Prescott AZ Real Estate - Principles of Value
March 26th, 2007
Principles of Value
Change - the physical and economic conditions of real estate do not remain constant, therefore this directly influences the value and how it will adjust. Whether it’s a gradual change through normal wear and tear, or the ill effect of an act of God, the property will tend to physically change.
Economic changes that affect the value may include zoning changes, tax law changes and changes to the marketplace.
Although not noticable on a day-to-day basis, change can be seen over a period of time.
Conformity - the maximum value a property will typically achieve is often times based on its conformity to the surrounding land use. Many times conformity is controlled with zoning laws.
Contribution - have you ever added an improvement to a property. The value of such an improved is equal to its contribution to the added value of the property. If you were to add a swimming pool onto your property, it can increase the value of a property. The amount of the increase is the contribution.
Highest and Best Use - is the principle that relates to the concept that each property has a legal use that gives the property its greatest value.
Appraisers keep this principle in mind because estimating the value of the property according to its current use may not indicate its true value.
Progression - is what refers to the value of a poorer property raising in value because of its location to a better property.
Regression - is what refers to the value of a better property lowering in value because of its location to a poorer property.
Supply and Demand - values of property will be affected both by the supply of property and by buyer demand.
Entry Filed under: Prescott Arizona AZ Real Estate Market
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