Chapter 10 economic principles and types of value Flashcards
The cost of options forgone or opportunities not chosen
principle of opportunity cost
Residential investment properties are typically considered to be \_\_\_\_\_\_\_\_\_\_\_\_ properties. Anything less than 10 units Apartment One- to four-unit Duplexes and apartments up to 8 units
one to four unit
The Principle of Anticipation is the basis for which valuation methodology? Market study Income Capitalization Approach Cost Approach Sales Comparison Approach
income capitalization approach
The most common methodology used to value residential investment properties is the Potential Gross Income Multiplier Overall capitalization rate Effective Gross Income Multiplier Gross Rent Multiplier
gross rent multiplier
A tangible or intangible benefit of real property that enhances its attractiveness or increases the satisfaction of the user. Natural amenities may include a pleasant location near water or a scenic view of the surrounding area; man-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
amenity
Historically, which investment typically produces the lowest overall rate of return? Savings account Real estate Bonds Certificate of deposit
savings account
“A tangible or intangible benefit of real property that enhances its attractiveness or increases the satisfaction of the user, but is not essential to its use” is the definition of Amenity Homeownership Real property Bundle of rights
amenity
Historically, which investment has typically produced the highest overall rate of return? Savings account Real estate Bonds Certificate of deposit
real estate
The value of a property interest to a particular investor or class of investors based on the investor’s specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market
Investment value
The value of a property according to the tax rolls in ad valorem taxation; may be higher or lower than Market Value, or based on an assessment ratio that is a percentage of Market Value
Assessed Value
In real estate appraisal, the value a specific property has for a specific use; may be the Highest and Best Use of the property or some other use specified as a condition of the appraisal.
Use Value
The value of a business enterprise that is expected to continue to operate into the future. The intangible elements of Going Concern Value result from factors such as having a trained work force, an operational plant, and the necessary licenses, systems, and procedures in place
Going Concern Value
In addition to estimating the Market Value of the fee simple interest in an income producing property, an appraiser can also estimate its Investment Value Leasehold Value Leased Fee Value All of these
all of these
Which investment typically incurs the highest burden of management? Savings account Real estate Bonds Certificate of deposit
real estate
\_\_\_\_\_\_\_\_\_\_ is often referred to as the "bundle of rights". Real property Real estate Leased fee estate Warranty deed
real property
The decision to purchase by an investor is motivated more by the property’s \_\_\_\_\_\_\_\_\_\_ and \_\_\_\_\_\_\_\_\_\_\_\_. Appeal, risk Income, appeal Curb appeal, amenities Income, risk
income, risk
Multiplying the effects of the equity money is called Leveraging Averaging The multiplier effect Doubling down
leveraging
Owners buy \_\_\_\_\_\_\_ – investors buy \_\_\_\_\_\_\_\_\_\_. Houses, homes Homes, vacant land Houses, apartments Homes, houses
homes, houses
If you are appraising a specialized industrial property you might estimate \_\_\_\_\_\_\_\_ Value. Investment Disposition Use Intangible
use
The primary principle upon which the Cost and Sales Comparison approaches are based is the principle of Balance Substitution Change Conformity
substitution
“A value that cannot be imputed to any part of the physical property, e.g., the excess value attributable to a favorable lease or mortgage, the value attributable to goodwill” is the definition of \_\_\_\_\_\_\_\_\_\_\_ value. Market Insurable Investment Intangible
intangible
"The cost of options forgone or opportunities not chosen” is the definition of the Principle of Options Lost Increasing and Decreasing Returns Opportunity Cost Anticipation
opportunity cost
The principle of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ is defined as “the perception that value is created by the expectation of benefits to be derived in the future.” Balance Anticipation Capitalization Contribution
anticipation
Which investment usually has the best liquidity? Stocks Real estate Certificate of deposit Savings account
savings account
Ad Valorem means Assessed Value According to value Adjusted to value Added value
according to value
Which investment has historically entailed the most risk? Certificate of deposit Savings account Stocks Real estate
stocks
In an appraisal of the leased fee interest, a lease that is below Market Rent could have a \_\_\_\_\_\_\_\_ effect on value. A lease that is above Market Rent could have a \_\_\_\_\_\_\_\_\_ effect on value. Positive, negative Positive, decreasing Negative, stabilized Negative, positive
negative, positive
The Income Approach considers the value of a property to a Typical investor Owner-occupant Lender Appraiser
typical investor
