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50 True/False questions

  1. physical deteriorationloss in value as a result of the passage of time or wasting away caused by the elements. deferred maintenance- can be curable or incurable. (physical depreciation)

          

  2. neighborhood lifecycles1. physical and environmental forces
    2. economic forces
    3. governmental forces
    4. social forces

          

  3. contributionan item is worth what it has to offer in real estate

          

  4. appraisalthe lack of sufficient supply

          

  5. reproduction costsestimated cost to construct, at current prices, a building with utility equivalent to building being appraised, using modern material and current standard designs and layout. (used most of the time for cost estimation)

          

  6. functional obsolescencea loss in value as a result of the subject not performing the function for which is was intended. curable or incurable (functional depreciation)

          

  7. economic characteristics of value1. demand
    2. utility
    3. scarcity
    4. transferability
    5.DUST

          

  8. market valuecombining of two or more adjacent parcels of land

          

  9. variable expensesexpenses that must be paid that are not related to occupancy. (taxes, insurance)

          

  10. plottagea plot of land plus improvements that make it ready for use

          

  11. anticipationan item is worth what it has to offer in real estate

          

  12. CA: estimate site valuedetermine the value of the land

          

  13. competitiona value concept that states that value is affected by the interaction of supply and demand in the market

          

  14. residential valuedetermined by using a gross rent multiplier method

          

  15. utilitythe total satisfaction received from consuming a good or service. must meet a useful need

          

  16. reconciliationan item is worth what it has to offer in real estate

          

  17. qualitative analysiscomparing data on properties to derive relative comparisons between properties in the same market. derives value by determining which properties are superior and inferior to the subject.

          

  18. SITEa plot of land plus improvements that make it ready for use

          

  19. CA: estimate cost of new improvementsrebuilding a house. measuring a build along its exterior foundation to determine gross square footage

          

  20. law of increasing returnsa point when added value of another feature, or additional repair, will be less than the cost to accomplish that feature or repair.

          

  21. scarcitythe lack of sufficient supply

          

  22. 4 agents of productioncapital, management, land and labor

          

  23. externalitiesan appraisal concept that states that economies or diseconomies outside a property's boundaries may have a positive or negative effect on its value

          

  24. transferabilitythe ability to transfer ownership. If ownership cannot be transferred, than value does not exist

          

  25. curablean item of physical deterioration where the cost to cure is equal to or less than the value added by curing.

          

  26. economic forcesan appraisal principle that states that the more a property is in harmony with its surroundings, the greater the contributory value. often maximizes value.

          

  27. gross rent multiplierdetermined by using a gross rent multiplier method

          

  28. quantitative analysiscomparing data on properties to derive relative comparisons between properties in the same market. derives value by determining which properties are superior and inferior to the subject.

          

  29. capitalizationthe conversion of income expectancy into a capital sum or property value

          

  30. assemblagecombining of two or more adjacent parcels of land

          

  31. commercial property valueevaluated by a direct capitalization technique

          

  32. changean appraisal principal that recognizes the fact that a property and its environment are always in transition and are impacted economic and social forces that are constantly at work

          

  33. incurablean item of physical deterioration where the cost to cure is greater than the value added by the curing problem

          

  34. fixed expensesexpenses that must be paid that are related to occupancy (maintenance, management)

          

  35. direct capitalization techniquethe conversion of income expectancy into a capital sum or property value

          

  36. supply and demandan appraisal principle that states the value of a property depends on the quantity and price of the property type available in the market, and on the number of market participants and price that they are willing to pay

          

  37. external obsolescencea loss in value as a result of the subject not performing the function for which is was intended. curable or incurable (functional depreciation)

          

  38. balancean appraisal principal that states that property value is created and maintained when contrasting, opposing or interacting elements are in state of equilibrium.

          

  39. sales comparison approachwhen the total property value is equal to the sum of the site value, plus contribution of improvements. it assumes a hypothetical buyer considers producing a substitute residence that has the same utility as the subject property. typically for new structures or "no-market properties"

          

  40. net operating incomeestimated cost to construct, at current prices, an exact duplicate, or replica of the building being appraised, using same material construction standards, design, layout, and quality.

          

  41. law of decreasing returnsa point when added value of another feature, or additional repair, will be less than the cost to accomplish that feature or repair.

          

  42. income approachthe primary method used to estimate the present value of properties the produce income. measures value through the eyes of the investor

          

  43. conformityan appraisal principle that states that the more a property is in harmony with its surroundings, the greater the contributory value. often maximizes value.

          

  44. demandthe desire for a good backed by the ability to pay for the good

          

  45. reserves for replacementsexpenses that relate to items that must be replaced more than once during a lifetime of a building. (heating and cooling units)

          

  46. cost approachwhen the total property value is equal to the sum of the site value, plus contribution of improvements. it assumes a hypothetical buyer considers producing a substitute residence that has the same utility as the subject property. typically for new structures or "no-market properties"

          

  47. economic principals of valueinfluence the market and cause adjustment and or correction in the marketplace

          

  48. market theory of valuestates that the value is determined by the actions of buyers and sellers in the marketplace in response to the influences of supply and demand.

          

  49. substitutionan appraisal concept that states that a buyer will pay no more for a property than the cost of obtaining an equally desirable substitute. when an investor looks at cost of a new structure before buying one. The maximum value of property is limited.

          

  50. replacement costsestimated cost to construct, at current prices, a building with utility equivalent to building being appraised, using modern material and current standard designs and layout. (used most of the time for cost estimation)