REE-4103 Chapter Notes - Chapter 27: Fee Simple, Externality
22 Mar 2018
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If the asset being valued is clearly absolute. Estimate the value of the site as though vacant and available to be developed to its highest and best use: 2. Determine which cost basis is most applicable to the assignment: reproduction cost or replacement cost: 3. Estimate the direct (hard) and indirect (soft) costs of the improvements as of the effective appraisal date: 4. Estimate an appropriate entrepreneurial incentive or profit from analysis of the market: 5. Add the estimated direct costs, indirect costs, and entrepreneurial incentive or profit to arrive at the total cost of the improvements: 6. Estimate the amount of depreciation in the improvements and, if necessary, allocate it among the three major categories: physical deterioration, functional obsolescence, external obsolescence, 7. Deduct estimated depreciation from the total cost of the improvements to derive an estimate of their depreciated cost: 8. Estimate the contributory value of any site improvements that have not already been considered: 9.
