Basic Appraisal Procedure Flashcards
Who is responsible for identifying the intended use of an appraisal?
the appraiser
“An assignment-specific assumption, as of the effective date, which, if found to be false, could alter the appraiser’s opinions or conclusions” is the definition of
extraordinary assumption
True or False: The effective date of the valuation must be the date on which the appraiser inspected the subject property.
False
What is the final step in the valuation process?
report the final opinion of value
An appraisal report must contain sufficient information to allow ________ to understand the scope of work.
intended users
“Documentation necessary to support an appraiser’s analyses, opinions, and conclusions” is the appraiser’s
workfile
True or False: A workfile must be in existence prior to the issuance of a written or oral report.
True
True or False: Real property appraisal reports may be written or oral.
True
An appraiser encounters a small crack in a foundation slab on a house he is appraising. He discloses the crack in the appraisal report and states that he is not a structural engineer and assumes the crack is not structural in nature and does not require a repair. This is an example of the use of a(n) ______________.
Extraordinary assumption
An appraiser produces an appraisal report that includes the effective date of the value. What other date does the appraiser need to include in the appraisal report?
Date of report
Which would NOT be a sub-step in defining the problem?
- definition of value
- effective date of value
- identification of the property rights
- highest and best use
highest and best use
What is the first step in the valuation process?
Define the problem
Which appraisal term is defined as: “A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis”?
Hypothetical condition
An appraiser encounters an underground storage tank. If there is no evidence of any observable leaks, the appraiser could indicate a value opinion based on the ______________ that the tank is indeed not leaking.
extraordinary assumption
Which influences typically exert the greatest pressure on property values?
local influences
The largest source for demographic information is
U.S. Bureau of the Census
True or False: General data tends to influence all properties in an area equally.
True
Professional or trade associations offering general data include all of the following EXCEPT
- Federal National Mortgage Association
- National Association of Home Builders
- National Association of Realtors
- Appraisal Institute
Federal National Mortgage Association
FEMA stands for
Federal Emergency Management Agency
It is important for an appraiser to research and understand what when doing an appraisal?
both the zoning map and the ordinance
You check the FEMA flood map, and the subject property is located in Zone C. Is this a Special Flood Hazard Area (SFHA)?
No
In residential mortgage lending appraisals, it is more common for lenders and AMCs to ask for _________ maps to be included in appraisal reports.
aerial
Local and regional multiple listing services typically concentrate on ____________ properties.
Single unit residential
Which of the following pieces of information would MOST likely be found in the deed?
- Assessed value
- Current owner of record
- Zoning classification
- All of these
Current owner of record
Multiple Listing Services can be utilized for gathering ____________ .
both general and specific data
Which of these organizations is responsible for preparing flood maps for U.S. communities?
- FEMA
- HUD
- Fannie Mae
- NAHB
FEMA
The largest repository of demographic information in the U.S. is the
Census Bureau
Comparable sale and rental properties would be considered ________ data.
specific
Which would NOT be a possible source of general data?
- trade association
- university
- deed
- department of transportation
deed
BEA stands for
Bureau of Economic Analysis
True or False: Condemnation appraisals often require an appraiser to develop a separate opinion of site value.
True
Improvements that could be made to raw land in order to make a site would include:
- permits
- grading
- fill
- any of these
any of these
A parcel of raw land has been improved so that it is ready to be used for a specific purpose. The land has now become
a site
(True or False) In the sales comparison method, quantitative adjustments are based on dollars, while qualitative adjustments are based on percentages.
b. False
Note: When utilizing sales comparison, adjustments to the comparable sales may be made either on a quantitative or qualitative basis. Quantitative adjustments are usually made on a percentage or dollar basis.
A rectangular parcel of land has 114 feet of frontage and is 222 feet deep. It sold for $280,000. What did it sell for per front foot?
$2,456
Note: $280,000/114 front ft.
= $2,456 per front foot
True or False: GPS systems can be used to locate vacant land parcels.
True
True or False: A postal mailing address is equivalent to a legal description.
False
Another name for the extraction method of site valuation is
abstraction
A property sold for $120,000. An old building on the property has a cost new of $300,000 and it is 75% depreciated. What is the indicated site value by extraction?
