real estate appraisal board examination

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  • Leverage

    use of Dr CAP to aquire asset

    Discounting

    converting FV to PV

    Discount Rate

    ror on cap used to convert Fpmts into PV

    capital gain

    net proceeds from sale of asset exceed adjusted C or book V

    participation mtg

    lender participates in inc of mtgd prop beyond a fixed return

    buydown

    fin teq when dvlpr bldr or seller make payment to lender to reduce loan pmt 4 purchaser

    reversion

    lump sum investor recieves at the end of investment

    reconstructed stmt of NOI contains

    mgmt EXP
    NO MTG EXP

    expenses

    fixed= do not vary w/ occupancy
    variable = vary ww/ occupancy
    reserves

    GIM

    $ales price/ income

    prop mgmt fees % of

    EGI - exp
    its an exp

    pretax cash flow

    NOI - Dr service(mtg pmt)

    return on capital

    INT R

    hoskold

    safe R for returnn OF Cap
    risky R for return ON Cap

    net inc multiplier

    recipricol of overall R
    if R = 8%
    1/ .08 = 12.5

    typ adj made in sales comp approach

    prop rights
    financing
    condition
    location

    reconciliation

    RE mkts not perfect n highly competitive
    exact data 4 approach to V may not b avail
    diff applications to approaches to V may result in diff est of V

    concept of consistent use

    improvements cannot be valued based on use diff from land
    important in temprary or interim use

    arbitrator

    AppR who resolves dispute in regard to speciffic opinion of V

    neighborhood

    grouping of similar land uses w/in accepted geo. boundaries

    interim use

    is current HIBUSE
    HIBUSE expected to change

    which stmt is correct in reconciling AppR

    relat. of final V est to mkt perceptions should be considered

    what analysis used for V of location

    paired data set

    which approaches can be used 4 V excess land

    sales comp and inc

    abstraction

    allocation of V b/w land n bldg

    proper sequence of adj sales comp appr

    prop rights
    finacing terms
    condition of sale
    location
    phys char

    comp sales

    should be similar to subject in: size, age, cond, sld as recently as poss to AppR date
    must be adjusted to subject prop 4 differences that can be IDd br AppR

    economic base analysis

    analysis of economic activity of a community that allows it to attract income from outside its bouondaries
    poopulation, demographic, int R, date

    acre
    section = sq mile
    Township

    43560 sq ft
    640 acres
    36 sq miles, 6x6 miles, 36 sections
    QUADRANT= 1/4 of section

    income approach

    based on prin of anticipation

    LEASEHOLD
    EST LESS THAN FREEHOLD

    RENTAL
    TENANT is LESSEE (personal prop)

    real property

    rights of ownership= bundle of rights
    use, possession, enjoyment, disposal
    includes all benfits interests and rights from ownership of RE

    geodetic

    method off lgl description
    ht, lat, long., rivers streams ...

    mortgagee

    lender who makes loan

    methods of lgl description

    lot n block
    metes n bounds (monument)
    rectangular survey (govt survey)
    geodetic

    fixtures

    pers prop permanantly attached to RE to become real prop

    eminent domain

    govt right to aquire prop w/out consent of owner 4 public use via compensation

    real estate

    improvements
    the phys structure n attachments

    metes n bounds

    method of lgl description
    distance n direction

    lot n block

    method of lgl description
    used typically in subdivisions drawn by surveyor n IDd by #, maps filed w/ govt

    mortgagor

    borrower

    tax assesment using mills formula

    1. tax% x AppR V = V
    2. V - exemptions (if any)= V
    3. V x mills = tax bill
    (.0## or ## mills)

    feudal system

    land is not inheritable
    land is sovereign
    only for lifetime

    partial release clause

    multi parcels of RE under 1 mtg allows dvlpr or owner to sell a parcel

    mills

    $#.## / $100 = ## mills
    assesed V
    $2.10 / $100 = 21 mills

    LEASED FEE

    RIGHTS of LESSOR or LANDLORD
    holds reversion int
    FYI tenant is lessee

    escheat

    right of govt to assume prop if owner deceased n prop abandoned n no will was left

    deed restrictions
    vs
    zoning retrictions

    most restrictive takes effect

    FREEHOLD ESTATE

    FEE, FEE SIMPLE, FEE SIMPLE ABSOLUTE
    interest in land
    FEE SIMPLE: most common only ltd by govt police power rights
    FEE ESTATE: held 4 lifetime n inheritable
    QUALIFIED FEE AKA FEE SIMPLE DETERMINABLE "as long as" created to exist until some occurance or particular event

    qualified fee estate
    aka
    fee simple determinable

    "AS LONG AS"
    created to exist until some occurance or particular event

    ltd common elements

    wall that seperates 2 condo units

    condemnation

    enforcing govt right of eminent domain

    surplus productivity

    land recieves any surplus inc after providing return on bldg
    inc attributable to land rent that remains after labor, capital, n mgmt compensated
    net inc remaining after agents of production satisfied

