Chapter 15: Appraisal Flashcards
An appraisal is a process leading to an _____ of the value of identified legal rights in a parcel of real estate.
estimate
rights
Value estimate is of the ______, not the property itself.
legal rights
Most appraisers are paid an agreed upon ____ before the assignment is begun.
fee
_____ is the amount expended to create the improved property.
Cost
_____ is the amount actually paid in the real estate transaction.
Price
_____ is the price the should be paid for the property - the monetarty worth.
Value
The four characteristics of value are: (DUST)
- _____
- _____
- _____
- _____
Demand
Utility
Scarcity
Transferrability
_____ is the value to a typical buyer and typical seller.
Market value
_____ is the value of a particular property to a particular investor.
Investment value
_____ is the amount that can be received from the sale of parts from a demolished structure.
Salvage value
_____ is the amount remaining after all assets of a business have been sold in a hurried but not rushed manner.
Liquidation value
_____ is the value assigned by the property appraiser for ad valorem tax purposes.
Assessed value
_______ recognizes that no one would pay more for a property than the amount necessary to acquire a suitable substitute.
Principle of substitution
_____ states that the value of a property is sustained when it is in conformity with other properties in the same area.
Principle of conformity
_____ recognizes that sellers compete with other sellers and buyers compete with other buyers.
Principle of competition
_____ states that circumstances can cause changes to occur in the market, which in turn affect the value of real estate.
Principle of change
_____ applies when a lower-priced property is built in an area of more expensive property.
Principle of progression
_____ applies when a higher-priced property is constructed in an area of lower-priced properties.
Principle of regression
_____ states that the value of a property today is the sum of its future benefits.
Principle of anticipation
_____ states that the value of a component is the amount it adds to the total value of the property.
Principle of contribution
The ______ of an appraisal is to estimate some type of defined value.
purpose
The _____ is the way in which the appraiser’s client will use the appraisal.
function
The _____ is usually the most applicable method for appraising residential properties.
comparable sales approach
A minimum of _____ comps are required, but ____ are preferred.
3 to 5
8 to 10
Adjustments should always be made to the _____ property.
comparable
______ is the estimated cost at current prices to construct a comparable building with equal utility.
Replacement cost
_____ is the estimated cost to construct at current prices an exact duplicate or replica of the building being appraised.
Reproduction cost
Land ____ depreciate.
does not
______ is a detailed inventory of the cost of each item, used to estimate the cost to reproduce a main improvement.
Quantity survey method
_____ is a cost per square foot or per cubic foot of an entire building, used to estimate the cost to reproduce a main improvement.
Unit-of-comparison
_____ is the loss of value due to normal wear and tear from use, negligence, or aging of the building.
Physical deterioration
_____ is a loss of value due to the failure of a property to meet current consumer preferences.
Functional obsolesence
_____ is the loss of value caused by factors beyond the boundary of the property.
External obsolesence
_____ is the estimate of the total life left in a building.
effective age
Always use _____ age in calculations.
effective
Effective Age
——————————– =
Total Economic Life
Percentage rate of depreciation
Cap Rate X ????
Value
Fixed expenses are _____ and ______.
property taxes
hazard insurance
_______ expenses change with occupancy levels.
Variable
Operating expenses include:
- _____
- _____
- _____
Fixed expenses
Variable expenses
Reserves for replacement
The _______ approach is the best for newer properties.
cost-depreciation
Sales price
——————- =
Gross rent
Gross Rent Multiplier (GRM)
Sales price
——————- =
Gross income
Gross Income Multiplier (GIM)
Appraisers involved in ______ must have an appropriate license.
federally related transactions
Florida Statute 475 requires that all appraisals be performed according to ______.
USPAP
Real estate licensees can perform a ______ to give opinion of value with the listing of a property.
comparative market analysis
PGI VCL EGI OE NOI DS CTO
Potential Gross Income Vacancy + Collection Losses Effective Gross Income Operating Expenses Net Operating Income Debt Service (Annual) Cash Throw Off
