Chapter 15 Flashcards
This appraisal method will indicate that the property’s exterior is typical or conforms to the neighbourhood:
Select one:
a. Full Appraisal
b. Automated Valuation Models (AVMs)
c. Drive-by Appraisal
d. Desktop Appraisal
Correct Answer: Drive-by Appraisal
Rationale: Drive-by Appraisal: This type of appraisal is based on the same information as the Desktop Appraisal; however, it also includes an inspection of the exterior of the property. While AVMs and Desktop Appraisals cannot provide details on whether the property is actually in a physical condition normal for the neighbourhood, a Drive-by Appraisal can at least indicate that the property’s exterior is typical or conforms to the neighbourhood.
Relevant section(s) of the textbook: 15.5 The Appraisal Report
The correct answer is: Drive-by Appraisal
This designation is the highest designation provided by the AIC:
Select one:
a. Canadian Residential Appraiser (CRA)
b. The Canadian National Association of Real Estate Appraisers (CNAREA)
c. Accredited Appraiser Canadian Institute, Professional Appraiser (AACI, P. App)
d. CMAR (Certified Mortgage Appraisal Reviewer)
Correct Answer: Accredited Appraiser Canadian Institute, Professional Appraiser (AACI, P. App)
Rationale: Accredited Appraiser Canadian Institute, Professional Appraiser (AACI, P. App): This designation is the highest designation provided by the AIC. This designation certifies that the holder is qualified to offer valuation and consulting services on all types of properties, including residential, industrial, commercial, and rural.
Relevant section(s) of the textbook: 15.3 The Appraiser
The correct answer is: Accredited Appraiser Canadian Institute, Professional Appraiser (AACI, P. App)
This refers to a designee who holds an undergraduate degree from a recognized university and has completed the AACI program of studies and has fulfilled all of the professional requirements of the AIC, but who can not appraise commercial properties:
Select one:
a. The Canadian National Association of Real Estate Appraisers (CNAREA)
b. Accredited Appraiser Canadian Institute, Professional Appraiser (AACI, P. App)
c. Canadian Residential Appraiser (CRA)
d. CMAR (Certified Mortgage Appraisal Reviewer)
Correct Answer: Canadian Residential Appraiser (CRA)
Rationale: Canadian Residential Appraiser (CRA): The designee holds an undergraduate degree from a recognized university and has completed the AACI program of studies and has fulfilled all of the professional requirements of the AIC. The CRA is qualified to offer valuation and consulting services and expertise for individual, undeveloped residential dwelling sites and dwellings containing not more than four self-contained family housing units. Only an AACI can appraise commercial properties.
Relevant section(s) of the textbook: 15.3 The Appraiser
The correct answer is: Canadian Residential Appraiser (CRA)
This term refers to computer programs that typically use public record data on residential properties to calculate the market value of a property:
Select one:
a. Automated Valuation Models (AVMs)
b. Drive-by Appraisal
c. Full Appraisal
d. Desktop Appraisal
Correct Answer: Automated Valuation Models (AVMs)
Rationale: Automated Valuation Models (AVMs) are computer programs that typically use public record data on residential properties to calculate the market value of a property. These models have been gaining in popularity throughout the world and are currently most often used by lenders and mortgage default insurers, as well as municipalities for determining values for property tax purposes.
Relevant section(s) of the textbook: 15.4 Calculating the Market Value of a Property
The correct answer is: Automated Valuation Models (AVMs)
Government policies are one of the factors affecting:
Select one:
a. Supply
b. Land use regulations
c. Demand
d. Listings
Correct Answer: Demand
Rationale: governments create policies that can increase access to funds, or tighten that access, depending on the policy. Policies such as stress tests can have a dampening effect on prices, while an increase in allowable amortization periods can provide more access to money, therefore give buyers more purchasing power, thereby increasing property values.
Relevant section(s) of the textbook: 15.2 Factors affecting Value
The correct answer is: Demand
This appraisal method is typically used when an AVM is unavailable, and the property is located in a marketable area:
Select one:
a. Drive-by Appraisal
b. Desktop Appraisal
c. Automated Valuation Models (AVMs)
d. Full Appraisal
Correct Answer: Desktop Appraisal
Rationale: Desktop Appraisal is typically used when an AVM is unavailable, and the property is located in a marketable area. This report relies on MLS reports, including data on recent sales and data on recent listings. It does not provide detailed information on the property nor is there a physical inspection of the property, which raises the same issues as are applicable to AVMs.
Relevant section(s) of the textbook: 15.5 The Appraisal Report
The correct answer is: Desktop Appraisal
This term refers to houses with two shared walls, except for the end units that have only one shared wall:
Select one:
a. Duplex
b. Semi-detached
c. Row-townhouses
d. Condominium
Correct Answer: Row-townhouses
Rationale: a row of houses with two shared walls, except for the end units that have only one shared wall; they can be freehold, or condominiums run by a condominium corporation; maintenance fees cover shared amenities, like yards, parking, etc.
Relevant section(s) of the textbook: 15.1 Property Types
The correct answer is: Row-townhouses
This appraisal method is considered to offer the most information and therefore the highest level of protection for the lender:
Select one:
a. Drive-by Appraisal
b. Desktop Appraisal
c. Automated Valuation Models (AVMs)
d. Full Appraisal
Correct Answer: Full Appraisal
Rationale: Full Appraisal expands on the information and techniques used in the Desktop Appraisal and the Drive-by Appraisal by having a full inspection of the subject property completed. This inspection allows the appraiser to document the characteristics of the subject property, including any upgrades or defects in the home. The report typically contains interior and exterior photographs of the property as well as the immediate neighbourhood. Considered to offer the most information and therefore the highest level of protection for the lender, the Full Appraisal is the appraisal of choice for lenders who rely heavily on the property as security and less on the personal covenant of the borrower. Virtually every sub-prime and private lender will insist on a Full Appraisal.
Relevant section(s) of the textbook: 15.5 The Appraisal Report
The correct answer is: Full Appraisal
This appraisal approach in determining the market value of a property is the most appropriate for mortgage financing and is therefore relied heavily upon in the appraisal report:
Select one:
a. The Indirect Comparison Approach
b. The Cost Approach
c. The Income Approach
d. The Direct Comparison Approach
Correct Answer: The Direct Comparison Approach
Rationale: The Direct Comparison Approach: This approach in determining the market value of a property is the most appropriate for mortgage financing and is therefore relied heavily upon in the appraisal report. This method uses the principle of substitution as its basis. of appraisal calculates the value of a property based on the cost of replacing it. This method takes the cost of rebuilding the structure, less depreciation, plus the cost of the land, resulting in a final value.
Relevant section(s) of the textbook: 15.4 Calculating the Market Value of a Property
The correct answer is: The Direct Comparison Approach
This term refers to the accredited individual who completes the appraisal report:
Select one:
a. Client
b. Agent
c. Appraiser
d. Broker
Correct Answer: Appraiser
Rationale: The Appraiser is the accredited individual who completes the appraisal report. Although a license to conduct appraisals is not required in Ontario, no lender would use a non-accredited appraiser since the decision to lend will typically involve several hundred thousand dollars.
Relevant section(s) of the textbook: 15.3 The Appraiser
The correct answer is: Appraiser
