Chapter 18

Question 1

Competitive Market Analysis (CMA)

Answer 1

Real Estate salespeople are called upon to provide comparable sales to a seller who wants to list a property for sale

Question 2

Real Estate Appraisal

Answer 2

an estimate or opinion of value, based on time and effort of the appraiser, never on the established price of the property

Question 3

Appraiser’s Ground Rules

Answer 3

payment must be in cash or its equivalent; buyer and seller must be unrelated and well informed consumers

Question 4

the appraisal process:

Answer 4

1. state the problem
2. gather, record, and verify the necessary data
3. analyze and interpret (neighborhood analysis, neighborhood cycle, site analysis)
4. Estimate Land Value
5. Estimate the value of the property by each of the 3 approaches to value: Market Data, Cost, Income
6. Reconcile estimated values for the final value estimates
7. Report final value estimates

Question 5

Principles of Real Estate Value

Answer 5

1. Highest and Best Use
2. Substitution
3. The Law of Supply and Demand
4. Conformity
5. Regression and Progression
6. Anticipation
7. Contribution
8. Assemblage
9. Competition
10. Change

Question 6

Sales Comparison Approach ( Market Data Approach)

Answer 6

used for appraising residential property or vacant land (compares property to similar properties and makes adjustments)

Question 7

Cost Approach (Summation Approach)

Answer 7

used on buildings that do not have market data because they are unusual properties (building without income)

Question 8

Reproduction cost

Answer 8

to replace with the same materials as original construction

Question 9

Replacement cost

Answer 9

to replace with current materials and methods with utility and function similar to original

Question 10

Cost can be determined by…

Answer 10

square foot cost; unit in place and quantity survey method

Question 11

depreciation

Answer 11

a loss in value due to any cause; any condition that adversely affects the value of an improvement

Question 12

3 types of depreciation

Answer 12

1. physical deterioration
2. functional deterioration
3. economic, environmental, or external obsolescence

Question 13

effective age

Answer 13

differs from the actual age by such variable factors as depreciation, quality of maintenance, and the like

Question 14

Chronological age (actual age)

Answer 14

actual age in years of the building, based on building date

Question 15

physical life

Answer 15

actual age or life of a structure that is considered habitable as opposed to economic life

Question 16

economic life

Answer 16

estimated period where an improved property will yield a return over and above economic rent

Question 17

Income Capitalization Approach

Answer 17

a value based on the present value of the rights to future income (for income generating purposes)

Question 18

CA four levels of licensing for real estate appraisers:

Answer 18

• residential license
• certified residential
• certified general
• trainee license

Question 19

how long are real estate appraiser license valid for?

Answer 19

two years