You are trying to estimate the value of a property that you are interested in buying....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are trying to estimate the value of a property that you are interested in buying. The subject property is located at 322 Rock Creek Road in a new suburb of a large metropolitan area. The property is like many others in the area, with three bedrooms, two baths, a living room, a den, a large kitchen, and a two-car garage. The residence has about 1,800 square feet of air-conditioned space and is of traditional design. The property is located on an interior lot with no potential flooding problems. The quality of construction appears to be about average for the market area. The property being purchased was built within the past two years. Three properties have been chosen as comparables and they also were constructed within the past two years. Comparable properties in the area have the following characteristics: Address Sale price Time of sale Design Comparable I 123 Clay Street $ 85,000 6 months ago Modern 2-car garage Corner lot Parking Location Drainage Good Bedrooms Baths Four Construction Two Average Comparable II 301 Cherry Lane $ 79,000 Traditional Comparable Ill 119 Avenue X $ 75,000 13 months ago Traditional 1-car garage Interior lot months ago 2-car carport Interior lot Below average Three Two Average Good Two Two Below average You have come to some conclusions concerning what you believe the different attributes of the comparable properties are likely to be worth in the market area. Appreciation in house values in the area has been very low over the past eight months, and you think that any properties that have sold within that period would probably not require any adjustments for the time of sale. However, one of the comparable properties sold over a year ago, and you think it will require a $1,500 upward adjustment. You also believe that properties in the area that are located near the creek sell for about $1,200 less than other properties in the area because of a slower rate of runoff after heavy rains. Properties on corner lots generally sell for a premium of about $1,000. Houses with the fashionable modern design usually bring about $1,000 more than those that have traditional design characteristics. Because three-bedroom homes are considered desirable by buyers in the area, an additional fourth bedroom will generally only add about $1,200 in value to a property. However, properties that contain only two bedrooms are rather difficult to sell, and often bring $2,000 less than their three-bedroom counterparts when they are sold. Most homes in the area have a two-car garage, but when properties have a one-car garage, they usually sell for about $800 less. A two-car open carport generally reduces the value of the property by a similar amount, or $800. The inferior construction quality exhibited by comparable III should reduce its value by about $1,500. Required: a. Complete the sales comparison approach to value and assign an estimate of value to the subject property. b. A second approach using the cost method of valuation will also be used to estimate value. Comparing vacant lot sales in the market area indicates that the value of the lot the subject property is constructed on is $13,000. Air-conditioned space in the dwelling would cost about $36.00 per square foot to reproduce, and the garage would cost approximately $3,700 to reproduce. Complete the cost approach to value, assuming that, because the property being valued is relatively new, no depreciation of the structure is required. Complete this question by entering your answers in the tabs below. Required A Required B Complete the sales comparison approach to value and assign an estimate of value to the subject property. (Negative amounts should be shown with a minus sign.) Address Sale price Value Adjustments Time of sale Location Site Design Construction quality Number of bedrooms Baths Garage Total adjustment Indicated value Property #1 123 Clay street Property #2 301 Cherry street Property #3 119 Avenue X 0 0 0 0 0 0 Required A Required B A second approach using the cost method of valuation will also be used to estimate value. Comparing vacant lot sales in the market area indicates that the value of the lot the subject property is constructed on is $13,000. Air-conditioned space in the dwelling would cost about $36.00 per square foot to reproduce, and the garage would cost approximately $3,700 to reproduce. Complete the cost approach to value, assuming that, because the property being valued is relatively new, no depreciation of the structure is required. Estimated reproduction cost of the dwelling: Estimated reproduction cost of the garage Estimated land value Estimated value using the cost approach $ 0 < Required A Required B > Show less You are trying to estimate the value of a property that you are interested in buying. The subject property is located at 322 Rock Creek Road in a new suburb of a large metropolitan area. The property is like many others in the area, with three bedrooms, two baths, a living room, a den, a large kitchen, and a two-car garage. The residence has about 1,800 square feet of air-conditioned space and is of traditional design. The property is located on an interior lot with no potential flooding problems. The quality of construction appears to be about average for the market area. The property being purchased was built within the past two years. Three properties have been chosen as comparables and they also were constructed within the past two years. Comparable properties in the area have the following characteristics: Address Sale price Time of sale Design Comparable I 123 Clay Street $ 85,000 6 months ago Modern 2-car garage Corner lot Parking Location Drainage Good Bedrooms Baths Four Construction Two Average Comparable II 301 Cherry Lane $ 79,000 Traditional Comparable Ill 119 Avenue X $ 75,000 13 months ago Traditional 1-car garage Interior lot months ago 2-car carport Interior lot Below average Three Two Average Good Two Two Below average You have come to some conclusions concerning what you believe the different attributes of the comparable properties are likely to be worth in the market area. Appreciation in house values in the area has been very low over the past eight months, and you think that any properties that have sold within that period would probably not require any adjustments for