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Residential Highest and Best Use > 1 > Flashcards

1 Flashcards

1
Q

“A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises.”

A

Neighborhood

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2
Q

“The geographic region from which a majority of demand comes and in which the majority of competition is located.

A

Market Area

Depending on the market, a market area may be further subdivided into components such as primary, secondary, and tertiary market areas, or the competitive market area may be distinguished from the general market area.”

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3
Q

“A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural.”

A

District

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4
Q

USPAP states that credible assignment results require _________.

using the Internet
three approaches to value
market analysis
support

A

support

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5
Q

With regard to the four agents of production, which is the last agent to be satisfied?

Capital
Land
Labor
Coordination

A

land

Chapter 1, “Four Agents of Production”: The four agents of production are land, labor, capital, and coordination. An out of balance condition usually has a detrimental effect on the land value. Subsequently, the property value is impacted because land is always the last agent of production to be satisfied.

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6
Q

The value of a good quality home will suffer if it is located in a neighborhood of average or fair quality homes. What economic principle does this demonstrate?

Substitution
Progression
Anticipation
Regression

A

Regression

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7
Q

The principle of _______ states that when a property is inferior to those surrounding it, its value will be enhanced by the presence of the superior properties.

A

progression

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8
Q

The principle of _______ holds that if a superior property is located among inferior properties, the superior property will tend to suffer a loss in value due to its location among the inferior properties.

A

regression

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9
Q

_______ is the value of the property as it is presently being used. This value does not consider the highest and best use of the property or the market value as of the effective date of the assignment.

A

Value in use

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10
Q

This type of value identifies a tenant’s interest in a lease. When the tenant’s right to use the property is greater than the rent being paid for the actual use of the property.

A

LEASEHOLD VALUE

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11
Q

The definition of market value included in USPAP Advisory Opinion 22:

is required for use in all market value appraisals
is only an example
is required for use in non-lending market value appraisals
may not be changed or modified in any way

A

is only an example

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12
Q

How is the type of value used in an appraisal assignment determined?

all appraisals are for market value
the client must supply the value definition to the appraiser
it does not matter what type of value is used
the appraiser identifies the type of value, based on the intended use of the appraisal

A

the appraiser identifies the type of value, based on the intended use of the appraisal

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13
Q

What type of value includes an operating business with both tangible and intangible assets?

going concern value
book value
insurance value
market value

A

going concern value

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14
Q

“The Bundle of Rights” or property interests are commonly considered to include:

A 
The right to Sell the property
The right to Lease or rent the property
The right to Use or demolish the property
The right to Give it away
The right to Enter or leave the property
The right to Refuse any of these rights.
NOTE: Remember the acronym "SLUGER".
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15
Q

relates to the supply of a given commodity relative to the demand for that commodity or property. A property can have a use, but if there are too many of that same type of property on the market and an insufficient demand, there is said to be an oversupply.

A

SCARCITY

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16
Q

is the purchaser’s motivation to purchase the item in question to satisfy a need.

A

DESIRE

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17
Q

is recognized as the ability of the market participants (people) to buy a given commodity. This is sometimes said to be a subset of demand. People will desire a property and be willing to purchase it up to a certain point.

A

EFFECTIVE PURCHASING POWER

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18
Q

Land cannot be moved to another location. It is permanent where it is.

A

Immobility:

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19
Q

We cannot destroy the land. We can alter its usability, but we cannot destroy it like we can blow up or implode a building.

A

Indestructibility:

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20
Q

Each piece of land is unique. There are no two parcels that are exactly the same. Valuing land through the use of comparable sales is made all the more difficult because of this uniqueness.

A

Heterogeneity:

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21
Q

grants the state the right to lay claim to a property upon the death of the owner if there are no heirs and/or there is no will to provide for the continued ownership of the property.

A

Escheat

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22
Q

There are two or more owners of the property. Upon the passing of one of the owners, that owner’s share passes to his or her heirs. There is no right of survivorship. Unlike joint tenants, there can be unequal ownership shares.

A

Tenants in Common:

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23
Q

This type of property ownership is specifically for husband and wife with the right of survivorship.

A

Tenancy by the Entirety:

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24
Q

Three people own a property together. When one person dies, his undivided share of property ownership goes to the other two owners. What type of ownership is this?

ownership in severalty
joint tenants
tenants by the entirety
tenants in common

A

joint tenants

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25
Q

The principle of substitution is associated with which approach to value?

Sales Comparison Approach
Cost Approach
Both the Sales Comparison and Cost approaches
None of these

A

Both the Sales Comparison and Cost approaches

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26
Q

When analyzing the life cycle for a neighborhood, what problem is often faced by appraisers?

