Ch 12 Final Exam Flashcards by Petra Weise

A house has a total cost new of $212,340. It is 12 years old and has an estimated remaining economic life of 38 years. The cost to cure deferred maintenance items is $670. Short lived items Cost is $20,000 and depreciation on the short lived items has been identified totaling $4,850. What is the amount of long-lived depreciation attributable to the building?

Exercise 2. 12 + 38 = 50 years total economic life. Determine Cost of Long-lived Items by subtracting deferred maintenance and short lived items Cost from total replacement cost: $212,340 - $670 - $20,000 = $191,670. Determine depreciation percentage by diving effective life by total economic life: 12 / (12 + 38 = 50) = 24%. Multiply the Cost of the Long-Lived Items by the depreciation percentage: $191,760 X 24% = $46,000.

How well did you know this?

Not at all

Perfectly

__________ occurs within a property; while _________occurs off the site.

Physical deterioration and functional obsolescence, external obsolescence

How well did you know this?

Not at all

Perfectly

“An amount paid for the use of land, improvements or a capital good” is the definition of

rent

How well did you know this?

Not at all

Perfectly

“The relationship or ratio between the sale price or value of a property and its periodic gross rental income” is the definition of

gross rent multiplier

How well did you know this?

Not at all

Perfectly

“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” is the definition of

hypothetical condition

How well did you know this?

Not at all

Perfectly

“A method of estimating land value in which the depreciated cost of the improvements on an improved property is calculated and deducted from the total sale price to arrive at an estimated sale price for the land” is the definition of the ___________ method of site valuation.

extraction

How well did you know this?

Not at all

Perfectly

“A method used to convert an estimate of a single year’s income expectancy into an indication of value in one direct step, either by dividing the net income estimate by an appropriate capitalization rate or by multiplying the income estimate by an appropriate factor ” is the definition of

direct capitalization

How well did you know this?

Not at all

Perfectly

“Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat” is the definition of

fee simple estate

How well did you know this?

Not at all

Perfectly

“Data that relates to the four forces that affect real property values—social, economic, governmental, and environmental forces” is the definition of

general data

How well did you know this?

Not at all

Perfectly

“Real property for which the expansion, redevelopment, or reuse of the real estate may be complicated by the presence of environmental contamination that needs to be remediated to appropriate regulatory standards ” is the definition of

brownfield

How well did you know this?

Not at all

Perfectly

“The actual rental income specified in a lease” is the definition of ___________ rent.

contract

How well did you know this?

Not at all

Perfectly

“The age of property that is based on the amount of observed deterioration and obsolescence it has sustained” is the definition of ____________ age.

effective

How well did you know this?

Not at all

Perfectly

“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 the definition of__________ cost.

replacement

How well did you know this?

Not at all

Perfectly

“The estimated cost to construct, at current prices as of the effective appraisal date, an exact duplicate or replica of the building being appraised, using the same materials…” is the definition of _______________ cost.

reproduction

How well did you know this?

Not at all

Perfectly

“The relationship or ratio between the sale price or value of a property and its gross annual rental income” is the definition of

gross income multiplier

How well did you know this?

Not at all

Perfectly

“The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease” is the definition of _______________.

leasehold interest

How well did you know this?

Not at all

Perfectly

A ___________ home has a permanent steel chassis, wheels and axles.

manufactured

How well did you know this?

Not at all

Perfectly

A _______________ home is built in accordance with the HUD Code.

manufactured

How well did you know this?

Not at all

Perfectly

A 5 year old water heater with an expected life of 12 years and a replacement cost of $825 will have experienced depreciation of $__________.

344.03

How well did you know this?

Not at all

Perfectly

A building was constructed in July 2000 for $654,200. The cost index at that time was 138.5. The current cost index is 221.8. What is the indicated reproduction cost of the building today?

1046720

How well did you know this?

Not at all

Perfectly

A comparable new house just sold for $440,000. You estimate the value of the site at $90,000 and the cost of the site improvements at $15,000. It has 2,885 square feet of GLA. What is its unit cost?

116.12

How well did you know this?

Not at all

Perfectly

A comparable sale of a new house just sold for $640,000. You estimate the value of the site at $120,000 and the cost of the site improvements at $18,000. It has 2,940 square feet of GLA. What is its unit cost?

170.75

How well did you know this?

Not at all

Perfectly

A deed could provide all of the following information about a property EXCEPT

zoning

How well did you know this?

Not at all

Perfectly

A deed could provide which of the following information about a property?

owner of record, easements, deed restrictions

How well did you know this?