the time of sale. However, one of the comparable properties sold over a year ago, and you think it will require a $1,500 upward adjustment. You also believe that properties in the area that are located near the creek sell for about $1,200 less than other properties in the area because of a slower rate of runoff after heavy rains. Properties on corner lots generally sell for a premium of about $1,000. Houses with the fashionable modern design usually bring about $1,000 more than those that have traditional design characteristics. Because three-bedroom homes are considered desirable by buyers in the area, an additional fourth bedroom will generally only add about $1,200 in value to a property. However, properties that contain only two bedrooms are rather difficult to sell, and often bring $2,000 less than their three-bedroom counterparts when they are sold. Most homes in the area have a two-car garage, but when properties have a one-car garage, they usually sell for about $800 less. A two-car open carport generally reduces the value of the property by a similar amount, or $800. The inferior construction quality exhibited by comparable III should reduce its value by about $1,500. Required: a. Complete the sales comparison approach to value and assign an estimate of value to the subject property. b. A second approach using the cost method of valuation will also be used to estimate value. Comparing vacant lot sales in the market area indicates that the value of the lot the subject property is constructed on is $13,000. Air-conditioned space in the dwelling would cost about $36.00 per square foot to reproduce, and the garage would cost approximately $3,700 to reproduce. Complete the cost approach to value, assuming that, because the property being valued is relatively new, no depreciation of the structure is required. Complete this question by entering your answers in the tabs below. Required A Required B Complete the sales comparison approach to value and assign an estimate of value to the subject property. (Negative amounts should be shown with a minus sign.) Address Sale price Value Adjustments Time of sale Location Site Design Construction quality Number of bedrooms Baths Garage Total adjustment Indicated value Property #1 123 Clay street Property #2 301 Cherry street Property #3 119 Avenue X 0 0 0 0 0 0 Required A Required B A second approach using the cost method of valuation will also be used to estimate value. Comparing vacant lot sales in the market area indicates that the value of the lot the subject property is constructed on is $13,000. Air-conditioned space in the dwelling would cost about $36.00 per square foot to reproduce, and the garage would cost approximately $3,700 to reproduce. Complete the cost approach to value, assuming that, because the property being valued is relatively new, no depreciation of the structure is required. Estimated reproduction cost of the dwelling: Estimated reproduction cost of the garage Estimated land value Estimated value using the cost approach $ 0 < Required A Required B > Show less
Expert Answer:
Related Book For
Real Estate Finance and Investments
ISBN: 978-0073377339
14th edition
Authors: William Brueggeman, Jeffrey Fisher
Posted Date:
Students also viewed these finance questions
-
You are trying to estimate the value of a property that you are interested in buying. The subject property is located at 322 Rock Creek Road in a new suburb of a large metropolitan area. The property...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
When the wavelength of radiation falling on a metal is changed from 500 nm to 200 nm, the maximum kinetic energy of the photoelectrons becomes three times larger. The work function of the metal is...
-
What is a curvilinear regression model? How do you know when to use one?
-
Identify each of the following compounds from the NMR data and molecular formula. The number of hydrogens responsible for each signal is shown in parentheses. a. C4H8Br2 1.97 ppm (6) singlet 3.89 ppm...
-
What does kinship system refer to and why is it important?
-
Trojan Corporation USA borrowed 1,000,000 New Zealand dollars (NZ$) at the beginning of the calendar year when the exchange rate was $0.60 = NZ$1. Before repaying this one-year loan, Trojan learns...
-
Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An...
-
Apollo 14 astronaut Alan B. Shepard Jr. used an improvised six-iron to strike two golf balls while on the Fra Mauro region of the moon's surface, making what some consider the longest golf drive in...
-
Your first attempt at a visualization of stock prices returned this table, which is very difficult to read. How can you change this chart to an easy-to-read visual that shows how stocks prices...
-
Kelly West Spinning Studio just bought two exercise bikes for $3800 pre-tax. Kelly paid $190 in taxes, $60 for a 1-year warranty, and $150 installation fees. Before the bikes were used for cycling...
-
INITIAL MARKUP PROBLEMS: Dolly's Dolls plans sales of $2.5 million, retail reductions of $500,000, expenses of $800,000, and profit of $46,000. What should be Dolly's initial markup percentage?
-
You receive no shipments of board games in the month of May. As a result, you can only sell what you have left on hand. Your current inventory is listed below. How does changing the scenario for the...
-
The statement of cash flow is separated into the three sections: operating, investing, and financing. How do these sections differ? What does each section tells us about the company's cash status?
-
Write an essay in which youll identify the values and social guidelines of the oath. What can be inferred about the spirit and beliefs of Greek society at the time? Your essay should have a central...
-
Under what conditions is the following SQL statement valid?
-
An electronic instrument is to be isolated from a panel that vibrates at frequencies ranging from \(25 \mathrm{~Hz}\) to \(35 \mathrm{~Hz}\). It is estimated that at least 80 percent vibration...
-
An exhaust fan, having a small unbalance, weights \(800 \mathrm{~N}\) and operates at a speed of \(600 \mathrm{rpm}\). It is desired to limit the response to a transmissibility of 2.5 as the fan...
-
The armature of a variable-speed electric motor, of mass \(200 \mathrm{~kg}\), has an unbalance due to manufacturing errors. The motor is mounted on an isolator having a stiffness of \(10 \mathrm{kN}...
Study smarter with the SolutionInn App