  • The entire life cycle happens quickly, usually over a period of a few months
  • the growth cycle may have passed before they realize it
  • a neighborhood may be in decline and still experience high demand and rapid price appreciation
  • some clients believe analysis of a neighborhood life cycle is discriminatory, and do not permit appraisers to do it
A

the growth cycle may have passed before they realize it

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27
Q

The comparable sales used in an appraisal assignment are considered ______ data.

general data
specific data
secondary data source
purchased data

A

specific data

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28
Q

Market analysis in appraisals can be divided into ___ distinct categories.

two
Three
Four
Many

A

two

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29
Q

What does USPAP state about cost?

it is an opinion developed by an appraiser
it is a fact, or an estimate of fact
it is the same as value
it is always less than value

A

it is a fact, or an estimate of fact

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30
Q

When writing an appraisal report, charts and graphs may be used to replace parts of the narrative explanation.

True
False

A

True

Pie charts and bar graphs are easily read by the intended users and/or clients. When the charts and/or graphs are included in the summation of the analyses, much of the narrative explanation may be able to be curtailed or eliminated.

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31
Q

Once the appraiser has gathered all the data, the next step in the process is:

double-checking to see if there is any data that was missed
writing the appraisal report
isolating the information that is relevant to the assignment
producing a value opinion for the subject property

A

isolating the information that is relevant to the assignment

32
Q

During which period in a neighborhood’s life cycle will there be a strong demand for additional community infrastructure?

stability
decline
growth
all of these

A

Growth
translates into increased supply to satisfy the demand for a certain type of housing in a particular area. Growth translates into the demand for more social services to be supplied by the community. It is also during this period that the demand for additional infrastructure and services by the community becomes very strained as supply is trying to catch up with the public’s demand for new or additional housing.

33
Q

In a market area, there were 327 single-family sales last year, and there were 29 expired listings that did not sell. What is the expiration ratio for this area?

12%
9%
8%
5%

A

“Expiration Ratios”: 327 + 29 = 356. 29 / 356 = 8.14% (rounded to 8%).

34
Q

The subject property’s assessment record would be considered ________ data.

general data
government data
specific data
verified data

A

specific data

35
Q

What is the first step in the market analysis process?

defining the market segment
gathering the data
statistical analysis
identifying data sources

A

defining the market segment

36
Q

This type of analysis is used by the appraiser to project the demand for properties based on current market trends.

A

Inferred Analysis:

37
Q

A prediction of future market conditions based on comparison of a quantified estimate of future demand with a quantified estimate of future supply;

A

Fundamental Analysis:

38
Q

This type of analysis examines the present worth of a future benefit. You are right if you equate that statement to the principle of anticipation.

A

Investment Analysis:

39
Q

This type of analysis will relate to the client whether the market considers such a project worthwhile – that is, whether or not the market “needs” this particular project.

A

Feasibility Analysis:

40
Q

What type of analysis is developed by an appraiser using secondary data about current and past market trends?

paired sales analysis
fundamental analysis
inferred analysis
scope of work analysis

A

inferred analysis

41
Q

What type of analysis consists of primary economic research by an analyst?

inferred analysis
fundamental analysis
consulting analysis
econometric analysi

A

fundamental analysis

42
Q

A community’s total employment is 52,220. The number of total core industry employees is 37,300. If the core industry adds 920 more jobs, how many additional jobs will be generated in the community?

653
328
404
368

A

Chapter 3, “Steps in the Analysis Process”: 52,220 / 37,300 = 1.4. 920 x 0.4 = 368

43
Q

What is the most common type of market study that appraisers are asked to complete?

feasibility analysis
market analysis
fundamental analysis
inferred analysis

A

Chapter 3, “Steps in the Analysis Process”: The feasibility analysis is generally the most common type of market study the appraiser is called upon to accomplish. The client will want to know if a proposed project is feasible for the market place at this time.

44
Q

The ANSI standard for measuring residential square footage in homes is based on _________ measurements, for detached dwellings.

interior
exterior
metric
tape measure

A

Chapter 3, “Analyzing the Improvements”: Because the increase in value due to the new windows ($20,000) is less than the cost to install the windows ($24,000), this is considered to be incurable. ANSI has attempted to consolidate the measurement process into a set of guidelines for the many different entities that use finished square footage as a measurement of value. The standard is based on exterior measurements taken at floor level.

45
Q

Generally, a heating system should be able to maintain an interior temperature of ______ degrees Fahrenheit.

65
98.6
74
70

A

70

46
Q

If a home has central air conditioning, what would be the minimum electrical amperage an appraiser would expect to see in the home?