    # of vacancies

    affect supply n weigh down on dmd

    investment V

    V to investor that may or may not be typical
    V based on specific goals

    principle of contribution

    is the foundation when calculating Depr. for Cost appr
    can also adjust for sq footage, age, Q3
    Ann. Depr. * age of bldg= Accrued Depr.

    easement in gross

    personal right to use land of another
    only has servient estate
    utility companies(transfers w/ sale)

    anchor tenant

    lg national tenant that occupies space in shopping center

    LTV

    amt borrowed - equity = V

    financial risk

    risk to Dr financing

    business risk

    uncertanty in rents

    vacancies

    operating expenses

    appurtenance

    right, priveledge, improvement asssoc. w/ land
    runs w/ the land

    tenancy by entirity

    husband and wife
    cannot be partitioned

    unity of PITTS

    possession= undivided int tenancy in common
    interset= equal ownership
    time= aquire at same time
    title= aquire w/ same title
    survivorship= transferable

    popcorn
    5 ways to create easement

    Private grant= agreement b/w owner and easement holder
    o
    Prescription= aquire thru hostile uninterupted possession 5 - 20 yrs
    Condemnation= govt eminent domain
    o
    Reservation= reserves easement in deed and conveys to another party
    Necessity= prevents from being landlocked (no acces to street)

    principle of substituion

    Cost approach to V is based on:

    physically curable deteriation

    C of restoring item yo new or reasonably new

    accrued Depr

    Ann Depr * age of bldg
    repro C new - PV = accrued Depr

    bldg 12 yrs old
    T econ life 50 yrs
    remmaining econ life 40 yrs
    what % is Accrued Depr?

    remaining 40 - total 50= 10 / total 50 = 20%

    Accr Depr (curable)

    cost to fix < or = increase in value

    subject renting for $ .50 p/ sq ft < than previously
    GIM 9
    subject 25000 sq ft

    .5 x 25000= 12500
    12500 x 9 = 112500 Accr Depr

    Accr Depr (incurable)

    C to fix > or = increase in V

    age life method
    staright line method

    C appr
    eff. age / T econ life (econ useful L)= age life
    C new * age/ L = Accr Depr

    methods of est'g bldg C

    unit in place
    Qty survey method (most accurate)
    comparative unit method
    //////////////////////////////////
    NOT! breakdown (its 4 Accr Depr)

    bldrs method
    trade break down

    method 4 calc Accr Depr
    NOT 4 REPRO OR REPL C of BLDG

    corner influence

    corner sites have higher V p/sq ft than other SITES

    bldg C est that fets C p/ unit of A or volume based on known C of similar structure, adj 4 time n phys diff

    comparative method
    V of site - each comp = V of improv
    V/ A or volume = $ p/ unit measure

    methods of est Accr Depr

    econ age life
    modiffied age life
    sales comp
    break down

    accumulated Depr (accrued)

    diff b/w bldgs repro or repl C n mkt V on AppR date
    repro/repl C - AppR V

    period of x improv generates > $inc than oper exp

    economic life

    obsolescence

    Fn or external
    loss of V w/in prop from all causes EXCEPT phys deter.

    effective age

    diff b/w
    econ life - remaining econ Life

    C appr to V

    est V of land + Depr V of improv

    depth tables/ charts

    set of %'s indicating proportion of site V attributable to each amt of depth in the lot
    do not rely on w/out 1st testing mkt behavoir
    used by tax assesors to est V of parcel of Land

    QTY survey method

    MOST PRECISE 4 est repl/ repro C
    system of estimating bldg C by duplicating contractors methods
    DIRECT C: material, labor, equip, etc...
    INDIRECT C: taxes, permits, insurance, surveys, etc...

    $50 p/ sq ft
    ex adj to comp are appropriate
    time +8%
    physical - 5%
    age - 6%

    50 x 1.08 = 54.
    54 x .89 = $ 48.06

    sales comp appr
    "sales contracts pending closing"

    should be COMPETITIVE w/ subject

    sinking fund

    FV{ i / [(1 + i) ^n - 1]} = pmt

    FV

    PV (1 + i)^ n = FV

    allodial system

    land owned 4ever n can be passed on

    divisibility

    lgl int that can b divided n sold seperatly
    adds 2 V

    mkt V

    most prob price A/O given date 4 which prop should sell to typical, knowledgable buyer in competitive mkt via arms length
    closely assoc w/ V in exchange

    deed restrictions

    lmts use of RE

    highest n best use analysis

    legally permissable
    phys possible
    financially/ econ feasible
    maximally productive

    condo

    lgl form of ownership, hold int in common A, fee int in units, occupy air lots, state laws= horiz prop, strata title, condo act
    part of horiz prop regime
    DOESNT SPECIFY STYLE OR TYPE

    encroachment

    unauth. intrusion or trespass by L
    extension of improv or object such as bldg or driveway across lgl boundary of adjoining tract
    remedies incl $ damages n improvmnt

    nuisance

    encroachment via airspace

    personal prop

    not permntly attachd( not affixed), can b tangible, aka chattel, prop that can b moved, rights held < lifetime, personal prop but not perm attached

