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AZ Real Estate Agent License 2020 > Appraisal Approaches and Principles of Approaches 9 > Flashcards

Appraisal Approaches and Principles of Approaches 9 Flashcards

1
Q

Estimate or Opinion of Value and Supported by an Analysis of Facts.

A

Appraisal -

Estimate or Opinion of Value and Supported by an Analysis of Facts

Chap 9

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2
Q

(AVM) Aut_______ Val______ Mod____

Appraisal made by Placing Data into an Algorithm

A

(AVM) Automated Valuation Model -

Appraisal made by Placing Data into an Algorithm

Chap 9

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3
Q

Or_______

Way Building is “Situated on Lot”

A

Orientation -

Way Building is “Situated on Lot.”

Chap 9

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4
Q

Dir_______nal G______

Way Community is Developing

A

Directional Growth -

Way Community is Developing

Chap 9

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5
Q

Greater Properties “Positively Effect** **Value“ of Lesser Properties

A

Principle of Progression -

Greater Properties “Positively Effect Value” of Lesser Properties

Chap 9

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6
Q

F___ C___ V____ aka Ass_____ Val____

Value for Tax Purpose

A

Full Cash Value; Assessed Value -

Value for Tax Purpose

Limited Prop Value x Assessed Value Ratio = Assessed Value

Chap 9

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7
Q

Ins____ V____

Value when Building Destroyed

A

Insurance Value -

Value when Building Destroyed

Chap 9

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8
Q

U_____

Capacity of Product to “Satisfy Human Need“

A

Utility -

Capacity of Product to “Satisfy Human Need“

Chap 9

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9
Q

T_________

Relative Ease of Transferring Ownership

A

Transferability -

Relative Ease of Transferring Ownership

Chap 9

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10
Q

Principal of R________

Presence of Lesser Properties “Adversely Affect** **Value” of Greater Properties

A

Principal of Regression -

Presence of Lesser Properties“Adversely Affect Value” of Greater Properties

Chap 9

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11
Q

Major Elements of Value - DUST:

  1. Dem___
  2. U____,
  3. Sc____
  4. T__________
A

Major Elements of Value -

DUST:

  1. Demand,
  2. Utility,
  3. Scarcity
  4. Tranferability

Chap 9

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12
Q

Mar___ V____ -

Amount Willing Buyer Will Pay and Seller Will Accept

Note: Market Value - Amount Given and Taken for a Property

A

Market Value -

Amount Willing Buyer Will Pay and Seller Will Accept

Note: Market Value - Amount Given and Taken for a Property

Chap 9

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13
Q

M____ P______

Amount Given and Taken for a Property

Note: Market Value - What Willing Seller/Buyer Will Pay

A

Market Price -

Amount Given and Taken for a Property

Arms Length Transaction - One in Which Parties Have Equal Bargaining Positions.

Note: Market Value - What Willing Seller/Buyer Will Pay

Chap 9

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14
Q

Amount of Money to Build Brand New?

A

Cost -

Amount of Money to Build Brand New

Chap 9

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15
Q

Principle of H_____ and B___ Use - Use of Property that Brings Greatest Net Return

  1. Only One - Highest Best Use: at Any One Time
  2. Based On Net Income: Takes Z____, Building Codes and Surrounding Market Into Account.
  3. Excess Land: Does Not Support Highest and Best Use
A

Principle of Highest and Best Use - Use of Property that Brings Greatest Net Return

  1. Only One - Highest and Best: Use at Any One Time
  2. Based On Net Income: Takes Zoning, Building Codes and Surrounding Market into Account.
  3. Excess Land: Does Not Support Highest and Best Use

Chap 9

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16
Q

Principle of Sub_________

No Reasonable Person Will Pay More for a Property Than Would Pay For a Duplicate

Will Not Pay More for Duplicate!

A

Principle of Substitution -

No Reasonable Person Will Pay More for a Property Than Would Pay For a Duplicate

Will Not Pay More for Duplicate!

