Spring, 1996

Instructor: Dr. Charles J. Delaney

Office: HSB 316.18. Phone: 755-2263 ext. 6140.

Office Hours: MWF (9:00-10:00 & Noon-2:00) & by appointment.

Text: American Institute of Real Estate Appraisers, The Appraisal of Real Estate, 10th ed., (Chicago: The Author, 1987).

References: Boyce and Kinnard, Appraising Real Property, (Lexington, MA: D.C. Heath Co., 1984).

Smith and Belloit, Real Estate Appraisal, 2nd Ed., (Dayton: Century VII Publishing Co., 1987).

Objective: To provide the student with the principles and fundamental techniques to estimate real estate values. The three classical approaches to valuation--income capitalization, cost less depreciation, and comparable sales--are presented. Emphasis in the course will be on the appraisal of one-to-four family residential dwellings and small income producing properties.

Assignments: Reading and homework assignments will be made on a weekly basis. The course schedule may be adjusted to comply with the pace of the class. Students are expected to read the material before coming to class.

Note: Eating, drinking, and dipping are not allowed in any classrooms in the College of Business. Please refrain from these activities.

Course Project: Each student will be responsible for writing an 8-10 page paper (not including references or notes) that focuses on one of the various analyses appraisers must conduct when preparing a narrative demonstration appraisal report. The analyses typically conducted by appraisers include: a market analysis of the subject neighborhood (an analysis of all factors within a neighborhood affecting supply of and demand for the type of property being appraised), highest and best use of the subject property both as vacant and improved (that use of the land as though vacant or the property as currently improved that maximizes value), tax burden analysis, locational analysis (an analysis of the locational attributes affecting the value of a property), and site analysis.

In your paper you should be sure to fully explain what is involved in conducting the type of analysis that you have chosen to write about (this would most likely comprise your introduction), why this type of analysis is included in a narrative demonstration appraisal report (an explanation of why you are doing what you are doing), the steps involved (a logical presentation of the process involved), a presentation of your data (actual data that you collect on the subject property), the analysis of your data (both quantitative and qualitative) and conclusions based on your analysis of the data.

The paper is to be done on a word processor using a font size of 12 and double spaced. Top and bottom margins are to be 1" and side margins are to be 1.25". Students should consult a style guide such as the APA style guide before writing the final draft of the paper. References must be properly formatted and direct quotes must be properly cited. Failure to do so will be construed as plagiarism.

Grading: Grades will be assigned on the basis of the highest two out of three midterm exams, the term paper, and the final exam. A student who misses a midterm exam for any reason must take the other two midterms and the final. No make-up exams will be given. There will be no exceptions to these requirements.

First midterm exam 100 points
Second midterm exam 100 points
Third midterm exam 100 points
Term paper 300 points
Final exam 100 points

Any student earning an A as a result of their test scores on all three midterm exams and the term paper will be excused from the final examination. Note you must take all three midterm exams in order to be excused from the final and score no lower than 60 on any of the three midterm exams.

Attendance and Participation:

Students at Baylor University are required to attend at least 75% of all scheduled class sessions in order to earn a passing grade. Any student missing more than 10 class sessions will automatically receive an F in this course. While attendance does not directly enter into a student's grade determination, questions on exams will be based on information presented in class that may not be contained in the textbook. Also, instructions and information for the term project will be presented in class only.


1 Introduction to real estate appraisal 1 & 24
Appraisal reports

2 Value theory and appraisal principles 2 & 3
The appraisal process 4

Students should read Chapter 5 & 6 by the end of the 2nd week of class. These are review chapters and will not be discussed. However, for exam purposes, students are responsible for the material in these two chapters.

3 Market analysis: National, regional,
community, and neighborhood 7 & 8

5 Land/site analysis: Highest and best use 9 & 12

6 Styles, design, materials, and equipment 10 & 11

7 Sales comparison approach 17

8 Sales comparison approach continued
Site and land valuation 13

9 Cost less depreciation approach 14, 15, 16

10 Marshall & Swift cost estimation approach case study

11 Income capitalization approach
Estimation of revenues & expenses 18 & 19

12 Income capitalization (continued)
Reconciliation 23

13 Direct capitalization
Estimating discount rates and capital recovery rates

14 Yield capitalization 21

15 Capitalization (continued); Mortgage equity 21
analysis; Ellwood formulation

EXAM I Friday, February 2.
EXAM II Friday, March 1.
EXAM III Wednesday, April 3.
FINAL EXAM. See Spring Semester Schedule of Classses.

Exam schedule is subject to change depending on the progress of the class.