Appraisals

Question 1

What are the 8 steps in appraisals?

Answer 1

1. Identify the problem
2. Determine the scope of work
3. Data collection and property description
4. Data Analysis (HABU)
5. Land value opinion
6. Application of 3 approaches to value
7. Reconciliation of value indications and final opinion of value
8. Report of defined value

Question 2

What are the three types of depreciation?

Answer 2

Physical, functional, external

Question 3

How do you adjust for superior or inferior comparables?

Answer 3

For superior, adjust down. For inferior, adjust up.

Question 4

What is paired sales analysis?

Answer 4

A quantitative technique used to identify and measure adjustments to the sales prices or rents of comparable properties.

Question 5

What is the difference between primary and secondary data?

Answer 5

Primary data is information confirmed directly with someone directly involved in the transaction. Secondary data is information obtained from other sources (MLS, brokers..etc)

Question 6

What is conformity, progression, and regression?

Answer 6

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).

Question 7

What is the contributory value?

Answer 7

The value that an item contributes to the overall value of the property (not necessarily the cost).

Question 8

What is the difference between real estate and real property?

Answer 8

Real estate is the land and everything attached. Real property is the rights, benefits, and interests inherent in ownership.

Question 9

What are the four powers of government?

Answer 9

Taxation, police power, escheat, and eminent domain.

Question 10

What is the Uniform Act appraisal definition?

Answer 10

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.

Question 11

What is fair market value?

Answer 11

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.

Question 12

What is consistent use?

Answer 12

The concept that land cannot be valued on one basis of use while the improvements are valued on the basis of another use.

Question 13

What are the three steps of HABU?

Answer 13

1. Determine HABU as vacant
2. Determine HABU as improved (if applicable)
3. Determine the overall HABU conclusion

Question 14

What are the four tests for HABU?

Answer 14

Legally permissible
Physically possible
Financially feasible
Maximally productive

Question 15

What is HABU?

Answer 15

Highest and best use. It’s the foundation of an appraisal. The reasonably probable use of a property that results in the highest value.

Question 16

What is incurable depreciation?

Answer 16

The cost to repair or cure the items causing the depreciation exceeds the loss in value due to the items.

Question 17

When should an appraiser average?

Answer 17

Never

Question 18

What is a waiver valuation?

Answer 18

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.

Question 19

What is anticipation?

Answer 19

The value is the present worth of the rights to all prospective future benefits accruing to ownership ( not necessarily the cost).

Question 20

What is externality?

Answer 20

The value can be affected positively or negatively by factors external to a property.

Question 21

What is substitution?

Answer 21

Someone will not pay more for something that is equally desirable as something that costs less.

Question 22

What is deferred maintenance?

Answer 22

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.

Question 23

What is interest rate?

Answer 23

It’s the return ON an investment (profit).

Question 24

What is the narrative?

Answer 24

The most detailed type of report. It includes quantity of analysis that matches the complexity of the appraisal problem.

Question 25

What are comparables?

Answer 25

These are adjusted to the subject. Never adjust the subject to the comparables.

Question 26

What are offsite improvements?

Answer 26

They are improvements that are considered part of the land (gutters, curbs, drainage)

Question 27

What are the units of measurement for vacant land?

Answer 27

Square feet, acres, ? IF

Question 28

What are the three approaches to value?

Answer 28

Sales comparison, cost, and income

Question 29

What are the ways to look up a property?

Answer 29

Address, APN, legal description

Question 30

What is the date of value?

Answer 30

The date of the last inspection

Question 31

What is the difference between replacement and reproduction?