100
150-200
60
400

A

150-200

47
Q

The length of time a given structure will contribute value to the property is its:

actual life
total economic life
total physical life
effective age

A

total economic life

48
Q

Another term for platform framing is:

balloon framing
western framing
post and plank framing
metal pole framing

A

western framing

49
Q

An appraiser’s exterior measurement of a single story residential property indicates a GLA of 1,300 square feet. An interior inspection reveals an entry foyer of 370 square feet and an eight foot by ten foot unfinished storage area not accessible from the interior of the house. The GLA of the home is:

1,300 square feet
1,380 square feet
850 square feet
1,220 square feet

A

“Analyzing the Improvements”: This is a single story home, so there is no second floor from which we would subtract the 370 foot foyer. We would subtract the 8’ x 10’ storage inaccessible storage area, so 1,300 less 80 equals 1220 square feet.

50
Q

What type of new home is MOST likely to have a pier and beam foundation?

a high-value home
a log home
a manufactured home
a home located in a sub-arctic region

A

a manufactured home

51
Q

When there is an open two-story foyer area, the ANSI standard for measuring residential square footage requires that this open second floor area:

be included in the square footage totals
be subtracted from the square footage totals
be included in the below-grade area only
be included if the ceiling height is at least 5 feet

A

be subtracted from the square footage totals

52
Q

An appraiser moves his business from Arizona to Minnesota. What characteristic will she undoubtedly notice regarding the homes in Minnesota?

they will not have double-glazed windows
they will have steeper roof pitches
they will have thicker exterior walls
they will have thicker interior walls

A

they will have steeper roof pitches

53
Q

The age of a structure based on the condition and utility of the structure in relation to the marketplace is its:

actual age
functional age
economic age
effective age

A

effective age

54
Q

An appraiser notes that there is a projected increase in production by major employers, which will result in a large increase in area employment. Which of the following conclusions is MOST TRUE?

An increase in demand will likely precede an increase in supply.
Lower and moderately-priced homes will increase in value; however high-value homes will not.
The appraiser should make negative adjustments in the sales comparison approach for market conditions (time).
An increase in the supply of housing will occur before an increase in demand is noted.

A

An increase in demand will likely precede an increase in supply.

55
Q

Generally, an air conditioning system should be able to maintain an interior temperature of ______ degrees Fahrenheit.

65
78
72
62

A

78

56
Q

How are existing improvements valued in a market value appraisal assignment?

based on their cost
using sales comparison
based on an extraordinary assumption
based on their contributory value to the land

A

based on their contributory value to the land

57
Q

Which highest and best use criterion would require an appraiser to consider the availability of public utilities to a site?

physically possible
legally permissible
financially feasible
maximally productive

A

Chapter 4, “Physical Possibility - as Vacant”:Considerations to be made in “physically possible” would include the availability of public utilities to the site. Other considerations would include the soil type and bearing capacity, and whether the property is situated in a flood-prone area.

58
Q

Which highest and best use criterion would require an appraiser to consider excavation or filling that may be required in order for a site to accommodate an improvement?

physically possible
legally permissible
financially feasible
maximally productive

A

Chapter 4, “Physical Possibility - as Vacant”: Considerations to be made in “physically possible” would include whether excavation and/or filling would be necessary in order to construct improvements. Other considerations would include the soil type and bearing capacity, and whether the property is situated in a flood-prone area.

59
Q

An appraiser is analyzing a parcel of vacant land, on a back road in a rural area. The owner tells the appraiser he plans to build a fast-food restaurant on the land. There is no zoning, and no other significant land use restrictions. The appraiser determines the highest and best use is NOT to build a fast food restaurant. What is the most likely reason for this conclusion?

it is not physically possible
it is not legally permissible
it is not financially feasible
it is not maximally productive

A

Chapter 4, “Financial Feasibility - as Vacant”: When considering financial feasibility, the first analysis is the inferred analysis of the relationship between the supply and the demand for a site’s particular highest and best use. Is there a need or demand for this use of the land? How many other similarly used land areas are there in the market area? Can the market support another land use of this type? In this type of area and location, it is obvious that there is no demand for this type of use, because of its location and lack of visibility. Also, there are no other similarly-used land areas in the market.

60
Q

In highest and best use analysis, how do we determine maximum productivity?

the use that results in the highest property value
the use that results in the highest land value
the use that is the most acceptable to local residents
the use that is acceptable to the local zoning board

A

the use that results in the highest land value

61
Q

Which highest and best use criterion would require an appraiser to consider the availability of public utilities to a site?

physically possible
legally permissible
financially feasible
maximally productive

A

legally permissible

62
Q

Which highest and best use criterion would require an appraiser to consider the need for the land use, or how many similarly-used land areas are in the market area?

physically possible
legally permissible
financially feasible
maximally productive

A

financially feasible

63
Q

is defined in The Appraisal of Real Estate, 13th Edition, as “a use that was lawfully established and maintained, but no longer conforms to the use regulations of the current zoning in the zone where it is located.”