Not at all

Perfectly

A dwelling has a reproduction cost of $625,000. It is 10 years old and has an effective age of 12. Its remaining economic life is estimated to be 48 years. What is the depreciated value of the improvements by the age-

500000. Age-Life Method. 12 + 48 = 60 years (total economic life). 12 ÷ 60 = .20 or 20% depreciation. $625,000 X .20 = $125,000 depreciation. $625,000 - $125,000 = $500,000.

A factory-built house constructed in compliance with the HUD code is _________ home.

manufactured

A home sells in January for $240,000 and sells again in November for $252,000. When the home resold it had not been improved at all. What is the indicated adjustment for change in market conditions, per month?

0.005

A house cost $295,000 to build new. It is 5 years old and has sustained a total of 8% depreciation. It sits on a lot worth $45,000. What is its value by the cost approach?

316400

A house cost $395,000 to build new. It is 5 years old and has sustained a total of 10% depreciation. It sits on a lot worth $65,000. What is its indicated value by the cost approach?

420500

A house is rented for $1,050 per month, but lacks air conditioning. Comparable houses with air conditioning rent for $1,100 per month. The appropriate gross rent multiplier is 85. By the capitalized value method, how much is the depreciation attributable to the lack of air conditioning?

4250

A house is rented for $1,050 per month, but lacks air conditioning. Comparable houses with air conditioning, rent for $1,100 per month. The appropriate gross rent multiplier is 75. By the capitalized value method, how much is the depreciation attributable to the lack of air conditioning?

3750

A management fee usually is based on a percentage of the _________ income.

gross

A mortgage in which a party other than the borrower assures payment in the event of default is a(n) _____________ mortgage.

guaranteed

A one

cape cod

A parcel is valued at $450,000 as a single unit. Zoning allows it to be subdivided into 8 lots and it is estimated that each lot could sell for $70,000. Site development costs (sewer, grading, road, etc.) would cost $65,000. What is the highest and best use?

Subdivide it

A property contains 3.2 acres and is worth: A. $155,000 as single home site; B. $75,000 per unit as a site for a duplex; or C. $50,000 per acre as a retail site. All uses are physically possible, economically feasible and legally permitted. Which is the highest and best use?

C, retail site

A property sold for $2,350,000. The net operating income was verified as $294,640. The capitalization rate indicated by sale is ____%.

0.125

A property sold for $250,000. The reproduction cost of the building was $380,000 and it was 60% depreciated. By extraction, what is the value of the land?

98000

A single parcel is valued at $450,000. Zoning allows it to be subdivided into 8 lots and it is estimated that each lot could sell for $50,000. Site development costs (sewer, grading, road, etc.) would cost $50,000. What is the highest and best use?

Leave it as one parcel

A single unit residence sold for $126,000. It was rented for $1,100 per month but the market rent was $1,200. What is the GRM indicated by this sale?

105

All of the following could be sources of general data EXCEPT

zoning ordinances

All of the following could be sources of specific data EXCEPT

U.S. Census Bureau

All of the following would be considered short-lived items EXCEPT

foundation

An 8-unit apartment building has 5 units rented at $850 per month and 3 units rented at $925 per month. What is its gross income?

84300

An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be __________.

biased

An entrepreneur is taking on a development project, and by his calculations, he expects to receive a 25% return on his investment in the project. This 25% figure represents

entrepreneurial incentive

An estimate of remaining economic life is required by

VA. Yes, it is required by VA and FHA.

An old gas station on a good corner location in a desirable older neighborhood recently sold for $375,000. The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 80%. What is the land value?

305000. Extraction Method. $350,000 X .2 = $70,000 (current building value). $375,000 - $70,000 = $305,000 (land value).

Another name for girder is

beam

Appraisal fees are examples of _______________ costs.

indirect

Appraisers are cautioned to identify the exact _______________ of market value, and its _______________, applicable in each appraisal completed for the purpose of market value.

definition, authority

Architectural and engineering fees are examples of _____________ costs.

indirect

Condos in your market area sold for a median price of $195,320 twelve months ago and the median price of condos for the current month is $219,540. What is the percentage of change in market conditions?

