Chapter 14

Question 1

what is an appraisal

Answer 1

an estimate or opinion of value as of a certain date that is supported by objective data.

Question 2

how long is an appraisal good for

Answer 2

only valid as of its effective date

Question 3

what are appraisals used for

Answer 3

determine the value of property used as collateral for mortgages or investments.

Question 4

Appraisers must be licensed or certified by

Answer 4

The AZ Dept of Financial Institutions

Question 5

What does USPAP Stand for and what do they do

Answer 5

Uniform Standards of Professional Appraisal Practices (USPAP) are generally accepted standards for professional appraisal practice

Question 6

what is an appraisal management company

Answer 6

(AMC) Adds an important buffer between lender and appraisers and is now a legally requird part of the mortgage process

Question 7

what is an arm’s length transaction

Answer 7

transaction that occured under typical conditions in the marketplace with each party acting in his/her best interest.

Question 8

what is the difference between price and cost in a property

Answer 8

price is the amount someone actually paid for a property. Price is a fact. Cost is the amount needed to develop, produce, or build something. May be fact or estimate.

Question 9

what is subjective and objective value

Answer 9

objective - created by the object itself, the cost to create develop it and its amenities.

subjective - created in the mind. pool, fresh paint, or a fireplace. some amenities can increase the value of a house, or decrease it’s value

Question 10

define substitution

Answer 10

says that an informed buyer will not pay more for a home than a comparable substitute.

Question 11

which is the best approach to use when determining value for residential, commercial, industrial, agricultural, and other properties, but is the only approach that can be used on land

Answer 11

sales comparison approach (aka, market data approach, or comparative analysis approach)

Question 12

What is a curable depreciation

Answer 12

indicates that the cost to repair is less than the value the repair would contribute to the sale value

Question 13

what is an incurable depreciation

Answer 13

indicates that the cost to repair is more than the value the repair would contribute to the sale value.

Question 14

what is functional obsolescence

Answer 14

outdated design in the physical structure

Question 15

what is economic obsolescence

Answer 15

something outside the boundaries that makes the structure less desirable.