A

legally nonconforming use

64
Q

Who would be the most likely purchaser for a multi-use property?

a speculator who converts the property to a single use
a residential owner-occupant
an investor
any of these

A

an investor

Chapter 4, “Multiple Uses”: Very often, the market is limited to investors who plan to either continue with the renters in place or renovate and resume its use as a multi-use, income producing property.

65
Q

What often happens when a special purpose property, like a school, is abandoned?

its useful life has ended
it is demolished
it becomes an illegal use
it will be put to an alternative use

A

it will be put to an alternative use

66
Q

Which highest and best use criterion would require an appraiser to consider the need for the land use, or how many similarly-used land areas are in the market area?

physically possible
legally permissible
financially feasible
maximally productive

A

Chapter 4, “Financial Feasibility - as Vacant”: When considering financial feasibility, the first analysis is the inferred analysis of the relationship between the supply and the demand for a site’s particular highest and best use. Is there a need or demand for this use of the land? How many other similarly used land areas are there in the market area? Can the market support another land use of this type?

67
Q

A single-family home is situated on a commercially-zoned lot. It would not be financially feasible to convert the home to commercial use, because there is not enough demand for commercial properties at this time. Demand for industrial property is very strong; however, a zoning change is unlikely. Demand for commercial properties is expected to increase as the community grows. What is the ultimate highest and best use for this property?

Industrial use
Commercial use
Single-family use
Not enough information has been provided

A

Chapter 4, “Special Situations”: Today, the temporary use of the land area is the continued use as a single-family home. Today’s use can be termed to be an interim use for the land area – interim in that the highest and best use of the land is expected to change in the not too distant future. The ultimate highest and best use for this property is for commercial use.

68
Q

The age of a structure based on the condition and utility of the structure in relation to the marketplace is its:

actual age
functional age
economic age
effective age

A

effective age

69
Q

A two-story home measures 32 feet by 41.5 feet on the exterior. There is an open two-story foyer area which measures 12 feet by 12 feet. What is the gross living area (GLA) of this home?

2,656 square feet
2,512 square feet
2,800 square feet
1,184 square feet

A

2,512 square feet

70
Q

A single-family home is situated on a commercially-zoned lot. It would not be financially feasible to convert the home to commercial use, because there is not enough demand for commercial properties at this time. Demand for industrial property is very strong; however, a zoning change is unlikely. Demand for commercial properties is expected to increase as the community grows. What is the ultimate highest and best use for this property?

Industrial use
Commercial use
Single-family use
Not enough information has been provided

A

Chapter 4, “Special Situations”: The ultimate highest and best use for this property is commercial use.

71
Q

An appraiser notes that there is a projected increase in production by major employers, which will result in a large increase in area employment. Which of the following conclusions is MOST TRUE?

An increase in demand will likely precede an increase in supply.
Lower and moderately-priced homes will increase in value; however high-value homes will not.
The appraiser should make negative adjustments in the sales comparison approach for market conditions (time).
An increase in the supply of housing will occur before an increase in demand is noted.

A

Chapter 3, “Steps in the Analysis Process”: Any increases in the production by the employment centers may result in additional people required to facilitate the proposed increases in production. This increased production will necessitate an increase in the supply for housing. The demand will normally make itself known before supply can increase sufficiently to accommodate that increase in demand for housing.

72
Q

When analyzing the life cycle for a neighborhood, what problem is often faced by appraisers?

the entire life cycle happens quickly, usually over a period of a few months
the growth cycle may have passed before they realize it
a neighborhood may be in decline and still experience high demand and rapid price appreciation
some clients believe analysis of a neighborhood life cycle is discriminatory, and do not permit appraisers to do it

A

the growth cycle may have passed before they realize it

73
Q

Once the appraiser has gathered all the data, the next step in the process is:

double-checking to see if there is any data that was missed
writing the appraisal report
isolating the information that is relevant to the assignment
producing a value opinion for the subject property

A

isolating the information that is relevant to the assignment

74
Q

Which highest and best use criterion would require an appraiser to consider the availability of public utilities to a site?

physically possible
legally permissible
financially feasible
maximally productive

A

physically possible

75
Q

What type of analysis is developed using the studies and surveys of others (secondary data)?

paired sales analysis
fundamental analysis
inferred analysis
scope of work analysis

A

inferred analysis

76
Q

What is the first step in the market analysis process?

defining the market segment
gathering the data
statistical analysis
identifying data sources

A

defining the market segment

77
Q

What is another name for the principle of inclining and declining periods?

Supply and Demand
Externalities
Anticipation
Integration and Disintegration

A

Integration and Disintegration

Residential Highest and Best Use (1 decks)

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