Ch 12 Final Exam Flashcards
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.
__________ occurs within a property; while _________occurs off the site.
Physical deterioration and functional obsolescence, external obsolescence
“An amount paid for the use of land, improvements or a capital good” is the definition of
rent
“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
“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
“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
“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
“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
“Data that relates to the four forces that affect real property values—social, economic, governmental, and environmental forces” is the definition of
general data
“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
“The actual rental income specified in a lease” is the definition of ___________ rent.
contract
“The age of property that is based on the amount of observed deterioration and obsolescence it has sustained” is the definition of ____________ age.
effective
“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
“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
“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
“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
A ___________ home has a permanent steel chassis, wheels and axles.
manufactured
A _______________ home is built in accordance with the HUD Code.
manufactured
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
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
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
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
A deed could provide all of the following information about a property EXCEPT
zoning
A deed could provide which of the following information about a property?
owner of record, easements, deed restrictions
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-
- 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?
- 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?
- 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