Extraction Method Solution:
Depreciation: $300,000 x 0.75
= 225,000
Building Value: $300,000-$225,000
= $75,000
Property = Land + Building 120,000 = Land + 75,000
Land Value = $45,000
Which method of site valuation is based on a typical ratio of land value to total property value?
allocation
Note: The allocation method is defined as “A method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed.”
An improved property has a net operating income of $75,000. The appraiser estimates that $61,000 of the income is attributable to the building. The land capitalization rate is 8%. What is the estimated land value?
$175,000
V (land) = I (land)/R (land)
Net income: $75,000
Income from building: $61,000
$75,000-$61,000
= $14,000 income from land
V (land) = I (land)/R (land)
V(land) = $14,000 / 0.08
V(land) = $175,000
Sidewalks, curbs, and landscaping are examples of
site improvements
A property contains 2.1 acres and is worth:
A. $115,000 as single home site
B. $40,000 per unit as a site for a triplex and
C. $60,000 per acre as a retail site.
All uses are physically possible, economically feasible and legally permitted. Which is the highest and best use?
C
A. Single home: $115,000 B. Triplex: $40,000 x 3 units = $120,000 C. Retail: $60,000 x 2.1 acres = $126,000
Property that fronts on a lake is often valued using what unit of comparison?
Price per front foot
A commercial site currently rents for $4,000 per month. The applicable land capitalization rate is 6%. What is the value of the site by the ground rent capitalization method?
$800,000
4,000 x 12 = 48,000
48,000/ .006 = 800,000
Which of the following is a technique for site valuation?
- Subdivision development
- Sales comparison
- Allocation
- All of the above
All of the above
The ___________method has good application in valuing land in rural areas and in older, urban areas.
extraction
A site is currently rented for $600 per month and the ground rent capitalization rate is 7.5%. What is the indicated value of the site?
$96,000
Note:
$600 month X 12 months
= $7,200 per year.
$7,200 ÷ .075
= $96,000
Developers usually value land on a basis of price per
buildable unit
A property with an old house sold for $220,000. The cost new of the house was $280,000 and it was 75% depreciated. What is the site value of the property by extraction?
$150,000
280,000 x .75 = 210,000
280,000 - 210,000 = 70,000
220,000 - 70,000 = 150,000
“Improved land or a lot in a finished state so that it is ready to be used for a specific purpose” is the definition of
Site
The Manufactured Home Construction and Safety Standards is also known as the
HUD Code
The _______ area of the site is used for family activities and is often found in the _______ yard.
private, rear
A bilevel home is also often referred to as a __________ home.
split entry
Which type of home is built to meet the HUD Code?
manufactured home
In framing, __________ are constructed above window and door openings.
headers
The main support beams for a home are called
girders
In modern construction, the most common subflooring material is
plywood or OSB board
A monolithic slab on grade foundation is essentially one ____ footing
giant
An inch of wood has an R-factor of approximately
1
Materials that transfer heat and energy more quickly are called
conductors
The most common type of heat system in new construction today is
forced warm air
In electricity, voltage measures __________ , while amperage measures __________ .
pressure, volume
U-shaped traps are installed under every plumbing fixture in order to
prevent sewer gases from venting back into the house
Slab-on-grade foundations are most popular in the ______________.
South and Southwest
With regard to electricity, voltage is equal to __________.
pressure
A roof has a pitch of 4 to 12. For every three feet the roof goes sideways, it goes up ________.
One foot
Which is the most recent type of construction materials?
- rafters
- floor trusses
- floor joists
- balloon framing
floor trusses
The earliest framing method was
post and beam
When calculating the gross living area of a dwelling, you would NOT include:
- The stairs from the first floor to the second floor
- Closets
- Interior hallways
- Covered porches
Covered porches
Gross living area should NOT include:
A basement family room
A manufactured home is built to meet which code?
the HUD code
With regard to electricity, amperage is equal to:
volume
A reversible air conditioner is called a(n) _______________.
heat pump
Marshall & Swift categorizes reinforced concrete frame commercial structures as Class
B
When measuring a condominium unit, you should calculate _____ using ______measurements.
