Property Valuation
The principle of change in Missouri appraisal recognizes that:
AReal estate values are permanent
BProperty values are always changing due to economic, physical, governmental, and social forces✓ Correct
COnly new construction changes value
DValue is set permanently at first sale
Explanation
The principle of change holds that real estate values are constantly in flux due to physical forces (aging), economic forces (supply/demand), governmental forces (zoning), and social forces (demographics).
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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.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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