Chap 9

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17
Q

Principle of Su___ and De____

The Idea that Value is Affected by the Scarcity and Desire.

A

Principle of Supply and Demand -

The Idea that Value is Affected by the Scarcity and Desire.

Chap 9

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18
Q

Principle of C________

Value will Remain Stable in area with Reasonable Conformity.

A

Principle of Conformity -

Value will Remain Stable in area with Reasonable Conformity.

Chap 9

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19
Q

D_____

Amount of “Desire” to Buy a Product

A

Demand -

Amount of “Desire” to Buy a Product

Chap 9

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20
Q

Principle of C________-

Idea that Excess Profits can Increase Competition which Destroys Profits

A

Principle of Competition -

Idea that Excess Profits can Increase Competition which Destroys Profits

Chap 9

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21
Q

Principle of Ch____ -

Appraisal Principle “Values Do Not Remain the Same.” Appraisers Must Consider how Changing Economic and Social Conditions Affect Value

A

Principle of Change -

Appraisal Principle “Values Do Not Remain the Same.” Appraisers Must Consider how Changing Economic and Social Conditions Affect Value

Chap 9

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22
Q

Principle of Dev______, Equi_____, Disin_______ -

Idea that Property Goes Through Phases of Growth, Stability, and Decline.

A

Principle of Development, Equilibrium, Disintegration -

Idea that Property Goes Through Phases of Growth (Development), Stability (Equilibrium), and Decline (Disintegration)

Chap 9

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23
Q

Com_______ Approach (Ma____ Da__/ Dir___ Sa____ Approach) -

Appraisals that Uses Similar Comparable and Recent Sales

A

Comparison Approach (Market Data/ Direct Sales Approach) -

Appraisals that Uses Similar Comparable and Recent Sales

Chap 9

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24
Q

Sq____ F_____ of Liv____ Area -

Measuring “Exterior Dimensions” of Exterior Walls

Note: Not Garage or Patio

A

Square Footage of Living Area -

Measuring “Exterior Dimensions” of Exterior Walls

Note: Not Garage or Patio

Chap 9

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25
Q

Det________ -

Loss of Value by “Wear and Tear.”

A

Deterioration -

Loss of Value by “Wear and Tear.”

Chap 9

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26
Q

Principle of An_________ -

Value affected by “Future Events”

A

Principle of Anticipation -

Value affected by “Future Events”

Chap 9

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27
Q

E_____ In______ -

Appreciation by Owners Efforts

A

Earned Increments -

Appreciation by Owners Efforts

Chap 9

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28
Q

U________ Increments -

Appreciation by Other Factors, Out of Owners Control

A

Unearned Increments -

Appreciation by Other Factors, Out of Owners Control

Chap 9

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29
Q

Plot_____ (Assem_______) -

Joining “Smaller Parcels” into one Larger One.

A

Plottage (Assemblage) -

Joining “Smaller Parcels” into one Larger One.

Chap 9

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30
Q

Principle of Contr_______ -

Value of Component that Adds To or Detracts from Value of Whole.

A

Principle of Contribution -

Value of Component that Adds To or Detracts from Value of Whole

Chap 9

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31
Q

Def______ M__________ -

Repairs Put Off For Future.

A

Deferred Maintenance -

Repairs Put Off For Future.

Chap 9

32
Q

Functional Obsolescence - (Outdated)

  1. Loss Due To Out____ Features (Curable) ,
  2. T_______ Advances (Curable), or
  3. Poor Floor D_____ (**Incurable**).
A

Functional Obsolescence - (Outdated)

  1. Loss Due To Outdated Features (Curable),
  2. Technological Advances (Curable),
  3. Poor Floor D_____ (**Incurable**)

Chap 9

33
Q

Deterioration** such as **Termites, Weather Damage, Leaky Roof, Cracked Paint.

Are they Curable or Non-Curable?

A

Curable -

Deterioration such as Termites, Weather Damage, Leaky Roof, Cracked Paint.

