1 Flashcards
Which of these properties would likely be considered complex?
A house constructed to resemble a shoe
A 5,000 square foot home in a neighborhood of 2,000 square foot homes
A typical single-family home with a leaking oil storage tank on the property
All of these
All of these
A home with a relatively unusual type of construction, such as a berm home (built into a hill) is
Always a complex property
Sometimes a complex property
Never a complex property
May be a complex property, depending on IRS determinations
Sometimes a complex property
Complex properties are always identified by the appraiser and/or the client before the assignment is accepted.
True
False
False
The most ordinary looking home may have hidden, important value issues that can and must be reasonably discovered by an appraiser performing a normal scope of work. Sometimes, only your careful (but reasonable) attention to detail will disclose some otherwise easily overlooked factor, the discovery of which allows you to correctly recognize a property as being complex. Ch. 1 Property Characteristics Can Make an Assignment Complex
How does location factor into the decision on whether or not a property is complex?
It always makes a property complex
It never makes a property complex
It sometimes makes a property complex
It sometimes makes a property complex
What may be a typical assignment for one appraiser may be a very advanced assignment for another because the property is complex for its location. At other times, though, location has no bearing on issues of complexity.Ch. 1 Property Characteristics Can Make an Assignment Complex
A non-complex property with four residential units and having a transaction value of $750,000 could be appraised by
Only a General Certified Appraiser
Only a Certified Residential appraiser
Only a Licensed Residential Appraiser
A Certified General, a Certified Residential, or a Licensed Residential Appraiser
A Certified General, a Certified Residential, or a Licensed Residential Appraiser
An ordinary-looking home can have a hidden issue that can make the property complex.
True
False
TRUE
Complex properties are always identified by the appraiser and/or the client before the assignment is accepted.
True
False
False
The most ordinary looking home may have hidden, important value issues that can and must be reasonably discovered by an appraiser performing a normal scope of work. Sometimes, only your careful (but reasonable) attention to detail will disclose some otherwise easily overlooked factor, the discovery of which allows you to correctly recognize a property as being complex. Ch. 1 Property Characteristics Can Make an Assignment Complex`
Where should an appraiser look to find a definition of a “complex property”?
Code of Federal Regulations
USPAP
Fannie Mae
Any of these
Code of Federal Regulations
A _______ property is defined as “one in which the property to be appraised, the form of ownership, or market conditions are atypical”. Ch 1, Chapter Introduction
complex
A property can be complex because of
Market conditions
The appraiser’s level of licensure
The proposed loan amount
All of these
Market conditions
Which of these is likely to be considered a complex property?
A home with unfinished construction
A home located in a transitional neighborhood
A home located on a mountaintop with a view of three states
Any of these
Any of these
Complex properties are always identified by the appraiser and/or the client before the assignment is accepted.
True
False
False
Ramon owns a home. He grants his Aunt Marie, the right to live in and occupy the home as long Ramon’s father is still alive. This right is best described as a
Fee simple estate
Equitable interest
Life estate
Life estate pur autre vie
Life estate pur autre vie
Life estate is defined as “total rights of use, occupancy, and control, limited to the lifetime of a designated party”. This is a special type of life estate situation, known as a life estate pur autre vie because the life estate is based not on Marie’s life, but on the life of another person. Ch 1, Ownership Interests Can Make a Property Complex
As it refers to the sales comparison approach, what is meant by “bracketing”?
At least one comparable should be superior to the subject in physical characteristics, and one comparable should be inferior
How many comparable sales should be used in the sales comparison approach for a complex property?
3
4
6
It depends
It depends
Making an estimate that is beyond the range of known data is
A violation of USPAP
Matched pairs analysis
Extrapolation
Relative ranking
Extrapolation
All of the following are techniques related to the Sales Comparison Approach EXCEPT:
Extrapolation
Contribution
Qualitative analysis
Relative ranking
Contribution is a Cost Approach technique. This principle holds that the value of a component is based on its contribution to the whole property. This is known as the contributory value. (Ch.1, Nontraditional Techniques)
What can be used to support adjustments made (using a percentage adjustment)?
Rent difference
Contribution
Qualitative analysis
Extrapolation
Rent difference
How is the credibility of assignment results measured?
Within the context of the intended use
Based on an absolute scale
If the client can use the report to achieve his/her objective
By dividing the appraisal fee by the number of hours the appraiser worked on it
Within the context of the intended use
What rule requires the appraiser to use methods and techniques that are recognized by appraisers and users of appraisal service?
