VALUATION OF REAL PROPERTY
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Retail Banking and Wealth Management — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary purpose of real property valuation in banking?
Real property valuation determines the fair market value of immovable assets used as collateral for loans, ensuring the bank's security interest is adequately protected against credit exposure.
What is 'Distress Value' of a property in banking context?
Value at which property must be quickly sold under duress
Which method of property valuation estimates value based on the income the property generates?
The Income Capitalisation Method (also called the Investment Method) estimates property value by capitalising the net annual income at an appropriate yield rate reflecting market risk.
What is 'Market Rent' in the context of property valuation?
Estimated rent a property would fetch in open market
What does 'Fair Market Value' mean in the context of real property?
Fair Market Value is the price at which a property would change hands between a willing buyer and a willing seller, both having reasonable knowledge of the facts and neither being under compulsion to buy or sell.
What is the 'Investment Method' of property valuation?
Capitalising net annual income at an appropriate yield rate
What is the 'Comparative Method' of property valuation?
The Comparative Method (Sales Comparison Approach) estimates value by comparing the subject property with recent sales of similar properties in the same locality, adjusting for differences in features, condition, and time of sale.
What is 'Built-up Area' in real estate measurement?
Carpet area plus wall thickness and other covered areas
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