Chapter 12 notes (value)

Question 1

Prerequisites to Value

D.U.S.T

Answer 1

Demand
Utility
Scarcity
Transferability

Question 2

Types of Value

Answer 2

Assessed value
Condemnation
Going Concern
Insured value
Investment value
Liquidation value
Salvage value

Question 3

Appraisal process

Answer 3

1. Define the problem
2. Make preliminary study,
3. Gather data (general data, specific data.)
4. Analyze data
5. reconciliation final estimate.
6. prepare appraisal report,

Question 4

Factors influencing value

Answer 4

Location (situs), size and shape, depth tables, soil characteristics, key lots, assemblage

Question 5

Plottage

Answer 5

an increase in value resulting from assemblage.

Question 6

Assemblage

Answer 6

The process of combing several individually owned adjoining parcels into one tract.

Question 7

General Data used to appraise a property

Answer 7

(PEGS)
Physical factors,
Economic
Governmental
Social

Question 8

Data pertaining to subject property

Answer 8

Highest and best use, site characteristics, improvements, comparable sales, rentals, expenses, income (for investors)

Question 9

The above grade, heated, enclosed, and finished area of a property

Answer 9

Gross Living Area (GLA)

Question 10

Three approaches to analyze data (pertaining to appraisal report)

Answer 10

sales comparison approach
Cost/replacement approach
Income/Capitalization approach

Question 11

3 types of appraisal reports

Answer 11

letter of opinion, short form (lending institutions, most common), narrative (most comprehensive. used for commercial)
see page 12-15

Question 12

Sales comparison/market data approach

Answer 12

Adjustments made for:

Rights, conditions of sale, financing, market conditions, location, physical factors, income characteristics.

Question 13

C.I.A.

Answer 13

When the comp property is inferior to the subject property.

Comparable Inferior, Add

(Never make adjustments to the subject property. )

Question 14

C.B.S

Answer 14

Comparable Better, Subtract

When the comp property is superior to the subject property.

Question 15

___ establishes the procedure for a competent appraisal through the USPAP

Answer 15

The appraisal standards board

Question 16

What does USPAP stand for?

Answer 16

Uniform Standards of Professional Appraisal Practice

Question 17

What are the needs for an appraisal?

Answer 17

1. Contracts for the sale of a property
2. Lending institutions for loan purposes
3. Insurance companies for home owner’s insurance
4. Investors
5. Condemned properties under eminent domain

Question 18

Market value

Answer 18

The most probable selling price in an arm’s length transaction.

Question 19

Market Price

Answer 19

The actual selling price

Question 20

Cost

Answer 20

the sum of all past expenses that have gone into bringing a property into being.

Question 21

Economic principles of value

Answer 21

Principle of…

1. Supply and demand
2. Highest and best use
3. Substitution
4. Conformity (reasonable similarity to the social,economic, & architectural make-up of the neighborhood.
5. Change (development, stability, decline)
6. Progression and regression
7. Competition
8. Increasing and decreasing returns
9. Contribution (pg. 12-8)