Chapter 1 Flashcards
6 steps for identifying the problem:
- Identify client and intended users
- Identify intended use
- Identify the type and definition of value
- Identify the effective date
- Identify the relevant
characteristics of
the property - Identify any
assignment
conditions
What 3 categories are used in the data collection process?
- Market Area Data
- Subject Property Data
- Comparable Property Data
Market Area Data
General characteristics
of region, city, and
neighborhood
Subject Property Data
Subject characteristics of
land use and improvements,
personal property,
business assets, etc.
Comparable Property Data
Sales, listings, offers,
vacancies, cost and depreciation,
income and expenses,
capitalization rates, etc.
Two categories for data analysis:
Market, and Highest & Best Use Analysis
3 approaches to value:
- Sales comparison approach
- Income capitalization approach
- Cost approach
Valuation process
A systematic set of procedures an appraiser follows to provide answers to a client’s questions about real property value
Client
The party or parties (i.e., individual, group, or entity) who engage an appraiser by employment or contract in a specific assignment, whether directly or through an agent
Intended user
The client and any other party as identified, by name or type, as users of the appraisal or appraisal review report by the appraiser, based on communication with the client at the time of the assignment
Intended use
The use(s) of an appraiser’s reported appraisal or appraisal review assignment results, as identified by the appraiser based on communication with the client at the time of the assignment
identifying the purpose is the same as identifying the___
type and definition of value
Purpose of an assignment
The objective of an assignment—e.g., in an appraisal assignment, to develop an opinion of the defined value of a specified interest in real estate
effective date
the date of the value opinion
What two dates must be reported?
effective date and the report date
Relevant characteristics
Features that may affect a property’s value or marketability such as legal, economic, or physical characteristics
Physical characteristics
Attributes of a property that are observable or measurable as a matter of fact, as distinguished from opinions and conclusions, which are the result of some level of analysis or judgment
Extraordinary assumption
An assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions
Special assumption
An assumption, directly applicable to a specific appraisal or review, which, if found to be false, could alter the opinions or conclusions in an appraisal or review
Hypothetical condition
This is a condition that is contrary to what exists but is supposed for the purpose of analysis
Other assignment conditions
might include laws, regulations, guidelines, and other conditions that can affect the scope of work
Scope of work
The type and extent of research and analyses in an appraisal or appraisal review assignment
General data
Data that relates to the four forces that affect real property values—social, economic, governmental, and environmental forces
Specific data
Details about the property being appraised, comparable sale and rental properties, and relevant local market characteristics
Trend
A series of related changes brought about by a chain of causes and effects. Trends are forecast through economic base analysis, statistical analysis, market analysis, and analysis of economic indicators and surveys
Market analysis
The study of the supply and demand in a specific area for a specific type of property.
Highest and best use
The reasonably probable use of property that results in the highest value
The four criteria that the highest and best use must meet
are _____
- legal permissibility
- physical possibility
- financial feasibility
- maximum productivity
2 options for land as though vacant:
improve, leave vacant
3 options for property as improved:
leave as is, alter, demolish
A tax appeal assignment will commonly involve a ______ effective date
retrospective
Intended use affects both appraisal _____ and reporting
development
A systematic procedure appraisers can employ to provide the answer to a client’s question about the value of a property is called the _______
valuation process
In ______ analysis, the appraiser analyzes the ideal improvement for the property
highest and best use analysis
The relevant characteristics of a property are part of ___ the problem
identifying
T/F: Scope of work is the type and extent of research and
analyses in an appraisal or appraisal review assignment
True
T/F: Identifying relevant characteristics of the subject property
is specific data rather than general data
True
T/F: The client and intended user are never the same
False
T/F: A prospective appraisal has an effective date contemporaneous with the date of the report
False
T/F: Developing an opinion of insurable value can be identified as the purpose of an appraisal assignment
True
