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Basic Appraisal Principles > Chapter 12 > Flashcards

Chapter 12 Flashcards

1
Q

For any economic good to have value it must possess four elements:

A

Desire
Utility
Scarcity
Effective Purchasing Power

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2
Q

Utility and scarcity are _____ factors. Desire and effective purchasing power are ______factors.

A

supply, demand

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3
Q

“A purchaser’s wish for an item to satisfy human needs (e.g. shelter, clothing, food, companionship) or individual wants beyond essential life-support needs.”

A

Desire

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4
Q

In economics, the ability of a product to satisfy a human want, need, or desire

A

Utility

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5
Q

The ability of a property or building to be useful and to perform the function for which it is intended according to current market tastes and standards

A

Functional Utility

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6
Q

The present or anticipated undersupply of an item relative to the demand for it. Conditions of scarcity contribute to value

A

Scarcity

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7
Q

The ability of an individual or group to participate in a market, i.e., to acquire goods and services with cash or its equivalent.

A

Effective purchasing power

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8
Q

Value is created by

A

external market forces

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9
Q

4 main categories of external market forces

A

Governmental
• Economic
• Social
• Environmental

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10
Q

List of governmental forces

A
  • Planning
  • Zoning
  • Building Codes
  • Environmental restrictions
  • Taxes
  • Utilities
  • Transportation
  • Education
  • Cultural
  • Parks and recreation
  • Police
  • Fire protection
  • Public safety
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11
Q

This agency is charged with monitoring coastal habitats, such as estuaries and reefs. It also monitors development, water and sediment contamination, water diversion for industrial, agricultural, sedimentation, and dredging and filling activities.

A

NOAA

National Oceanic and atmospheric administration

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12
Q

Their mission is planning, designing, building and operating water resources and other civil works. Wetlands and waterways regulation & permitting

Economic forces are

A

US Army Corps of Engineers

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13
Q

types of economic external forces

A
  • National economy
  • Consumer Price Index
  • Interest rates
  • Availability of financing
  • Wage rates
  • Types of employment
  • Unemployment rates
  • Cost of construction
  • Rental rates
  • Rental vacancies
  • Expense levels
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14
Q

Social influences on property values

A 
Population trends
• Population migrations
• Ages
• Family formations
• Lifestyle changes
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15
Q

Environmental influences as external forces

A
  • Shopping
  • Schools
  • Employment
  • Houses of worship
  • Cultural facilities
  • Recreational facilities
  • Educational facilities
  • Restaurants
  • Police protection
  • Fire protection
  • Climate
  • Topography
  • Soil conditions
  • Nature of improvements in the area
  • Density
  • Natural hazards
  • Man-made hazards
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16
Q

Taxes would be a(n) _____________ force affecting property values.

A

Governmental

17
Q

A grossly over-improved house in a neighborhood is very large and good quality, however no one in the neighborhood can afford to purchase it. This demonstrates a lack of

A

effective purchasing power

18
Q

Do Building codes have impact on property values.

A

yes

19
Q

Value is influenced by

A

external market forces

20
Q

Why would a handful of air typically have no value?

A

lacks scarcity

21
Q

An optimal U.S. unemployment rate would be

A

3-4%

22
Q

The mortgage meltdown of the late 2000s resulted in

A

lessened Availability of Financing

23
Q

The cost of construction is based on three factors. What are they?

A

Land, labor and materials

24
Q

Generally, low interest rates encourage _________, while high interest rates encourage __________.

A

borrowing, saving

25
Q

The first citywide zoning regulations occurred in

A

New York City

26
Q

To get a permit to drain a wetlands area, you must contact

A

U.S. Army Corps of Engineers

27
Q

The majority of American households today consist of ________ person(s).

A

one or two

28
Q

What is a slow draining type of soil?

A

utility

29
Q

A one-acre parcel in the middle of a swamp might have very little or no value because it lacks

A

utility

30
Q

Which federal agency is responsible for monitoring coastal habitats?

A

NOAA

31
Q

The prime source for population demographics is

A

US bureau of the census

32
Q

Most insurance companies will give you a break on your fire insurance if you are within a certain distance from a

A

fire hydrant

33
Q

When analyzing an income property, it is generally true that a property that is more valuable should

A

be able to generate more rent

Rental Rates. Rents usually rise or fall in relationship to value.

34
Q

The federal agency responsible for navigation and flood control is

A

U.S. Army Corps of Engineers

35
Q

What are benefits of community living?

A

shared maintenance
common recreation areas
increased security

36
Q

The value of an income property is based primarily on

A

the net income it can produce

37
Q

There is a multiplier effect in that each job in a _______ industry supports two to three jobs in the ________ industries.

A

basic, service

Basic Appraisal Principles (19 decks)

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