Remember: Floor Plan Design - NOT Curable

Chap 9

34
Q

C___ Approach (S______ Approach) -

Appraisal that uses Calculated Building Costs, Subtracted Depreciaton and Added Land Values

Bldg Cost - Depreciation + Land = Cost Approach Value

One of Kind Properties - Church, Municipal Buildings

A

Cost Approach (Summation Approach) -

Appraisal that uses Calculated Building Costs, Subtracted Depreciaton and Added Land Values

Bldg Cost - Depreciation + Land = Cost Approach Value

One of Kind Properties - Church, Municipal Buildings

Chap 9

35
Q

Repl______ Cost -

Cost to build Reasonable Duplicate

A

Replacement Cost -

Cost to build Reasonable Duplicate

Chap 9

36
Q

Repro_____ Cost -

Cost to Build “Exact” Duplicate at Today’s Prices.

A

Reproduction Cost -

Cost to Build “Exact” Duplicate at Today’s Prices.

Chap 9

37
Q

Reh_________ -

Curing “Deferred Maintenance”

A

Rehabilitation -

Curing deferred maintenance

Chap 9

38
Q

Economic Obsolescence - (Outside)

Loss by Outside Factors:

  1. Neigh_____ Conditions (Air, Noise, Pollution)
  2. Over Imp_____,
  3. Negative Legislation (Z____),
  4. Change in B______/Mar___ Conditions
A

Economic Obsolescence - (Outside)

Loss by Outside Factors:

  1. Neighborhood Conditions (Air, Noise, Pollution),
  2. Over Improvements,
  3. Negative Legislation (Zoning),
  4. Change in Business/Market Conditions

Chap 9

39
Q

(URAR) Un____ Res______ Appraisal Report -

Standard Appraisal Form for SFR

A

(URAR) Uniform Residential Appraisal Report -

Standard Appraisal Form for SFR

Chap 9

40
Q

Sq____ F_____ Under R____ -

Area of Building includes Garages and Patios

A

Square Footage Under Roof -

Area of Building includes Garages and Patios

Chap 9

41
Q

De____ Appraisal -

Appraisal from “Internet Information” without Inspecting Property

A

Desktop Appraisal -

Appraisal from “Internet Information” without Inspecting Property

Chap 9

42
Q

Principle of Extern_______ -

Principle that Factors “Outside Property” have Positive or Negative Affect on Value.

A

Principle of Externalities -

Principle that Factors “Outside Property” have Positive or Negative Affect on Value.

Economic Obsolescence - Neighborhood, Air, Noice, Over Improved, Adverse Zoning

Chap i

43
Q

Salv____ (Resid___) Value -

Value of Buildings at End of Physical Life

A

Salvage (Residual) Value -

Value of Buildings at End of Physical Life

Chap 9

44
Q

M_____ Value -

Value for Loan Purposes, using Property as Collateral

A

Mortgage Value -

Value for Loan Purposes, using Property as Collateral

Chap 9

45
Q

Mar____ P_____

Money Given/Taken

Note: Market Value - Amount Given and Taken for a Property

A

Market Price -

Money Given/Taken

Note: Market Value - Amount Given and Taken for a Property

Chap 9

46
Q

Principle of H____ and B___ U__ -

Use of Property that Brings Greatest Net Return

A

Principle of Highest and Best Use -

Use of Property that Brings Greatest Net Return

Chap 9

47
Q

Principle of S____ and D_____ -

Value by Scarcity and Desire of Item

A

Principle of Supply and Demand -

Value by Scarcity and Desire of Item

Chap 9

48
Q

C___ Approach (S______ Approach) -

Appraisal that uses Calculated Building Costs, Subtracted Depreciaton and Added Land Values

Bldg Cost - Depreciation + Land = Value

One of Kind Properties - Church, Municipal Buildings

A

Cost Approach (Summation Approach) -

Appraisal that uses Calculated Building Costs, Subtracted Depreciaton and Added Land Values

Bldg Cost - Depreciation + Land = Value (Cost Approach)

One of Kind Properties - Church, Municipal Buildings

Chap 9

49
Q

A__ L______ Tran______ -

Transaction Where Parties Have Equal Bargaining Positions.

