone Strtace. | Important properties of spatial distibuten density, Concentration and pattern. éINTRODUCTION TO HUMAN GEOGRAPHY 6.1 Density ~ frequency that i i i ey ean y Something occurs within @ given unit of Ic density is th i peep nies age 'y is the total number of objects, such s 62 Poncentration emend of the spread of something over a given Study area. If the objects in a given area are close together, they are considered clustered. 1! they a i considered dispersed. eats oe 6.3 Pattern — the geometric arrangement of objects. Geographers observe that many objects trom a liner distribution, such as the Fmangement of houses along a street or stations along a subway ine. POPULATION 1. Demography ~ scientific study of population characteristics. 2. Ecumene - the porticn‘ of the earth's occupied by permanent human _ Settlement. 3." Density — helps geographers measure the relationship between population and available resources and can be computed in a number of ways: 3.1 Aritametic density (Population density) - total number of people divided by a total land area. 3.2 Physiological density - number of people per unit aréa of arable land, which is land suitable for agiiculture. The higher the physiological density, the greater the potential pressure people may place on the land to produce enough food. 3.3. Agricultural density ~ the ratio of the number of farmers to the total amount of land suitable for agriculture, helps to account for these economic differences. 4. Census — the most important source of knowledge about the growth and composition of a country's population. 5. Components of Fopulation Change 5.1 Fertility Natural increase — the percentage by which a population grows In a year and is computed by subtracting the crude death rate from the rude birth rate (excludes migration). 5.2 Mortality : Crude death rate - annual number of deaths per 1,000 population 5.3 Migration MIGRATION 1. Definition - 2 permanent move to new location, 2. Emigration - migration from a location. 3. Immigration - migration to a location. 4. Net migration = difference between the number of immigrants and the number of emigrant. 5. Factors affecting migration ¥ 5.1. Push factors - induce people to move away from old residences 5.1.1 Political push factors ~ people forced to migrate from a particular country for political reasons are known “as refugees. } 5.1.2. Economic push factorsINTRODUCTION TO HUMAN GEOGRAPH' 0 Huma 5.1.3 Environmental Pusi factors, ve features of a new jocation may lure migrants there 5.2.1 Political pull factors — 5.2.2 Econemic pull factors 5.2.3 Environmental pull factors — } ECONOMIC DEVELOPMENT 5.2 Pull factors ~ attract lure of freedom for health reasons 1. Measures of economic development thru indicators Per capita income 1 1.2 Economic structure by sector 1.2.1 “Primary sector - concem with the direct extraction of malerials from the earth's surface, generally through agriculture, though sometimes by mining, fishing and 2 forestry. 122 Secondary sector ~ includes manufacturers that process, \ransform, and assemble raw materials into useful products. 1.2.3 Tertiary sector ~ includes the provision .of goods and Services to people in exchange for payment, ie., offices, shops, physicians, attorneys, entertainment facilities and universities. 1.24 Quaternary sector — involves the processing of information, ~ | especially through computer technology. 1.3 Worker productivity ~ value of a particular product compared with the amount of labor needed to make it. | 1.4 Access to raw materials 1.5 Availability of consumer goods INDUSTRY 5 Industy seeks to maximize profits by minimizing production costs. 2 Two kinds of geographic costs: 2.1 Situation factors - those related to the transportation of materials tory. A firm seeks a location that minimizes the Costs of transporting inputs to the factory and finished goods to the consumers. 5 5 & is a s § 2 z 2.1.1 Bulk — reducing industry ~ an industry that produces a Product that has a lower volume or a lighter weight after Production than before. in this case, location of factory should be near inputs, 2.1.2 Bulk-gaining industry ~ produces a Product that has a higher ie Volume or @ heavier weight after production than before. Location of factory should be near market. 2.1.3 Break-of-bulk Point - location where transfer among transportation modes is possible. Important break-of bull points includes seaports and airports. eeINTRODUCTION TO HUMAN GEOGRAPHY ONTO HUMAN 22 Site factors ~ those related to the cost fae Blant resulting trom the ung ost, Production inside the 4 characteristics of i location. The main production factors are & parevlar 2.2.1 Land 2.2.2 Labor 2.23 Capital Obstacles to Optimum Location . A firm may have more than one Cftical site or situation factor, each ‘of which suggests a different location, + Even ifa firm has clearly identified its eritical factor, more than one suitable location may emerge. A firm cannot always Precisely calculate the costs of situation and site factors with in the ‘company or at various locations, The firm may select its location on the basis of inertia and history. Once a firm is located in a panicular community, expansion in a same place is likely to be cheaper than moving operations to a new one. . The calculations Concerning optimal location can be altered by government grants, loans, or tax breaks, SETTLEMENTS: Settlements — a permanent collection of building and inhabitants Geographic information about the good or service that will be provided at ” a new establishing: 2.1 Range ~ maximum distance people are willing to travel to obtain a good or use a service. 