Chapter 1 - Real Estate Appraisal 6th Edition

Question 0

Ad valorem

Answer 0

A Latin phrase meaning “according to value”. Used to describe general property taxes tthat are levied on the basis of a property’s assessed value.

Question 1

What does FIRREA stand for?

Answer 1

Financial Institution Reform, Recovery, and Enforcement Act.

Question 2

Appraisal

Answer 2

The act or process of developing an opinion of value; an opinion of value (USPAP definition). A form of appraisal practice.

Question 3

Appraisal assignment

Answer 3

The task of appraising a particular property under specified terms and conditions.

Question 4

Appraisal consulting

Answer 4

The act or process of developing an analysis, recommendation, or opinion to solve a problem, where an opinion of value is a component of the analysis leading to the assignment results (USPAP definition). A form of appraisal practice.

Question 5

Appraisal practice

Answer 5

Valuation services performed by an individual acting as an appraiser, including but not limited to appraisal, appraisal review, or appraisal consulting (USPAP definition).

Question 6

Appraisal review

Answer 6

The act or process of developing and communicating an opinion about the quality of another appraisers work that was performed as part of an appraisal, appraisal review, or appraisal consulting assignment (USPAP definition). A form of appraisal practice.

Question 7

Appurtenance

Answer 7

Something that goes along with ownership of real estate, such as mineral rights or an easement.

Question 8

Assessment (3 values)

Answer 8

1. The valuation of property for property tax purposes. 2. The amount of a property tax. 3. The process of levying a property tax.

Question 9

Bundle of rights

Answer 9

A description of property ownership in terms of the various rights that ownership converts.

Question 10

Charter

Answer 10

Authorization to operate an entity (such as a depository institution), granted by either the federal government or a state government.

Question 11

Depository institution

Answer 11

A financial institution that accepts deposits from its account holders. Includes savings institutions (also known as savings and loan associations or thrifts), commercial banks, and credit unions.

Question 12

Easement

Answer 12

Type of non financial encumbrance; a nonexclusive right to use someone else’s property for a particular purpose. An appurtenant easement benefits a particular parcel of real estate. An easement in gross benefits an individual or entity.

Question 13

Eminent domain

Answer 13

The power of government to take private property for public use upon payment of just compensation. This power is exercised through the process of condemnation.

Question 14

Encumbrance

Answer 14

A real property interest that does not inclue the present or future right of possession. Financial encumbrances (such as mortgages) affect title to real estate. Non-financial encumbrances (such as easements) also affect title; in addition, they affect the use of real estate.

Question 15

Escheat

Answer 15

Reversion of property to the sate when the owner dies without leaving a will or heirs.

Question 16

Estate

Answer 16

A real property interest that includes the right of possession, i.e., the exclusive right to occupy and use the real estate. Estates may be freehold estates (ownership) or leasehold estates (tenancy).

Question 17

Fee appraiser

Answer 17

An appraiser who is self-employed, or who works for a company whose primary business is to provide appraisal services to others.

Question 18

Fee simple

Answer 18

A freehold estate that is teh most complete and comprehensive form of real property interest, including the entire bundle of rights.

Question 19

Freehold

Answer 19

An estate that includes the rights of ownership or title, either presently or in the future. Freehold estates include the fee simple, the life estate, the estate in remainder, and the estate in reversion.

Question 20

General property tax

Answer 20

A property tax levied against all non-exempt property, usually on the basis of a property’s value (ad valorem).

Question 21

Improvement

Answer 21

An item of personal property that is added to the land by human effort, in such a way that it becomes part of the real estate. Also called a fixture.

Question 22

Land

Answer 22

The surface of the the earth, together with all that it contains.

Question 23

Leased fee

Answer 23

The real property interest of the landlord (owner) under lease, which includes ownership but not the immediate right of possession.

Question 24

Leasehold

Answer 24

A non-freehold estate, which includes the right of possession during the term of the lease, but not ownership or title. The real property interest held by a tenant under a lease. Also known as a tenancy. Leasehold estates include the tenancy for years (created by a term lease), the periodic tenancy (created by a period-to-period lease), and teh tenancy at will (created when a tenant remains in possession with the landlord’s consent after expiration of a valid lease).

Question 25

Legal description

Answer 25

A description of a parcel of real estate in a form that is legally approved in the state where the property is located. Common systems of legal description include the metes and bounds, government (rectangular) survey, and lot and block systems.

Question 26

Lien

Answer 26

A financial encumbrance. The holder of a lien has teh right to force the sale (foreclosure) of the liened property and use the proceeds of the sale to satisfy a debt, in the event that the debt is not paid according to its terms. Specific liens (such as mortgages) apply only to a particular piece of real estate, while general liens (such as judgment liens) apply to all real estate owned by the debtor.

Question 27

Life estate

Answer 27

A freehold estate that terminates automatically upon the death of the person designated as the measuring life.

Question 28

Loan qualifying

Answer 28

A mortgage lender’s analysis of a prospective borrower’s loan application and an appraisal of the security property, in order to determine whether the borrower can afford to repay the loan and whether the property is adequate collateral for the loan amount. Also called underwriting.

Question 29

Personal property

Answer 29

All tangible property that is not classified as real estate (USPAP definition).

Question 30

Police power

Answer 30

The power of government to make and enforce regulations for the protection of the public health, safety, and welfare. It is the basis for zoning laws, land use regulations, building codes, etc.

Question 31

Primary market

Answer 31

The market in which financial institutions (or other real estate lenders) make real estate loans to home buyers.

Question 32

Private restriction

Answer 32

A type of non-financial encumbrance that prohibits a real estate owner from using his or her property in specified ways. Private restrictions are most commonly created by developers at the time of subdivision, and they are enforced by other property owners, often through a homeowners association. Also called a deed restriction.

Question 33

Purpose of appraisal

Answer 33

The information that a client wants the appraiser to provide in an appraisal assignment. The purpose of most appraisals is to estimate a defined value for a specific real property interest in a specific parcel of real estate as of a specific date.

Question 34

Real estate

Answer 34

An identified parcel or tract of land, including improvements, if any (USPAP definition).

Question 35

Real property

Answer 35

The interests, benefits, and rights inherent in the ownership of real estate (USPAP definition).

Question 36

Report

Answer 36

Any communication, written or oral, of an appraisal, appraisal review, or appraisal consulting service that is transmitted to the client upon completion of an assignment (USPAP definition). The means by which an appraiser’s value conclusions are communicated to the client.

Question 37

Secondary market

Answer 37

The market in which real estate loans are purchased from lenders, securitized, and resold to investors.

Question 38

Servient tenemant

Answer 38

A parcel of land that is subject to an easement.

Question 39

Special assessment

Answer 39

A form of property tax levied against properties in a special assessment district or local improvement district, in order to cover the cost of certain public improvements that benefit those properties. It is a one-time tax that expires when sufficient tax revenue has been collected to pay for the improvements.

Question 40

Staff appraiser

Answer 40

An appraiser employed by a business, government agency, or other organization to perform appraisal services that relate to the employer’s operations.

Question 41

Trade fixture

Answer 41

A fixture installed by a tenant in connection with the operation of a business on leased property. Usually considered to be the personal property of the tenant, and not part of the real estate.

Question 42

Use of appraisal

Answer 42

The reason why a client wants to know the information that an appraiser will provide in an appraisal assignment.

Question 43

Value

Answer 43

The monetary relationship between properties and those who buy, sell, or use those properties (USPAP definition). The theoretical worth of something, expressed in terms of something else, usually money.