A

Arm’s-Length Transaction -

Transaction Where Parties Have Equal Bargaining Positions.

Chap 9

50
Q

Arm’s Length Transactions include?

For_____, Relatives S____, and Condem_____ Proceedings

A

Arm’s Length Transactions Include?

Foreclosures, Relatives Sales, and Condemnation Proceedings

Chap 9

51
Q

Principle of H_____ and B___ Use -

Principle Used that Will Generate Greatest Net Return

What is based on “Net Income,” Zoning, Building Codes, and Surrounding Market

A

Principle of Highest and Best Use -

Principle Used that Will Generate Greatest Net Return

Based on “Net Income,” Zoning, Building Codes, and Surrounding Market

Chap 9

52
Q

Fu_______ Ob_________ - Outdated

Poor Floor Plans - Form of Depreciation that “Is Not” Curable (Incurable)

A

Functional Obsolescence - Outdated

Poor Floor Plans - Form of Depreciation that “Is Not” Curable (Incurable)

53
Q

Economic Obsolescence (External) - Factors Outside of Property that deal with Neighborhood Issues includes?

  1. A__,
  2. N____
  3. Poll_____,
  4. Traf____
  5. Adverse Z_____
  6. Over Improved Property
A

Economic Obsolescence (External) - Factors Outside of Property that deal with Neighborhood Issues includes?

  1. Air,
  2. Noise
  3. Pollution,
  4. Traffic
  5. Adverse Zoning
  6. Over Improved Property

Chap 9

54
Q

Comparison Approach relies Most “Heavily Relies On -

  1. Ex____ Res______
  2. V____ L____
A

Comparison Approach relies Most “Heavily Relies On -

  1. Existing Residences
  2. Vacant Land

Chap 9

55
Q

Comparison Approach (Market Data/Sales) -

  1. Many Buyer/Sellers
  2. Comparable Sales at A___ Length
  3. 3 Comparables
  4. Adj______
  5. Heavily Relies On Existing Residence and Vacant Land
A

Comparison Approach (Market Data/Sales) -

  1. Many Buyer/Sellers
  2. Comparable Sales at Arm’s Length
  3. 3 Comparables
  4. Adjustments
  5. Heavily Relies On Existing Residence and Vacant Land

Chap 9

56
Q

Comparison Approach - Adjustments

  1. D___ of Sale
  2. Loc______
  3. Fin________
  4. Condition or Features
  5. Concessions
  6. Property with **Fewest Adjustments** ***Most Comparable***
A

Comparison Approach - Adjustments

  1. Date of Sale
  2. Locations
  3. Financing
  4. Condition or Features
  5. Concessions
  6. Property with **Fewest Adjustments** ***Most Comparable***

Chap 9

57
Q

C___ Approach (Su______) -

Building Cost - Depreciation + Land Value

= Appraised Value

One of Kind Properties - Church, Municipal Buildings

A

Cost Approach (Summation) -

Building Cost - Depreciation + Land Value

= Appraised Value

One of Kind Properties - Church, Municipal Buildings

Chap 9

58
Q

Cost Approach (Heavily Relies On}:

One of a K___ Properties, such as Churches, Municipal Buildings, New Constructions

A

Cost Approach (Heavily Relies On):

One of a Kind Properties, such as Churches, Municipal Buildings, New Constructions

Chap 9

59
Q

Scarcity means

A

Supply = Scarcity

Chap 9

60
Q

Desire means

A

Demand = Desire

Chap 9

61
Q

Growth means

A

Development = Growth

Chap 9

62
Q

Principle of H____ and B___ U__ -

Use of Property that Brings Greatest Net Return

A

Principle of Highest and Best Use -

Use of Property that Brings Greatest Net Return

Chap 9

63
Q

C___ Approach (S______ Approach) -

Appraisal that uses Calculated Building Costs, Subtracted Depreciaton and Added Land Values