    PUD

    allows dvlpr flexblty of design by allowing mixture of uses n densities. owner holds no int in common A, owner provides fees to maintion common A

    co-op

    own no prop, buy stock to obtain lease, title held by non profit corp., tenants assoc makes rules, lgl rights n int considered personal prop

    reversion

    FV { 1/[ 1 + i] ^ n} = PV

    discussion on deed restr and zoning would appear on what part of report

    analysis of HIBUSE

    feasibility study

    detailed analysis to determine most profitable use n likelihood of success

    linear regression analysis

    to study relationship b/w sales price n prop characteristics such as sqft, age to determine adj $ sales comp appr
    to complete mass AppR of res. A
    to test effect of flood on home V most similar to sales comp appr

    prop sld 3 yrs ago for 80k n increased in V 4% annual compound R what is amt?

    80000 (1.04 ^ 3) = 89989

    GMRM

    sales price / rent
    rent / price = GMRM

    converting inc to V

    capatilazation

    V of equity position

    b4 tax cash flow / equity div R

    ammortization

    repayment of Dr over x in series of periodic pmts

    equity div R
    or
    cash on cash R of return

    NOI - Dr / Equity

    R risky
    R safer

    V down
    V up

    1 basis pts
    2 basis pts
    3 basis pts

    1%
    2%
    3%

    cost appr

    Accr Depr
    repl C
    repro C
    Land V

    OER income producing prop

    stabilized exp/ gross inc = OER

    compounding

    converting PV into FV

    bill of sale

    transfers ownership of personal prop

    deed

    transfers ownrshp of real prop

    tenancy @ sufferance

    tenant remains in prop w/out consent of landlord
    LEASEHOLD- TENANT IS LESSEE

    estate at will
    tenancy at will

    can b terminated at any time
    LEASEHOLD- TENANT IS LESSEE

    estate for yrs

    has start n end date
    can b 4 any amt of x
    LEASEHOLD TENANT IS LESSEE

    timeshare

    dividing n selling land 4 specific x use

    liens

    created to secure Dr
    mtg lien: voluntary
    tax lien; involuntary, statutory (HIGHEST RPIORITY)
    ad valorem; specific; prop taxes
    special assesment; improvements (sidewalks)
    fed inc tax ; general
    mechanics; LIS PENDIS; lien on prop having work done
    judgement; involuntary; court order; WRIT OF EXECUTION ; SHERRIFS SALE
    deficiency judgement lien; foreclosure
    race status lien; given priority by recordation

    party wall easement

    2 parties 1 wall

    personal easement in gross

    not business, terminates w/ death, doesnt run w/ the land, not revocable

    easemant appurtenant

    dominant uses prop of serviant; always held by dominant
    ex. a driveway that runs thru serviant so dominant can access their driveway

    littoral

    land meets STILL water; cant alter the way water meets land

    riparian

    land meets FLOWING water;if navigable prop ends at low water mark; if un- navigable prop ends at middke of water

    FV of annuity

    PMT[( 1 + i) ^ n] / i = FV

    EGI

    pgi
    - vac n collection losses
    + other inc (ancillary [parking, vending])
    = EGI

    R

    inc / $ales price

    Land residual technique

    L V est its being used under its HIBUSE

    Dr coverage ratio

    NOI / LOAN ( Dr service of mtg)
    indication of riskiness
    lenders want 2 make sure NOI is enough to cover dr services w/out tapping owners capital to repay

    Mc

    loan pmt / loan amt

    band of investment

    75% of sales have Mc 10%
    25% remaining req.15% EQ.DIV.R
    (.75.1) + (.25.15)= R
    .075 + .0375 = .1125
    (# %) + (# %) = R
    used to calc Ro (overall rate)

    annuity

    series of periodic pmts or reciepts

    how to calc overall R

    NOI / PGI

    exculpatory clause

    relieves borrower from any personal liability
    no deficiency judgment

    how to calc T V of prop

    bldg V + V of land

    OER
    oper exp ratio

    exp / egi

    PGIM

    V / PGI

    EGIM
    effective gross income multiplier

    V / EGI

    is prop mgmt fixed exp

    NO, paid % of inc (EGI)

    net inc

    V * R

    NOI - Dr services (mtg pmts)

    EQ div
    pre tax - cash flow
    b4 tax - cash flow

    why prep reconstr oper stmt w/ inc appr

    to dvlp est projection of expected inc + EXP that reflect earning capacity

    EQ div R

    ratio of props 1st yr cash flow to amt of EQ recv'd

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