Ch 18 Real Estate Appraisal

Question 1

Define Appraisal

Answer 1

The estimate of the value of something

Question 2

Define Market Value

Answer 2

the cash price that a willing buyer and willing seller would agree upon, given reasonable exposure of the property to the marketplace, full information to the potential uses of the property, and no undue compulsion to act.

Question 3

What does USPAP stand for?

Answer 3

Uniform Standards of Professional Appraisal Practice

Question 4

The 7 steps of the valuation process

Answer 4

1. Define appraisal Problem
2. Conduct preliminary analysis, formulate appraisal plan, and Collect data
3. estimate highest and best use
4. estimate land value
5. estimate the improved property value through he appropriate value approaches
6. Reconcile the results to arrive at a defined value estimate
7. report the conclusion of value

Question 5

What are the 3 approaches to value

Answer 5

1. market/Sales Comparison Approach
2. Cost approach
3. income Approach

Question 6

How many square feet are in an acre?

Answer 6

43,560 square feet

Question 7

What are the 3 forms of depreciation we talked about in class?

Answer 7

1. Physical Deterioration
2. Functional Obsolescence
3. External Obsolescence

Question 8

What is Physical Deterioration?

Answer 8

Value loss due to old building

Question 9

What is Functional Obsolescence?

Answer 9

Value loss because of the way it is built

Question 10

What is External obsolescence?

Answer 10

Value loss due to market failure, or other external reasons

Question 11

4 terms for Age/Life Depreciation

Answer 11

1. Physical Age
2. Effective Age
3. Physical Life
4. Economic Life

Question 12

Define Physical Age

Answer 12

Actual age of the building

Question 13

Define Effective Age

Answer 13

How does it compare to the competition. Is it still competitive.

Question 14

Define Physical Life

Answer 14

Life Expectancy. How long could it last?

Question 15

Define Economic Life

Answer 15

How long will it contribute to Value

Question 16

Outline the Cost Approach

Answer 16

Cost to replace
\+ Entrepreneurial Profit
= Total cost
-  Depreciation
= Depreciated value of improvements
\+ Land
= Total Value