Bldg Cost - Depreciation + Land = Appraised Value

One of Kind Properties - Church, Municipal Buildings

A

Cost Approach (Summation Approach) -

Appraisal that uses Calculated Building Costs, Subtracted Depreciaton and Added Land Values

Bldg Cost - Depreciation + Land = Appraised Value

One of Kind Properties - Church, Municipal Buildings

Chap 9

64
Q

Stability (Balance) means

A

Equilibrium = Stability, Balance

Chap 9

65
Q

Decline means

A

Disintegration = Decline

Chap 9

66
Q

V_____

Worth of Property and has for 4 Major Elements such as Demand, Utility, Scarcity, and Transferabilty

A

Value (Worth) -

Worth of Property and has for 4 Major Elements such as Demand, Utility, Scarcity, and Transferabilty

Chap 9

67
Q

Land Not Needed to support the Highest and Best Use.

A

Excess Land -

Land Not Needed to support the Highest and Best Use.

Chap 9

68
Q

Increase in Value for Any Reason

A

Appreciation -

Increase in Value for Any Reason.

Chap 9

69
Q

Loss in Value for Any Reason. In the Cost Approach Most Difficult to Estimate.

A

Depreciation -

Loss in Value for Any Reason. In the Cost Approach Most Difficult to Estimate.

Cost Approach - One of a Kind Properties, such as Churches, Municipal Buildings, New Constructions

Chap 9

70
Q

An Exterior Inspection of a Home by a Licensed Appraiser. Lenders Typically Use to Document Comparable Properties.

A

Drive-By Inspection

An Exterior Inspection of a Home by a Licensed Appraiser. Lenders Typically Use to Document Comparable Properties

71
Q

C___ Approach (S______ Approach) -

Appraisal that uses Calculated Building Costs, Subtracted Depreciaton and Added Land Values

Bldg Cost - Depreciation + Land = Appraised Value

One of Kind Properties - Church, Municipal Buildings

A

Cost Approach (Summation Approach) -

Appraisal that uses Calculated Building Costs, Subtracted Depreciaton and Added Land Values

Bldg Cost - Depreciation + Land = Appraised Value

One of Kind Properties - Church, Municipal Buildings

Chap 9

72
Q

In Preparing an Estimate of Value for a Thirty Year Old House, an Appraiser will MOST LIKELY Use Which of the Following Approaches to Value?

  1. Replacement Cost
  2. Reproduction Cost
  3. Market Data
  4. Income
A

In Preparing an Estimate of Value for a Thirty Year Old House, an Appraiser will MOST LIKELY Use Which of the Following Approaches to Value?

  1. Replacement Cost
  2. Reproduction Cost
  3. Market Data
  4. Income

Chap 9

73
Q

When Market Data is lacking and the property has no income, the appraisal approach MOST LIKELY to be used is the:

  1. Comparison
  2. Cost
  3. Capitalization
  4. Market Data
A

When Market Data is lacking and the property has no income, the appraisal approach MOST LIKELY to be used is the:

  1. Comparison
  2. Cost
  3. Capitalization
  4. Market Data
74
Q

If a property is built usng inferior building materials this would directly result in

  1. Functional Obsolescence
  2. Physical Deterioration
  3. External Obsolescense
  4. Reproduction Cost
A

If a property is built usng inferior building materials this would directly result in

  1. Functional Obsolescence
  2. Physical Deterioration
  3. External Obsolescense
  4. Reproduction Cost

Chap 9

75
Q

An owner improves a property bringing it up to value commensurate with surrounding properties. This is an example of:

  1. Conformity
  2. Contribution
  3. Competition
  4. Regression
A

An owner improves a property bringing it up to value commensurate with surrounding properties. This is an example of:

  1. Conformity
  2. Contribution
  3. Competition
  4. Regression

Chap 9

AZ Real Estate Agent License 2020 (23 decks)

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