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68 True/False questions

  1. 4 Factors of Reconciliation.1. defn of value sought (usually market value)
    2. amount and reliability of data
    3. inherent strengths and weaknesses of each approach
    4. relevance of each approach to subject

          

  2. Gross Income (formula)Net Operating Income / Return (capitalization rate) = Property Value

          

  3. Reproduction CostThe amount of $$ required to construct a similar rebuilding.

          

  4. USPAPUniform Standards of Professional Appraisal Practice

          

  5. ZoningAppraiser Qualifications Board

          

  6. Bracketingthe idea that the subject must fall in range of comparables, must fall within adjusted percentage as well, final value should be with a comparable price range.

          

  7. Appraiser Qualifications3,000 hours of residential experience, no fewer than 30 months, 1500 non residential appraisal hours

          

  8. GLAHome Owner Association - sort of like a neighborhood governing system, really has no power.

          

  9. Public Restrictions (list)Taxation, Eminent Domain, Escheat, Police Power to establish zoning laws, etc.

          

  10. How long is an appraisal valid for ?One day, the day that it is dated.

          

  11. Life Estate (legal Description #3)a present, possessory interest that lasts only as long as you are alive, and then ownership is returned to the person who sold it to you.

          

  12. Replacement Costreal property interest that conveys a limited right of use or enjoyment, such as the right to travel over a parcel of land.

          

  13. Licensean example of a police power, can set rules and ordinances on properties and their owners.

          

  14. HOAHome Owner Association - sort of like a neighborhood governing system, really has no power.

          

  15. Value Principles (list)Appraisers own records, official records of deeds, real estate assessor's office, records of sales, newspapers, internet valuation services.

          

  16. Remaining Economic Lifethe absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, along with a specified share of the undivided interest in the common areas within the development.

          

  17. Highest & Best Useone must consider an entire range of uses for the land and determine which is most economically feasible, usually it will be valued with and without structures on the land.

          

  18. AQBAppraisal Standards Board

          

  19. Sales Comparison FormulaSales Price of Comparable Property +/- adjustments = Indicated value of subject property

          

  20. Fee Simple Estate (legal Description #2)Most common type of ownership, right to use land now and for an indefinite period

          

  21. Cost Approacha property that has sold and is similar to the subject, up to 12 months old but preferably less than 6, must have actually transferred ownership, avoid older sales because the market fluctuates so much, same neighborhood if possible, location is so important because it is immobile. Usually 3-6 comparables are used if possible.

          

  22. Age Life Method (Calculating total physical deterioration)Effective Age / Total Economic Life = Total Deterioration

          

  23. Single-Family Homes (cost approach)primarily income-producing homes, (multi-family)

          

  24. Mortgagecreates a lien in favor of the mortgagee (lender) on the property of the mortgagor (property owner). The lien is enforced if the owner fails to meet payments, and the enforcing is usually stated prior in the contract.

          

  25. Reconciliation is NOT...The process of the weighing the different approaches in order to make one estimate of the value for the subject.

          

  26. Market Value (definition)rooms, bedrooms, and bathrooms. Ex: 6-6-1.1 = 6 rooms, 3 Bedrooms, and 1 and 1/2 bathrooms

          

  27. Comparablea property that has sold and is similar to the subject, up to 12 months old but preferably less than 6, must have actually transferred ownership, avoid older sales because the market fluctuates so much, same neighborhood if possible, location is so important because it is immobile. Usually 3-6 comparables are used if possible.

          

  28. Income Formulabased on net income, or investment return, that a buyer expects from the property. The price the buyer will pay is determined by the probable return the property will yield from the investment.

          

  29. Private RestrictionsLiens, subdivisions

          

  30. ReconciliationThe process of the weighing the different approaches in order to make one estimate of the value for the subject.

          

  31. Effective Datethe date in which the client requests the appraisal is done for, a value is needed

          

  32. Condominiuman example of a police power, can set rules and ordinances on properties and their owners.

          

  33. 3 Types of RentContract Rent - tenant pays a landlord, amount stated in lease.
    Market Rent - potential rent on a property based on others in the area. Appraisers typically use this because they are looking for a typical market value.
    Historical Rent - Shows trends and rent rates over a long period of time. Also shows vacancy rates, rent increases, etc.

          

  34. Advantages of Sales Comparison ApproachReflects the activity of the marketplace, relatively simple to understand and use, considered reliable and objective, preferred whenever we have comparable sales.

