Ch 7 Quiz Flashcards
______________ is “the process by which a value indication is derived in the sales comparison approach”.
Comparative analysis
“The geographic region from which a majority of demand comes and in which the majority of competition is located” is the definition of
market area
“A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural” is the definition of ____________
district
“A numerical (dollar or percentage) adjustment to the indicated value of a comparable property to account for the effect of a difference between two properties on value” is the definition of _______________ adjustment.
quantitative
A market area boundary might be indicated by a change in all of the following EXCEPT
topography. A change in topography would not usually be as significant.
A property sold for $129,000. It was not improved or added onto, and it re-sold 12 months later for $141,900. What is the annual change in market conditions indicated by this sale?
a 10% increase
A transaction could be verified through any of the following EXCEPT
home inspector
Adjustments should be made for __________ differences between the subject property and a comparable property.
significant
An appraiser uses five comparable sales, and gets a differing indication of value from each one. What step of the sales comparison process involves considering these indications and arriving at an indication of value for the subject?
reconcile the value indications
Besides properties that have recently sold, other value indications might include all of the following EXCEPT
offers to lease
Comp A has three bedrooms and sold for $118,000. Comp B has four bedrooms and sold for $125,000. What is the indicated adjustment for a fourth bedroom, using these two paired sales?
7000
Comp C sold for $127,000 and has 2,450 square feet. Comp D is essentially identical, except that it has 2,675 square feet and it sold for $136,000. What is the indicated adjustment per square foot?
40
Comparable 1 sells for $222,000 and contains 1,900 SF. Comparable 2 is similar in all aspects, except it contains 2,100 SF, and it sells for $234,000. How much should we adjust another comparable sale, per square foot?
60
For what type of property might the sales comparison approach NOT be an applicable approach to value?
an unusual or one-of-a-kind design home
In applying comparative analysis, an appraiser may employ
quantitative or qualitative techniques, either separately or in combination
In the URAR, concerning verification, you are asked to provide the ____________ and the __________.
data source, verification source
Paired data analysis is also known as
paired sales analysis
Price per square foot of gross living area is a common unit of comparison when appraising
one-unit residences
Price per square foot of net leasable area is a common unit of comparison when appraising
offices.
Relative comparison analysis is __________ technique.
a qualitative
Specific data is
different for each appraisal assignment
The first step in the sales comparison approach is
research the market
The last step in the sales comparison approach is
reconcile the value indicators
The only limitation of the sales comparison approach is that _____________.
you need a sufficient number of reliable sales
The primary principle upon which the cost and sales comparison approaches are based is the principle of ________________.
substitution
The principle of _________________ is used when determining how much to adjust for differences between various components of a property.
contribution
The subject property has 1,200 square feet of GLA, and a comparable sale has 1,400 square feet. What type of adjustment are you likely to make in the sales comparison approach for GLA?
a downward adjustment to the comparable. When determining whether to make a positive or negative adjustment, it is helpful to think of the subject property as a base, which doesn’t move. Then think of the comparable property as either above the subject (superior) or below the subject (inferior). You want to adjust the comparable to meet the base, so make a positive (upward) or negative (downward) adjustment as necessary. In this case, the comparable is superior, so the adjustment to the comparable would be negative.
Traditionally, appraisers have used a minimum of _____ comparable sales in the sales comparison approach.
3
True or False: A market area could encompass an entire state, or several states.
TRUE
True or False: General data includes items of information on value influences that originate outside the property being appraised.
TRUE
True or False: In an arms-length transaction, the seller is under no duress to sell, but the buyer may be under duress
FALSE
True or False: Qualitative analysis is used for elements that cannot be given a numerical value.
TRUE
True or False: Qualitative analysis uses percentages adjustments, while quantitative analysis uses specific dollar adjustments.
FALSE
Two virtually identical houses are offered for sale in a subdivision. House A is listed for $129,900 and House B is listed for $169,000. House A has been shown 12 times and there are 4 offers pending, while House B has been shown twice and there have been no offers. Which appraisal principle is being demonstrated here?
substitution
We never adjust the _______________.
subject property
What is the first step in the sales comparison approach process?
research the market
What type of analysis is used for elements that cannot be given a numerical value?
qualitative
When determining how much to adjust for a two-car garage in the sales comparison approach, which valuation principle is of primary importance?
contribution
Which analysis technique employs only plusses and minuses?
relative comparison analysis
Which approach is most widely used in the appraisal of residential properties?
sales comparison approach
Which of the following would be considered a source of comparable sale data?
MLS, appraiser’s own files, the internet
Which of the following would NOT be considered a source of specific data?
U.S. Census Bureau
Which of these is an element of comparison listed in The Appraisal of Real Estate, 14th Edition?
location, financing terms, property rights being appraised
Which of these is NOT another name for the sales comparison approach?
sales capitalization approach
You are conversing with an appraiser who has been in the profession for 40 years, and he mentions the term “market approach”. What approach to value is he probably referring to?
sales comparison
