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The market value would be $225,000 ($250,000 site value minus $25,000 demolition cost). However, if the demolition costs rose to $55,000, the highest and best use would be the existing residential use, because the value as a commercial lot (now $195,000) would not exceed the existing value as a residence.
Real estate economics is the application of economic techniques to real estate markets. It aims to describe and predict economic patterns of supply and demand . The closely related field of housing economics is narrower in scope, concentrating on residential real estate markets, while the research on real estate trends focuses on the business ...
The nominal value of the commodity bundle at a point of time is the total market value of the commodity bundle, depending on the market price, and the quantity, of each good in the commodity bundle which are current at the time. A price index is the relative price of a commodity bundle. A price index can be measured over time, or at different ...
Market value is the most commonly used type of value in real estate appraisal in the United States because it is required for all federally regulated mortgage transactions, and because it has been accepted by US courts as valid. However, real estate appraisers use many other definitions of value in other situations. [5]
The two main basis for determining the ad valorem value are fair market value and current use value. The fair market value is based on the typical selling price for property on which the buyer and seller can agree, with the assumption that the property is being used or will be used at its highest and best use after the sale. The current use ...
Capitalization rate (or "cap rate") is a real estate valuation measure used to compare different real estate investments. Although there are many variations, the cap rate is generally calculated as the ratio between the annual rental income produced by a real estate asset to its current market value. Most variations depend on the definition of ...
There are several types and definitions of value sought by a real estate appraisal. Some of the most common are: Market value – the price at which an asset would trade in a competitive Walrasian auction setting. Market value is usually interchangeable with open market value or fair value. International Valuation Standards (IVS) define:
Home equity is the market value of a homeowner's unencumbered interest in their real property, that is, the difference between the home's fair market value and the outstanding balance of all liens on the property.