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38 Multiple choice questions

  1. GIM
  2. 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.
  3. property is like is soundings
    -design, construction, size, age.
  4. brokers price opinion
  5. (cap rate)
    rate of return investor will make on an owner's investment.
    -comparing relationship of NOI and sales prices of similar properties.
  6. income project for income-producing property after deducting: operating expenses, vacancy, collection.
  7. max value of property set by how much it would cost to buy similar property.
    -foundation of sales comparison approach.
  8. fixing problem will raise value.
  9. sales price/ monthly gross rent
  10. comparison of prices of recent sold properties that are similar (size, location, amenities)
    -licensees prepare this for buyers and sellers
  11. figure x gross monthly income.
    -residential rentals (1-4 units)
    -needs recent sales/ rental data from minimum of 4 similar properties.
  12. CMA
  13. estimate value by comparing it to actual sales of similar properties.
    -uses substitution.
    -minimum of 3 compared properties
    *single family homes
  14. number of years that improvement is adding value to land.
    number of years improvement is still useful for original purpose.
  15. combines two adjoining lots to raise value.
    -1 larger lot has more value than sum of two separate lots
  16. loss in value because of;
    (1) physical deterioration
    (2) external depreciation
    (3) functional obsolescence
  17. 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.
  18. loss in property value
    -land doesn't usually depreciate.
  19. USPAP
  20. (economic age-life method)
    property cost is divided by # of years of it's expected life to get annual depreciation
  21. sales price/ annual gross income.
  22. GRM
  23. construction cost of exact duplicate of previous building
    -part of cost approach
  24. multiplier of gross annual income.
    -used for properties with 5+ units.
    -used because commercial/ industrial properties get income from multiple sources.
  25. most likely price for property; not average
    -includes comparable sales, potential income, expenses, replacement costs.
  26. higher value property raises value of lower property
  27. depreciation; loss of value due to problem not directly related to property.
    -loss cant be fixed by spending money.
    *environment, social, economic.
  28. estimate value by adding land value to reproduction or replacement cost of building (minus the depreciation).
    -uses substitution.
    *special purpose buildings.
  29. value of nicer property is adversely affected by lesser quality property.
    -nicer property losses value because of crappier property.
  30. fixing property doesn't raise value enough to cover costs.
  31. NOI
  32. 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
  33. depreciation; loss of value because of functional issues.
    -caused by bad design.
  34. law where improvements don't increase income or value
  35. law that money spent on improvements increases the income or value
  36. depreciation; decline in physical condition.
  37. 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.
  38. uses assemblage; more value when two lots are put together than their sum would be separately