38 Multiple choice questions
- less expensive alt to appraisal
(1) drive by to verify existence of property.
(2) listing of comparable sales.
*used by lenders for: home equity line, refinancing, portfolio management, loss mitigation, collections.
- property is like is soundings
-design, construction, size, age.
- brokers price opinion
- (cap rate)
rate of return investor will make on an owner's investment.
-comparing relationship of NOI and sales prices of similar properties.
- income project for income-producing property after deducting: operating expenses, vacancy, collection.
- max value of property set by how much it would cost to buy similar property.
-foundation of sales comparison approach.
- fixing problem will raise value.
- sales price/ monthly gross rent
- comparison of prices of recent sold properties that are similar (size, location, amenities)
-licensees prepare this for buyers and sellers
- figure x gross monthly income.
-residential rentals (1-4 units)
-needs recent sales/ rental data from minimum of 4 similar properties.
- estimate value by comparing it to actual sales of similar properties.
-minimum of 3 compared properties
*single family homes
- number of years that improvement is adding value to land.
number of years improvement is still useful for original purpose.
- combines two adjoining lots to raise value.
-1 larger lot has more value than sum of two separate lots
- loss in value because of;
(1) physical deterioration
(2) external depreciation
(3) functional obsolescence
- capital of annual net income expected to be made during rest of it's years.
-estimating value of income producing properties.
-Ex. apt buildings, office buildings, shopping centers.
- loss in property value
-land doesn't usually depreciate.
- (economic age-life method)
property cost is divided by # of years of it's expected life to get annual depreciation
- sales price/ annual gross income.
- construction cost of exact duplicate of previous building
-part of cost approach
- multiplier of gross annual income.
-used for properties with 5+ units.
-used because commercial/ industrial properties get income from multiple sources.
- most likely price for property; not average
-includes comparable sales, potential income, expenses, replacement costs.
- higher value property raises value of lower property
- depreciation; loss of value due to problem not directly related to property.
-loss cant be fixed by spending money.
*environment, social, economic.
- estimate value by adding land value to reproduction or replacement cost of building (minus the depreciation).
*special purpose buildings.
- value of nicer property is adversely affected by lesser quality property.
-nicer property losses value because of crappier property.
- fixing property doesn't raise value enough to cover costs.
- construction cost at current prices of building that isn't exactly the same but serves the same purpose.
-used with older homes
-part of cost approach
- depreciation; loss of value because of functional issues.
-caused by bad design.
- law where improvements don't increase income or value
- law that money spent on improvements increases the income or value
- depreciation; decline in physical condition.
- final step in appraisal process; combines all 3 methods to get estimate of market value.
-not average. each method is weighted depending on what is being appraised.
- uses assemblage; more value when two lots are put together than their sum would be separately