Standards Rule 3-1
Standards Rule 1-2
Standards Rule 1-1
Standards Rule 1-2 (b)
Standards Rule 1-1
A single-family home is constructed on two half-acre residential lots, and the home is situated on one of the lots. The other lot has frontage and would be suitable to be sold off and developed with a new home. How would this situation BEST be described?
Residual land
Grandfathered use
Surplus land
Excess land
Excess land
_____ Land that is not needed to serve or support the existing use and has the potential to be sold separately and is valued
excess
Bertha is appraising a single-family home that is situated on a commercially-zoned lot, for a residential mortgage lender. Based on the facts of the situation, what is the lender likely to ask her?
If the property owner has applied for a zoning change
If the improvement can be rebuilt if destroyed
To provide an estimate of legal fees necessary to receive a non-conforming use certificate
To verify with the zoning officer that a zoning change is imminent
With a nonconforming use, the highest and best use as though vacant will be different than the highest and best use as improved. If the existing use does not conform to current zoning, the lender will want to know if the improvements can be rebuilt after a fire or other natural disaster. Ch 3, Legally Permissible
Because long-term leases are often used in 1-4 unit residential properties, situations involving such leases are commonly encountered by residential appraisers.
True
False
Because long-term leases are rarely used for residential properties, this type of situation would probably not be encountered by a residential appraiser. Ch 3, Standards Rule 1-4(d)
An appraiser is valuing a property with an illegal dwelling unit. What part of USPAP requires an appraiser to recognize the illegal use and analyze its effect on value?
The COMPETENCY RULE
The JURISDICTIONAL EXCEPTION RULE
Statement on Appraisal Standards Number 1
STANDARD 2
The COMPETENCY RULE
Which statement is TRUE regarding an appraiser using common appraisal report forms that have the definition of value pre-printed as part of the form?
This type of form should not be used
Market value is the same in all assignments, and therefore does not need to be defined
The form serves to provide a definition of value, but do not appropriately cite the source of the definition
The form serves to provide a definition of value, and cite the source for the definition
The form serves to provide a definition of value, and cite the source for the definition
Sarah is completing an appraisal, and is reporting it on the URAR appraisal report form. What does she have to do in her report concerning her highest and best use analysis?
State it.
Summarize it.
Describe it.
Mention it.
Summarize it.
One of the glaring deficiencies in many appraisal reports of typical properties is the appraiser’s failure to summarize the highest and best use rationale and conclusions. Many appraisers are guilty of merely stating the highest and best use in so-called Summary Appraisal reports. Ch 5, Standards Rule 2-2 continued
If a residential appraiser decides to write a narrative report, where is a good source of help and information regarding formatting the report?
Copy passages from another appraiser’s narrative report
Another appraiser who has never written a narrative
His/her residential forms software program
USPAP
His/her residential forms software program
It is inappropriate for an appraiser to use the URAR form to report the results of an appraisal prepared for estate tax purposes.
True
False
True
On page 4 of the URAR form, it specifically states that “The intended user of this appraisal report is the lender/client.” This form should not be used to report appraisals that were not prepared for mortgage lending purposes. Ch 5, Form Reports
What is another name for the Fannie Mae URAR form?
1025 form
2025 form
1004 form
the Universal Regular Appraisal Report
The Uniform Residential Appraisal Report (URAR) form is also called the Fannie Mae 1004 form. Ch 5, Form Reports
Which of these sections would probably NOT be part of the Introduction section of a narrative appraisal report?
Reconciliation
Certification
Letter of transmittal
Table of contents
Reconciliation
Appraiser Bart wants to use the URAR form to report an appraisal on a property for a divorce situation. What should he do?
Use the form, and add an addendum with new intended use and intended user statements
Use the form as it is - the client knows what the intended use is
Remove the page with the pre-printed intended use and intended user statements
Not use the form for this purpose
Not use the form for this purpose
The USPAP reporting requirements set forth in Standards Rule 2-2 are
Minimum requirements
Only applicable to 1-4 family residential properties
Only applicable in market value appraisal assignments
Maximum requirements
Minimum requirements
On the URAR appraisal form, which approach or approaches is/are required?
Cost Approach
Sales comparison and cost approaches
Sales comparison, cost, and income approaches
Sales comparison approach
Sales comparison approach
When filling out the 1004MC Market Conditions Addendum, what should an appraiser do if not all of the required information is available?
