Appraisal 1 Flashcards
Property valuation or land valuation is the process of developing an opinion of value is a(n)________
A: Appraisal
B: Demand
C: Supply
D: None Of The Above
A: Appraisal
_______ is the amount for which something can be sold on a given market
A: Property Value
B: Principle Value
C: Market Value
D: None Of The Above
C: Market Value
Definition of Appraisal
- Impartial analysis and evaluation conducted according to established criteria to determine the acceptability, merit, or worth of an item.
- Evaluation by a qualified appraiser to (1) assess the current market value of a property, (2) estimate the extent of damage to an insured property
and cost of repairs, or (3) determine if a total loss occurred. A written appraisal is usually a key requirement when a property is bought, sold, insured, or mortgaged. It is required also when a claim is filed for compensation for damage or destruction of the insured property. - Alternative term for valuation.
What is required to obtain an Appraiser’s license? These are the requirements:
- In order to become a certified residential appraiser, you will need the following: A bachelor’s degree. At least 200 hours of AQB-approved appraisal coursework.
What is USPAP?
- In 1989, the Uniform Standards of Professional Appraisal Practice (USPAP) was authorized by Congress as the minimum performance standards for appraisal practice in the United States of America. Published by The Appraisal Foundation, USPAP is recognized as the source for standards for professional appraisal practice in the United States and many other parts of the world. The main purposes of USPAP are to protect the public and to promote public trust in the appraisal profession.
- USPAP contains both rules and standards pertaining to: (1) development of an appraisal; and (2) the reporting of that value opinion to the client. USPAP provides details on what an appraiser must consider in order to be independent, impartial and objective and to arrive at a credible opinion of value. It does not dictate specific methodologies or approaches that are to be employed in order to arrive at a conclusion. For a complete understanding, the official USPAP document can be viewed at www.appraisalfoundation.org.
Value
- Property valuation
- land valuation is the process of developing an understanding of value
What is Market Value
The amount for which something can be sold on a given market
Supply
“The total amount of a good or service available for purchase; along with demand, one of the two key determinants of price”.
Demand
Definition The amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given price. Along with supply, demand is one of the two key determinants of the market price.
The acronym AMC stands for:
A: Appraisal Management Company
B: Assets Merging Company
C: Arrangement Management Company
D: None Of The Above
A: Appraisal Management Company
The Nature of Value = DUST
- Demand
- Utility or usefulness
- Scarcity
- Transferability
The Essential Parts of an Appraisal
- Date
*Property Description - Estimate of value
*Signature
Substitution
Definition An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.
The Appraisal Process
1) Define the problem
2) Conduct survey
3) Gather data
4) Classify data
5 Reconcile data
6) Issue Report
Conformity
The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value. In general, conformity assumes that a neighborhood that is reasonably similar in social and economic activity will result in properties that
reach their maximum value.
Progression
A smaller home next to a larger one increases the value of the smaller home.
Regression
A larger home in a neighborhood with smaller
homes decreases in value.
Contribution
- An improvement must contribute its cost to the value of
the property. - Examples:
- Swimming pools
- New kitchen
- Landscaping
- New bathrooms
Principle of Change
The principle of change realizes the economic and social factors that might affect value of the property
Anticipation
Principle of anticipation refers to a rule on which the current value of a property depends. According to this principle the value of the property depends on the anticipated utility or income that will accrue to the property owner in the future
Competition
the competition principal is in regards the value of a property compared to another very similar property
Outlier
Outlier: That ultra high price, far more than the other willing home buyers were offering to pay.
Situs
Definition The economic attributes of a location, including the relationship between the property and surrounding properties. Situs is the aspect of location that contributes to a property’s market value.
What is an Plottage?
- Plottage is the increase in value realized by combining adjacent parcels of land into one larger parcel. The process of combining the parcels is known as assemblage. Generally, the value of the whole
parcel will be greater than the sum of the individual smaller parcels.
Appraisal
- An appraisal can help you understand and decide what and how to renovate the property
*Appraisers will use standard forms to complete the appraisal process for each property
There are several components that are considered when conducting an
appraisal process. Lets discuss a few of them:
* The Neighborhood
* The condition of the home
* Trends within the area
* The foundation of the home
* Comparable sales
* Exterior material of the home
A appraisal is NOT the same thing as an inspection
A home inspection is a detailed report of the home’s condition
Remember, an appraiser will be looking at your neighborhood and
comparable sales when conducting an appraisal
* There are several factors that can drive the value of the home up or down.
*The main focus of an appraisal is ALL about a home’s current condition
Another word for “area preference” is
A: Progression
B: Conformity
C: Situs
D: Outlier
C: Situs
A subdivision of “cookie-cutter” identical homes is an example of
A: Progression
B: Conformity
C: Situs
D: Regression
B: Conformity
When a smaller home in a neighborhood with larger homes increases in value, this is an example of the principle of
A: Progression
B: Conformity
C: Highest And Best Use
D: Regression
A: Progression
A brand new kitchen that significantly enhances the value of the property and more than makes up for the actual cost of the improvement would be an example of:
A: Situs
B: Regression
C: Contribution
D: All Of The Above
C: Contribution
The basic principles of value do NOT include
A: Demand
B: Utility
C: Scarcity
D: Depreciation
D: Depreciation
The two charateristics that govern the way the market reacts to supply and demand are:
A: Uniqueness And Immobility
B: Governmental Controls And Monetary Policy
C: Population Demographics
D: Price And Demographics
A: Uniqueness And Immobility
USPAP stands for
A: Uniform Standards Of Professional Appraisal Practice
B: Uniform Standards Of Practiced Appraisers Performances
C: Uniform Supported Professional Appraisal Practices
D: Utah Supported Professional Appraisal Practices
A: Uniform Standards Of Professional Appraisal Practice
Essential components of an appraisal include:
A: Date
B: Property Description
C: Estimate Of Value
D: All Of The Above
D: All Of The Above
Forces that influence value include:
A: Physical
B: Economic
C: Political
D: All Of The Above
D: All Of The Above
The price a willing and able buyer is willing to pay and a willing and able seller is willing to accept is called:
A: Market Value
B: Market Price
C: Appraised Value
D: Assessed Value
A: Market Value