Appraisals Flashcards
What are the 8 steps in appraisals?
- Identify the problem
- Determine the scope of work
- Data collection and property description
- Data Analysis (HABU)
- Land value opinion
- Application of 3 approaches to value
- Reconciliation of value indications and final opinion of value
- Report of defined value
What are the three types of depreciation?
Physical, functional, external
How do you adjust for superior or inferior comparables?
For superior, adjust down. For inferior, adjust up.
What is paired sales analysis?
A quantitative technique used to identify and measure adjustments to the sales prices or rents of comparable properties.
What is the difference between primary and secondary data?
Primary data is information confirmed directly with someone directly involved in the transaction. Secondary data is information obtained from other sources (MLS, brokers..etc)
What is conformity, progression, and regression?
Conformity is the reasonable degree of architectural sameness and compatibility of land uses.
Progression is a lower priced property will be worth more in a higher priced neighborhood (pulled up).
Regression is a higher priced property is worth less in a lower priced neighborhood (pulled down).
What is the contributory value?
The value that an item contributes to the overall value of the property (not necessarily the cost).
What is the difference between real estate and real property?
Real estate is the land and everything attached. Real property is the rights, benefits, and interests inherent in ownership.
What are the four powers of government?
Taxation, police power, escheat, and eminent domain.
What is the Uniform Act appraisal definition?
A written statement INDEPENDENTLY and IMPARTIALLY prepared by a Qualified Appraiser setting forth an OPINION of defined Value of an adequately described property as of a SPECIFIC DATE, supported by the presentation and analysis of relevant market information.
What is fair market value?
The highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity to do so, nor obliged to sell and a buyer, being ready, willing, and able to buy, but under no particular necessity for doing so, each dealing with the other with full knowledge of the uses and purposes for which the property is reasonably adaptable and available.
What is consistent use?
The concept that land cannot be valued on one basis of use while the improvements are valued on the basis of another use.
What are the three steps of HABU?
- Determine HABU as vacant
- Determine HABU as improved (if applicable)
- Determine the overall HABU conclusion
What are the four tests for HABU?
Legally permissible
Physically possible
Financially feasible
Maximally productive
What is HABU?
Highest and best use. It’s the foundation of an appraisal. The reasonably probable use of a property that results in the highest value.
What is incurable depreciation?
The cost to repair or cure the items causing the depreciation exceeds the loss in value due to the items.
When should an appraiser average?
Never
What is a waiver valuation?
It’s not an appraisal.
It’s used when an appraisal is not required, the valuation problem is uncomplicated, and the FMV is $10,000 or less. Waiver valuations cannot be used to obtain RONs.
What is anticipation?
The value is the present worth of the rights to all prospective future benefits accruing to ownership ( not necessarily the cost).
What is externality?
The value can be affected positively or negatively by factors external to a property.
What is substitution?
Someone will not pay more for something that is equally desirable as something that costs less.
What is deferred maintenance?
Items of wear and tear on a property that should be fixed now to protect the value or income producing ability of the property. It’s almost always curable.
What is interest rate?
It’s the return ON an investment (profit).
What is the narrative?
The most detailed type of report. It includes quantity of analysis that matches the complexity of the appraisal problem.