          

  35. Sales Comparison Approachaka market data approach, the appraiser finds 3-5 (or more) properties that have recently sold and are similar to the subject property.

          

  36. Strengths of Cost ApproachIt can be used when no others are available, provides an upper limit for property value, useful for finding the value of newly built homes and buildings, useful for special purpose buildings.

          

  37. Net AdjustmentsAny single adjustment made to any single comparable, can't exceed 10%.

          

  38. Matched-Pair AnalysisThe method used to determine the amount of any single adjustment. Accomplished by comparing similar properties to isolate the value of a particular feature. **If the comparable is inferior, the adjustment is positive. vice versa.

          

  39. ASBAppraisal Standards Board

          

  40. Weaknesses of Cost AppoachIt assumes Value=Cost, builders cost may vary drastically , its not accurate for old buildings.

          

  41. Effective Gross Income (formula)(Gross Income) - (Vacancy + Credit losses) = EGI

          

  42. Most common way to calculate the cost of improvements is called the __________-___________ method.Effective Age / Total Economic Life = Total Deterioration

          

  43. Vacancy/Credit LossesShould have steel beams in the frame of the home. Look underneath. Won't have a foundation so dont look there.

          

  44. Manufactured HomesMoney lost when the property is not being rented. Collection losses is any money that is not collected for some reason. V & C losses are usually expressed as a percentage.

          

  45. Line AdjustmentsAny single adjustment made to any single comparable, can't exceed 10%.

          

  46. Cost Approach FormulaReproduction/Replacement Costs - Depreciation on Improvements + Site Value = Property Value

          

  47. Elements of a Legal Contractan agreement between the buyer and seller, must be of legal age and mental capacity

          

  48. Easementwhen part of an improvement or addition on a piece of land reaches beyond the property lines/boundaries onto an adjoining parcel.

          

  49. Deed (definition)a written instrument by which the owner of real estate intentionally conveys to a purchaser interest in a parcel of real estate (must have a granting clause)

          

  50. 2-4-Family Homes (cost approach)It can be used when no others are available, provides an upper limit for property value, useful for finding the value of newly built homes and buildings, useful for special purpose buildings.

          

  51. CCRAppraisal Standards Board

          

  52. 3 Types of DepreciationInterest paid on a loan used to buy real estate

          

  53. Freehold Estate (legal Description #1)highest form of ownership of a piece of property.

          

  54. Disadvantages of Sales Comparison ApproachReflects the activity of the marketplace, relatively simple to understand and use, considered reliable and objective, preferred whenever we have comparable sales.

          

  55. Market Analysissubject property, contract and listing info, neighborhood data & demographics, urban vs. suburban vs. rural, site data,

          

  56. Cost of CreditThe appraiser estimates any improvements to the land (such as structures) on terms of their reproduction or replacement cost as though new.

          

  57. Personal Property vs. Real EstatePersonal property can be any movable object that is yours. Real Estate is immobile.

          

  58. Substitutionthe way to determine the value of real property, the price someone is willing to pay is determined by a similar property and its respective price.

          

  59. GRMGross Rent Multiplier - to determine what a value of a single family property we use GRM.
    **Sales Price / Yearly Rent = GRM
    -compare rent of other homes that sold and their sales prices. ( Sales Price = GRM x Rent)

          

  60. Encroachmentwhen part of an improvement or addition on a piece of land reaches beyond the property lines/boundaries onto an adjoining parcel.

          

  61. Arm's Length TransactionsLiens, subdivisions

          

  62. P.U.D.Planned Unit Development - type of development, as we;; as a zoning classification, that features individually owned parcels together with shared common areas.

          

  63. Data Sources (book list)Anticipation, balance, change, competition, conformity progression & regression, contribution, externalities, factors of production, life cycle property, highest & best use, law of increasing returns, law of decreasing returns, opportunity cost, substitution, supply & demand, surplus productivity

          

  64. Operating Expenses (3 types)Variable expenses - can change dependant on a variable.
    Fixed expenses - flat rates that will not change.
    Reserves For Replacement - basically paying insurance for things.

          

  65. Income Approachbased on net income, or investment return, that a buyer expects from the property. The price the buyer will pay is determined by the probable return the property will yield from the investment.

          

  66. Quality & Conditionone must consider an entire range of uses for the land and determine which is most economically feasible, usually it will be valued with and without structures on the land.

          

  67. Gross AdjustmetsCalculate the running total for all adjustments. "+" and "-" signs are cared for.

          

  68. Room Count (definition)The process of the weighing the different approaches in order to make one estimate of the value for the subject.