Chapter 21 - Appraising Real Estate Flashcards
Which approach to value makes use of a rate of investment return?
- Income Approach
- Gross Income Multiplier
- Sales Comparison Approach
- Coast Approach
-Income Approach
The characteristics of value include which of the following?
- Anticipation
- Balance
- Competition
- Scarcity
-Scarcity
There are two vacant adjacent lots, each worth approximately $50,000. If their owner sells them as a single lot, however, the combined parcel will be worth $120,000. What principle does this illustrate?
-Plottage
An appraiser is responsible for …
estimating value
Who is permitted to draw up an appraisal?
Appraiser
A written analysis or opinion drawn up relating to the probable sales price of a property is …
a comparative market analysis (CMA)
If a property’s annual net income is $24,000 and it is valued at $300,000 what is its capitalization rate?
-8%
The market value of a parcel of real estate is
an estimate of the most probable price it should bring
Capitalization is the process by which annual net income is used as the basis to
-estimate value
From the reproduction or replacement cost of the building, an appraiser deducts depreciation, which represents
loss of value due to any cause
Which principle of value indicates that a developer’s profitable real estate project will attract others to engage in similar activity in the same area and thus drive down profits?
Competition
The appraised value of a residence with four bedrooms and one bathroom would probably be reduced because of
- incurable physical deterioration
- curable physical deterioration
- functional obsolescence
- external obsolescence
-functional obsolescence
The principle of anticipation is the basis of the …
income approach
The early houses that a developer built in a neighborhood were smaller than the homes built later when demand for the homes increased. The early homes have a higher value than their square footage would expect due to the principle of …
-progression
In the appraisal of an office building, which of the following would be classified as external depreciation?
- Termite damage to the structural components of the building
- Antiquated restroom facilities
- A poor architectural design resulting in a cluttered floor plan
- Next door to a closed factory
-Next door to a closed factory
Who is permitted to appraise any property for any reason?
-State-certified general real estate appraiser
Who, or what, determines value?
-Indicated by market
One of the most important steps in making an appraisal is that of …
-determining the highest and best use of a property
When appraising real estate, the first consideration of the appraiser should be the …
highest and best use of the property
In Pennsylvania, who is permitted to perform a broker’s price opinion (BPO)?
-an appraiser
The income approach to value is MOST important in the appraisal of …
an office building
In an old retail building, which of the following would MOST likely be a cause of incurable functional obsolescence?
- Deficient and inadequate lighting
- Closely spaced internal support columns
- An unattractive store front
- a decrease in the area’s population
-Closely spaced internal support columns
All of the following are characteristics of value EXCEPT
- Scarcity
- Transferability
- obsolescence
- utility
-obsolescence-
Multiple structural cracks in the foundation of a home would MOST likely be an example of …
-incurable physical deterioration