0.124

Construction materials and workers' wages are examples of __________costs.

direct

Depreciation is defined as “a loss in property value from _________. “

any cause

Developers often value land on a basis of price per

buildable unit

Each of these is a variable expense EXCEPT

taxes

Each written appraisal report must contain the date

of the report and the effective date of the appraisal

Fannie Mae says the appraiser must base his or her analysis and any adjustments to comparable sales on

market data

Fannie Mae says the cost approach ____________________.

is optional

Fill, grading and permits are examples of improvements that create a

Site

Footings need to be _______________ below average frost penetration levels.

at least 12 inches

GLA includes _______________ but not _______________.

above grade finished area, garages

GRMs are derived by dividing the __________ by the property's ___________ at the time of sale.

sale price, gross monthly unfurnished market rent

If a cost manual is used, the result is _____________ cost.

replacement

In a federally related transaction, a licensed residential appraiser is permitted to appraise non-complex 1-4 unit residential properties with a transaction value of less than ________ and complex 1-4 unit residential properties with a transaction value less than _________.

$1,000,000, $250,000

In most residential appraisals, the appraiser values

site

In the age-life method of estimating depreciation, the ___________ age is divided by the ____________ life.

effective age, total economic life

In the sales comparison approach, sales data on __________ sales should be collected.

at least three

It is common in appraisal reports to include a map that shows the location of the _______________.

subject property and comparable sales

Market condition adjustments should always be calculated from the time of the ________ to the ___________.

contract, effective date of the appraisal

Materials that transfer energy quickly are called _______________.

conductors

Modular homes are constructed to meet __________ code requirements.

State and Local

Price per room is a common unit of comparison when appraising

2-4 unit residential properties

Ranking analysis is a form of __________ analysis.

qualitative

Segregated cost method is another name for the _________ method.

unit-in-place

The "summation approach" is another name for the _______________ approach.

cost

The credibility of assignment results is always measured in the context of the _______________.

intended use

The Fannie Mae Single Family Comparable Rent Schedule is designated as Form

1007

The first step in the valuation process is

define the problem

The ground rent capitalization method should only be used when appraising a property that is

income-producing or suitable for income production

The intended user of an appraisal is the __________ and any other user, as identified by _________.

client, name or type

The last step in the valuation process is

report the final opinion of value

The method that treats the land value as a percentage of the total value is the __________ method.

allocation

The most commonly used method for valuing sites is the ____________ method.

sales comparison

The SCOPE OF WORK RULE says that in each real property appraisal assignment, the appraiser must _______ the problem to be solved, and determine and perform the scope of work necessary to develop ________ assignment results.

identify, credible

The subject is a 15 year old duplex that would cost $240,000 to build new today. It is in good condition and you estimate the effective age to be 10 years. Your estimate of total economic life is 50 years. Its land value is $60,000. What is its value by the cost approach?

252000. Cost Approach Using Age- Life Method. 10 ÷ 50 = .20 or 20% depreciation. $240,000 X .20 = $48,000 depreciation. $240,000 - $48,000 = $192,000. $192,000 + $60,000 - $252,000

The summation approach is another name for the _______________ approach.

cost

The URAR form can be used to report the appraisal of which of the following property types?

one-unit property, one-unit with an accessory unit, unit in a PUD

Today the _______________ technique of site valuation is used primarily in highest and best use analysis.

land residual

Two squares of 180-pound roof shingles would weigh _____ pounds.

360

USPAP says a cost approach must be developed when it is necessary for

credible results

When describing roofing shingles, a “square” contains __________ square feet.

100

When developing an appraisal, you calculate the following GRMs for comparable properties: 94.3, 90.1, 95.6, 109.2, 84.5, 100.7, 99.9. What is the mean of the GRMs?

96.3

When developing an appraisal, you calculate the following GRMs for comparable properties: 94.3, 90.1, 95.6, 109.2, 84.5, 100.7, 99.9. What is the range of the GRMs?

24.7

When estimating the amount of adjustments for differences among properties, the most important principle is the principle of _______________.

contribution

When the property being appraised is a one-family property that will be used as an investment property, Fannie Mae requires that the appraiser must prepare a ______________.

Form 1004 and Form 1007

Which site valuation methods should only be utilized when the subject property is income-producing by nature?

land residual and ground rent capitalization

Which type of depreciation occurs off the site?

external

Which type of valuation analysis would typically NOT include a separate site valuation?

gross rent multiplier

Which was the earliest form of electrical wiring?

knob and tube

Which would NOT be a sub-step in defining the problem?

highest and best use analysis

You calculate the following gross rent multipliers for comparable properties: 121.2, 105.3, 111.2, 150.1, 108.3, 105.3, 109.8, 108.8. What is the mode of the GRMs?

105.3

You examine a construction contract to build a 2,448 square foot house and the total cost is $197,450. What was the cost per square foot?

80.66