Appraisal - Need To Know

Question 1

Define:

Contribution

Answer 1

The appraisal principle which states that an improvement to a property must add its cost to the value.

Question 2

What are the steps of the neighborhood cycle?

Answer 2

1. Growth or integration
2. Equilibrium
3. Disintegration or decay

Question 3

When computing NOI, what is never included?

Answer 3

Debt Service

Question 4

Define:
Economic Obsolescence
A.K.A. External Obsolescence

Answer 4

A form of depreciation caused by forces outside the property boundaries. They may be political or social factors. It is considered to be incurable.

I.e. A factory that emits smoke and Oder near a home.

Question 5

In appraisal, is depreciation a credit against an income tax liability or simply a loss of value?

Answer 5

Loss of value.

Question 6

What are the four essential parts of an evaluation?

Answer 6

1. Date
2. Property Description
3. Estimate of Value
4. Signature of the Appraiser

Question 7

What are the four essential elements of value?

DUST

Answer 7

Demand
Utility
Scarcity
Transferability

Question 8

What are the three forms of appraisal?

Answer 8

Letter form - quick and easy

Short form - a.k.a. Checklist, typically for residential properties

Narrative form - most extensive, typically for commercial properties

Question 9

What is assemblage?

Plottage? Subdividing?

Answer 9

Assemblage is the process of joining two or more contiguous properties.
Plottage is joining two or more parcels of property to increase value.
Subdividing is braking property into smaller parts to increase value.

Question 10

The purpose of capitalizing income, or income capitalization, is to:

Answer 10

Determine property value

Question 11

What is the difference between reproduction cost and current value?

Answer 11

Depreciation