Chapter 15: Appraisal

Question 1

An appraisal is a process leading to an _____ of the value of identified legal rights in a parcel of real estate.

Answer 1

estimate

rights

Question 2

Value estimate is of the ______, not the property itself.

Answer 2

legal rights

Question 3

Most appraisers are paid an agreed upon ____ before the assignment is begun.

Answer 3

fee

Question 4

_____ is the amount expended to create the improved property.

Answer 4

Cost

Question 5

_____ is the amount actually paid in the real estate transaction.

Answer 5

Price

Question 6

_____ is the price the should be paid for the property - the monetarty worth.

Answer 6

Value

Question 7

The four characteristics of value are: (DUST)

1. _____
2. _____
3. _____
4. _____

Answer 7

Demand
Utility
Scarcity
Transferrability

Question 8

_____ is the value to a typical buyer and typical seller.

Answer 8

Market value

Question 9

_____ is the value of a particular property to a particular investor.

Answer 9

Investment value

Question 10

_____ is the amount that can be received from the sale of parts from a demolished structure.

Answer 10

Salvage value

Question 11

_____ is the amount remaining after all assets of a business have been sold in a hurried but not rushed manner.

Answer 11

Liquidation value

Question 12

_____ is the value assigned by the property appraiser for ad valorem tax purposes.

Answer 12

Assessed value

Question 13

_______ recognizes that no one would pay more for a property than the amount necessary to acquire a suitable substitute.

Answer 13

Principle of substitution

Question 14

_____ states that the value of a property is sustained when it is in conformity with other properties in the same area.

Answer 14

Principle of conformity

Question 15

_____ recognizes that sellers compete with other sellers and buyers compete with other buyers.

Answer 15

Principle of competition

Question 16

_____ states that circumstances can cause changes to occur in the market, which in turn affect the value of real estate.

Answer 16

Principle of change

Question 17

_____ applies when a lower-priced property is built in an area of more expensive property.

Answer 17

Principle of progression

Question 18

_____ applies when a higher-priced property is constructed in an area of lower-priced properties.

Answer 18

Principle of regression

Question 19

_____ states that the value of a property today is the sum of its future benefits.

Answer 19

Principle of anticipation

Question 20

_____ states that the value of a component is the amount it adds to the total value of the property.

Answer 20

Principle of contribution

Question 21

The ______ of an appraisal is to estimate some type of defined value.

Answer 21

purpose

Question 22

The _____ is the way in which the appraiser’s client will use the appraisal.

Answer 22

function

Question 23

The _____ is usually the most applicable method for appraising residential properties.

Answer 23

comparable sales approach

Question 24

A minimum of _____ comps are required, but ____ are preferred.

Answer 24

3 to 5

8 to 10

Question 25

Adjustments should always be made to the _____ property.

Answer 25

comparable

Question 26

______ is the estimated cost at current prices to construct a comparable building with equal utility.

Answer 26

Replacement cost

Question 27

_____ is the estimated cost to construct at current prices an exact duplicate or replica of the building being appraised.

Answer 27

Reproduction cost

Question 28

Land ____ depreciate.

Answer 28

does not

Question 29

______ is a detailed inventory of the cost of each item, used to estimate the cost to reproduce a main improvement.

Answer 29

Quantity survey method

Question 30

_____ is a cost per square foot or per cubic foot of an entire building, used to estimate the cost to reproduce a main improvement.

Answer 30

Unit-of-comparison

Question 31

_____ is the loss of value due to normal wear and tear from use, negligence, or aging of the building.

Answer 31

Physical deterioration

Question 32

_____ is a loss of value due to the failure of a property to meet current consumer preferences.

Answer 32

Functional obsolesence

Question 33

_____ is the loss of value caused by factors beyond the boundary of the property.

Answer 33

External obsolesence

Question 34

_____ is the estimate of the total life left in a building.

Answer 34

effective age

Question 35

Always use _____ age in calculations.

Answer 35

effective

Question 36

Effective Age
——————————– =
Total Economic Life

Answer 36

Percentage rate of depreciation

Question 37

Cap Rate X ????

Answer 37

Value

Question 38

Fixed expenses are _____ and ______.

Answer 38

property taxes

hazard insurance

Question 39

_______ expenses change with occupancy levels.

Answer 39

Variable

Question 40

Operating expenses include:

1. _____
2. _____
3. _____

Answer 40

Fixed expenses
Variable expenses
Reserves for replacement

Question 41

The _______ approach is the best for newer properties.

Answer 41

cost-depreciation

Question 42

Sales price
——————- =
Gross rent

Answer 42

Gross Rent Multiplier (GRM)

Question 43

Sales price
——————- =
Gross income

Answer 43

Gross Income Multiplier (GIM)

Question 44

Appraisers involved in ______ must have an appropriate license.

Answer 44

federally related transactions

Question 45

Florida Statute 475 requires that all appraisals be performed according to ______.

Answer 45

USPAP

Question 46

Real estate licensees can perform a ______ to give opinion of value with the listing of a property.

Answer 46

comparative market analysis

Question 47

PGI
VCL
EGI
OE
NOI
DS
CTO

Answer 47

Potential Gross Income
Vacancy + Collection Losses
Effective Gross Income
Operating Expenses
Net Operating Income
Debt Service (Annual)
Cash Throw Off