Do not use the 1004MC form
Fill out the form, but do not sign it
Explain the attempt to obtain the information
Estimate the unknown information based on the appraiser’s judgment
Explain the attempt to obtain the information
When filling out the “Inventory Analysis” section of the 1004MC Market Conditions Addendum, the appraiser should include
All properties in the subject’s defined neighborhood
Only those properties that are competitive with the subject
Only single-family residential properties in the subject’s neighborhood
All properties that are listed and/or sold within 20% of the subject property’s appraised value
Only those properties that are competitive with the subject
After the 1004MC form was created by Fannie Mae, it was later adopted by
HUD/FHA
Department of Veterans Affairs (VA)
Both of these
Neither of these
Both of these
An appraiser is valuing a property located next door to an automobile salvage yard. He has no sales of properties adjacent to salvage yards, so he uses recent sales of properties in the same general area, and makes an adjustment for the subject’s view. What is this technique called?
Discount factor
Contingent valuation method
Qualitative analysis
Going back in time
Discount factor
The technique in which you interview market participants is called the
Bonus technique
Market survey technique
Component technique
Ranking analysis technique
Market survey technique
An appraiser is valuing a property with water frontage. She has no sales of waterfront properties, so she uses sales of non-waterfront properties in the subject’s area and makes an adjustment for the water frontage. What is this technique called?
Quantity survey
Market survey
Qualitative analysis
Bonus factor
Bonus factor
What is another name for the market survey technique?
Contingent Valuation Method
Bonus Value
Component Technique
Discounted Cash Flow Analysis
Contingent Valuation Method
Which section of Form 1004MC assists the appraiser in analyzing important supply and demand factors in order to reach a conclusion regarding housing trends and market conditions?
Market Conditions
Inventory Analysis
Median Sale and List Price
Overall Trend
Inventory Analysis
Life Tenant A has a life expectancy of 4 years. Life Tenant B has a life expectancy of 7 years. Which one of these would require the use of a LOWER discount rate when valuing a life estate?
Life Tenant A
Life Tenant B
Cannot be determined by the information provided
The shorter the life expectancy of the life tenant, the lower the discount rate. Ch 11, Encumbered Ownership Interest Scenario
“An identified parcel or tract of land, including improvements” is the definition of
Real property
Real estate
Site
Fee simple
Real estate
Appraiser Al is valuing a property that is subject to a life estate. According to the actuarial table, the 92-year-old life tenant has a death probability of 0.228968, and a life expectancy of 3.15. Which statement is TRUE?
There is a 2.28% chance that the life tenant will die this year.
The life tenant can be expected to live a little over 3 years.
Al has a death probability of approximately 23% this year.
All of these statements are true.
The life tenant can be expected to live a little over 3 years.
When you are performing an appraisal on a four-unit residential property, you are valuing
Surface, subsurface, and air rights
The ownership rights of the property
The income stream from the property
The land and related improvements
The ownership rights of the property
The subject property has an effective age of 10, and a remaining economic life of 40 years. The cost new of the subject property improvements is $880,000. What is the percentage of accrued depreciation that should be applied in the cost approach?
25%
20%
10%
16.67%
20%
Which of these sections would probably NOT be part of the Introduction section of a narrative appraisal report?
Reconciliation
Certification
Letter of transmittal
Table of contents
Reconciliation
Bertha is appraising a single-family home that is situated on a commercially-zoned lot, for a residential mortgage lender. Based on the facts of the situation, what is the lender likely to ask her?
If the property owner has applied for a zoning change
If the improvement can be rebuilt if destroyed
To provide an estimate of legal fees necessary to receive a non-conforming use certificate
To verify with the zoning officer that a zoning change is imminent
If the improvement can be rebuilt if destroyed
With a nonconforming use, the highest and best use as though vacant will be different than the highest and best use as improved. If the existing use does not conform to current zoning, the lender will want to know if the improvements can be rebuilt after a fire or other natural disaster. Ch 3, Legally Permissible
Problems often encountered by an appraiser when completing an appraisal with an exterior-only inspection of the subject property include
Clients pay lower fees because they think the appraisal is easier
USPAP violations due to lack of an appropriate property inspection
Determining which reporting form to use
Dog bites are common in exterior-only appraisal inspections
Clients pay lower fees because they think the appraisal is easier
Where should an appraiser look to find a definition of a “complex property”?
Code of Federal Regulations
USPAP
Fannie Mae
Any of these
Code of Federal Regulations
After the 1004MC form was created by Fannie Mae, it was later adopted by
HUD/FHA
Department of Veterans Affairs (VA)
Both of these
Neither of these
Both of these
On the URAR appraisal form, which approach or approaches is/are required?
Cost Approach
Sales comparison and cost approaches
Sales comparison, cost, and income approaches
Sales comparison approach
Sales comparison approach
