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
The term DEPRECIATION refers to the …
loss of value in real estate from any cause
An appraiser’s report should seek to determine the …
highest and best use of the property
Which of the following would be classified as external depreciation?
- A leaking roof that needs to be completely replaced
- Poorly maintained properties in the neighborhood
- A poorly designed floor plan that could be modified
- Convenient access to schools and recreational facilities
-Poorly maintained properties in the neighborhood
It is necessary to calculate a dollar value for depreciation when using which of the following?
- The sales comparison approach to value
- The cost approach to value
- The income approach to value
- Gross rent multipliers
-The cost approach to value
The income approach as used by an appraiser makes use of which of the following?
- Equalization
- Depreciation
- Appreciation
- Capitilaization
-Capitilaization
In the valuation of a large apartment complex, the MOST weight would be given to which of the following approaches to value?
- The cost approach
- The income approach
- The sales comparison approach
- All approaches equally weighted
-The income approach
The sales comparison approach to value would be MOST important when estimating the value of …
-an existing residence
In the income approach, the appraiser makes use of …
-capitalization rate
An appraiser who is using the sales comparison approach to value would use all of the following comparable properties EXCEPT
- a similar home that was sold within the last six months
- a similar home that was sold recently but is located in another similar neighborhood within 1/4 mile
- a similar home that was sold by the owners who sold the property to a relative
- a similar home that was sold recently but is located on a much larger lot.
-a similar home that was sold by the owners who sold the property to a relative
Reconciliation is BEST described as …
analyzing the results obtained from the three approaches to value.
The gross rent multiplier is used as a guideline for estimating value based on the …
relationship of the sales prices to the rental income
Defined as a loss in value from any cause, depreciation is generally divided into three categories. The loss of value due to normal wear and tear on a property is called …
-physical depreciation
An appraiser has been employed to estimate the market value of a parcel of vacant land. The resulting appraisal would report include reference to all of the following EXCEPT
- the highest and best use of the parcel
- the listed price of the parcel
- the most probable price the parcel will bring
- the physical dimensions of the parcel
-the listed price of the parcel
The period over which an improvement to the property will contribute to its value is known as its …
-economic life
When appraising a commercial property, the appraiser is MOST concerned with …
income generated by the property
Which if the following is considered specific data?
- Dimensions of the subject property
- Employment opportunities in the area
- Proximity of the subject property to public transportation
- Building codes within the municipality
-Dimensions of the subject property
A house with outdated plumbing is suffering from …
functional obsolescence