GLA, interior
The estimated cost to construct an exact duplicate or replica of the property being appraised, using the same materials, and embodying all the obsolescence of the subject building, is _______________ cost.
reproduction
The cost approach would likely be MOST applicable in a situation where:
- the improvements are older, and are constructed of outdated materials
- the subject is a special purpose property
- the improvements do not represent the highest and best use of the property as though vacant
- the land value is not well-supported
the subject is a special purpose property
The difference between the cost of an improvement and its market value on the effective date of the appraisal is
depreciation
The estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout, is _______________ cost.
replacement
The most popular cost estimating service for residential appraisers is:
Marshall & Swift
When a published cost manual is used, the result is ____________ cost.
replacement
Which type of cost new would replicate a slate roof and a steam heating system in a 100-year-old home?
- reproduction cost
- replacement cost
reproduction cost
Direct costs are also called
hard costs
You are using the Marshall & Swift Residential Cost Handbook to estimate the cost new of a home built in the early 1900s. What should you do?
- not use Marshall & Swift because it has no data on homes built before 1966
- go to the Old Residence pages in the book
- go to the Manufactured Housing section in the book
- none of the above
go to the Old Residence pages in the book
A rectangular-shaped two-story home measures 28 feet by 40 feet. How many lineal feet are there in the foundation?
136
(28 x 2) + (40 x 2) = 136
A 2,800 square foot new home recently sold for $660,000. The site value was $180,000. What was the indicated cost per square foot of the home?
$171.43
$660,000 - $180,000 = $480,000 cost new. $480,000 divided by 2,800 = $171.43
Which of these is NOT one of the traditional cost estimating methods?
- comparative-unit
- direct-indirect
- unit-in-place
- quantity survey
direct-indirect
A building was constructed in September 2008 for $872,500. The cost index at that time was 174.6. The current cost index is 222.9. What is the indicated cost new of the building today? (Round the index to 2 decimal places)
$1,116,800
When does USPAP require the cost approach to be developed?
When it is necessary for credible results
An example of a special purpose property is
- 5,000 acre ranch
- geodesic dome house
- school building
- 8,000 square foot residence
school building (it has limited use)
The oldest of the three traditional appraisal approaches is the _________ approach.
cost
You examine a construction contract to build a 1,448 square foot house and the total cost is $197,450. What was the cost per square foot?
$136.36
Fannie Mae says the cost approach _______________.
is optional
A building was constructed in August 1999 for $2,340,000. The cost index at that time was 192.3. The current cost index is 302.1. What is the indicated cost new of the building today? (Round the index to 2 decimal places)
$3,673,800
You are performing the cost approach on an old house. By engaging in painstaking research, you are able to estimate the cost to construct an exact duplicate of the house, using all the actual materials that were used in its construction. What type of cost have you estimated?
Reproduction cost
The simplest, quickest, and least accurate method of estimating costs is the ______________ method.
comparative-unit
“Expenditures for the labor and materials used in the construction of improvements” is the definition of
direct costs
Unless adjustments are made for ownership interest, the cost approach will indicate the value of the ___________ interest.
fee simple
You are performing the cost approach on an old house. You use a cost manual to estimate the current cost of constructing a similar structure, using modern materials. Which type of cost have you estimated?
Replacement cost
Physical deterioration is best described as
wear and tear
Depreciation is defined as a loss in property value from
any cause
True or False: Functional obsolescence may be present in a brand-new structure.
True
In most situations, which of these would be considered an example of a superadequacy?
- gold-plated faucets
- R-90 insulation in walls and ceilings
- foundation walls that are 4 feet thick
- all of these
all of these
A building has an effective age of 12 and a total economic life of 60 years. It cost $320,000 new and its site value is $95,000. What is the indicated value by cost approach?
$351,000
12 / 60 = 20% depreciation. $320,000 x 20% = $64,000. $320,000 - $64,000 + $95,000 = $351,000
The number of years that have elapsed since a building was constructed is its
actual age
A new building is expected to remain standing for 80 years. This period is the building’s ____________ life.
physical
“The period over which improvements to real estate contribute to real property value” is the definition of
economic life
