Appraisal

Question 0

Since its use must be considered in every appraisal assignment, an appraiser must have a clear understanding of this methodology. A real estate professional can also benefit from a high level of understanding of this appraisal approach.

Replacement cost- Accrued depression+ Site valuation= Property value

Answer 0

Cost approach

Question 1

Considered to be the most objective of the three appraisal methods, and can provide an accurate value for replacing or reproducing buildings…

Answer 1

Cost approach

Question 2

An appraisal method which estimates the value of real estate by analyzing the amount of revenue or income the property currently generates, or could generate, often comparing it to other similar properties.

Answer 2

Income approach

Question 3

can be difficult to use when dealing with single family homes because it is not always possible to find other income producing residential homes in the same area. One must also remember that the value derived from the _______ approach bases a property value on past income activity.

Answer 3

Income approach

Question 4

is the future income one hopes the property will have, but is usually based on the prior income the property produced.

Income ➗ Rate = Value

Answer 4

Capitalization Rate Equation

Income

Question 5

Or capitalization rate, is a percentage rate representing the amount of profit return the investor expects in order to be willing to risk his money in the investment.

Answer 5

Rate

Question 6

Is the amount one would need to spend to buy the investment.

Answer 6

Value

Question 7

When appraising residential properties of 1 to 4 units, this method is frequently used. The ____________is a number derived from the comparable rental properties in that area used to estimate the value of a piece of real estate. The _____is based on the total gross rent of a particular piece of real estate. With this method, no deduction allowances made for expenses, vacancies, or collections losses.

Answer 7

Gross rent multiplier

Question 8

is most useful when determining the value of residential properties in areas where there are many other rental properties. It identifies the subject properties ranking within the market of some of the properties by giving a means of comparing gross rent and sale prices or value.

SALE PRICE OF THE RENTAL
               PROPERTY
                       ➗
     GROSS MONTHLY RENT
------------------------------------
   GROSS RENT MULTIPLIER

Answer 8

Gross rent multiplier

Question 9

is not a dead stand alone, but rather is intended to be used as supporting evidence for the appraisal methods. In fact, many times there are not enough residential rentals in the area to derive value using this method.

Answer 9

Gross rent multiplier

Question 10

Market Price Gross GRM
of The Monthly
Rental Rent
Property

Comp # 1
$137,900 $975 $141.44

Comp #2
$149,500 $1,200 $124.58

Comp # 3
$142,700 $1,000 $142.7

Subject
??? $1,100 ??

Answer 10

Gross Rent multiplier

Question 11

A method of determining the approximate market value of a home by comparing the subject property to other homes that have sold, are presently for sale, or did not sell in a given area.

Answer 11

Competitive market analysis (CMA)

Also called a comparable market analysis.