7 2.2 Threshold - minimum number of people needed to support th good or service. 2.3 Principle of Retail Location URBAN PATTERNS, Three Models of Urban Structure 1 The concentric zone model. A city grows outward from a central area in a Series of concentric rings, like the rizgs of a tree. 1.1 Central Business District (CBD) ~ the area of the city where retail and office activities are concentrated. 12 Zone in transition or gray area or twilight zone -- comprises older industies and warehouses. as well as residential areas surrounding the CBD. 1.3. Zone of independent worker's homes 14 Zone of better residences 15 Commuters zone The Sector model — a city grows in a series of sectors, wedges, or Sortiders, which extend out from the central business distict. Certain areas of the city are more attractive for various activities, originally because of an environmental factor or éven by mere chance. 21 Central business district BE INTRODUCTION TO HUMAN GEOGRAPHY 2.2 Transportation and industry 2.3 Low-class residential 2.4 High-class residential The multiple nuclei model - 31 city - #1 complex struct i collection ie oe OF Centers, around which activities ei serene of these nodes include # pout, nvighborhood busing f > Girport and park, ‘ usiness center, university, ' URBANIZATION | | Urbanization is a process of becoming (implying moverneni) from a state of less concentration to a state of more concentration. : 1, 3 4, Regularities in Urban Structure 1.1. Transportation Frame 1.2 Speculative Realm , 1.3. Settlement Sphere Accessibility, Interaction and Land Value 2.1 Land use bid Rent Curves 2.2 Pattern of land uses Urban — generally refer to places that are predominantly non ~ agricultural Location / Competition - 2 concept of why cies are where they are QUALITY OF LIFE Based on Socioeconomic E1 1. Aments Social indicators and quality of life 1 Democratic Process 2 Public Participation 3 Health 4 Choices in Life :5 Housing 6 Economic Security 7 Education 8 Land Use Planning .9 Essential Living Cost 10 Economic Opportunity Based on Physical Environment a: Physical environment indicators and quality of life 2.1 Landuse 22 Air pollution 2.3 Water pollution 2.4 Recreational resources 25 Noise pollution 2.6 Solid waste 2.7 Climate / Weather 28 Utilities “4ee INTRODUCTION TO HUMAN GEOGRAPHY SOCIOECONOMIC ENVIRONMENT L SIAL INDICATORS AND QUALITY OF LIFE governs itself in accordance with the principle of equality of rights, opportunity and treatment. Public Participation — the ability of citizens to be heard and to interrogate the decision makers. Health — physical and mental well-being. Ability to detect, treat and contrcl specific causes and characteristic symptoms of illness and ailments to maintain physical growth and development. K FACTORS Democratic Process ~ the system by which the public (nominally) q Choices of Life - the chance, right or power to make fundamental | choices in life usually by the free exercise of one’s judgement and use of one's resources. 5 Housing ~ the available of adequate housing facilities. 5 Economic Security - the degree to which one can maintain his economic state in relation to his needs. 4 fi 7 Education - the knowledge, skills, character and so forth of the - population and the process of obtaining and development them by schooling, training and othe: means. 2 8 Land Used Planning ~ the well-organized, planned and presumably beneficial use of the land 9 Essential Living Costs ~ the portion of the total income required to satisfy basic human needs such as food, clothing, shelter, etc. i Economic Opportunity - circumstances favorable to improvement ef an individuar's material welfare in relation to his ability. |: PitYSICAL ENVIRONMENT RANK FACTORS I LAND: USE - the wellorganized planned, and presumably beneficial use of land. 2 AIR POLLUTION — the amount of foreign and. harmful substances } in the air from all possible sources. 3 WATER POLLUTION - the amount of foreign and harmful substances in the waler from all possible sources. |. RECREATIONAL RESOURCES ~ the availability of nonpersonal resources for use in leisure activities, 1sw INTRODUCTION TO HUMAN GEOGRAPHY NOISE POLLUTION ~ the production of sound at a level than can be considered annoying and possibly harmful, ‘SOLID WASTE ~ the probleins engendered by the requirements to effective! 105e of residual matter remaining after the ‘consumption of products. CLIMATE J WEATHER ~ the impact of long-term (climate) and short term (weather) atmospheric and solar condition. UTILITIES — the avaitability of power, communi transporiation, etc. in the locality tion, water, “