Category Archives: Term of the Day

Term of the Day: Market Approach

In appraisal practice, one of the three approaches to value wherein comparable property transactions are analyzed and adjusted for differences in timing, location, circumstance and other parameters to arrive at an indication of value of a subject property. The two other approaches are the cost and income approach. Market approach is defined as a method…

Term of the Day: Vacancy Rate

Vacancy rate is defined as the percentage of all units that are not occupied or rented. On an income statement, a projected vacancy rate is used to estimate the vacancy allowance, which is deducted from potential gross income to derive effective gross income. For example, the vacancy rate for apartment units in City A is…

Term of the Day: Soft Costs

Soft costs are costs associated with the construction or development of real property such interest, realty taxes, permits, fees and more, which can be written off for income tax purposes under limited circumstances.

Term of the Day: Rent

The rent is a payment made by a tenant to a landlord in consideration of the right to use and occupy a specified unit or real property given by the landlord to the tenant. Because the collection of rent due under a lease is treated differently in law than sums due under a promissory note,…

Term of the Day: Property Tax

The term property tax is defined as a tax assessed against real property, and is usual assessed by a county or municipal taxing authority but it can also be assessed by special purpose districts and agencies, in accordance with the assessed value of the property.

Term of the Day: Operating Expenses

The definition of the term operating expenses is that they are the amounts paid for the maintenance of a property, such as property taxes, utilities or hazard insurance. Operating expenses exclude financing expenses and depreciation. Some of these expenses are considered as operating: maintenance, management, real estate taxes, hazard and liability insurance, utilities, supplies. The…

Term of the Day: Market Value

The term market value is defined as the value that a property has on the open market. The key assumptions used by professional real estate appraisers in reaching a fair market value include: the parties are informed and prudent; they are operating independently and are under no compulsion to complete the transaction; the market is…

Term of the Day: Low-Ball Offer

A low-ball offer is defined as an offer from a potential property buyer that is significantly lower than the actual listing price of the property. By making such an offer, the buyer wants to indicate that the property will not attract other good offers and that the current listing price is high. It also means…