Property Valuation
What is 'going concern value' vs. 'real property value' in Idaho business appraisal?
AThey are the same value
BGoing concern value includes the value of the operating business, goodwill, and fixtures; real property value is just the land and building — separating them is important in transactions involving both real estate and a business✓ Correct
CGoing concern value is for agricultural properties; real property value is for residential
DGoing concern value is always lower than real property value
Explanation
When a property houses an operating business (hotel, gas station, restaurant), the total value includes: real property value, personal property/fixtures, and business enterprise/goodwill. Idaho lenders and appraisers must separate the real property value from the going concern value for mortgage lending purposes.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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