Chapter 4: Procedures of the sales comparison approach Flashcards
Adjustments only need to be made (and should be made) when there is a
significant, measurable difference between the subject property and a comparable sale.
The order in which quantitative adjustments are applied to the sale prices of comparable properties
sequence of adjustments
“Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat” is the definition of Leased fee Partial Interest An estate Fee simple estate
fee simple estate
“Divided or undivided rights in real estate that represent less than the whole, i.e., a fractional interest such as a tenancy in common, easement, or life interest” is the definition of Condominium Partial interest Divided interest Limited partnership
partial interest
In traditional appraisal theory, the first step in the adjustment sequence is an adjustment for Market conditions Real property rights appraised Sales or financing concessions Physical characteristics
real property rights appraised
There are many kinds of partial interests. Some are specific forms of ownership that are created by special situations. These would include:
life interests
leased fee interests
leasehold interests
Rights of use, occupancy, and control, limited to the lifetime of a designated party, sometimes referred to as the life tenant.
life interest
The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires
leased fee interest
The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease
leasehold interest
An easement that benefits a legal person or entity (individual, corporation, partnership, LLC, government entity, etc.) and not a particular tract of land; an easement having a servient estate but no dominant estate.
easement in gross
An easement that is attached to, benefits, and passes with the transfer of the dominant estate; runs with the land for the benefit of the dominant estate and continues to burden the servient estate, although such an estate may be transferred to new owners
easement appurtenant
The right to perform a specific act on a property owned by another
affirmative easement
An easement preventing a property owner from certain, otherwise permitted, uses of his or her land, e.g., agreeing not to do something such as building a wall or fence blocking an adjoining property’s view.
negative easement
Examples of negative easements would include:
Conservation easements Drainage easements Historic preservation easement Subsurface rights Air rights
An interest in real estate restricting future land use to preservation, conservation, wildlife habitat, or some combination of those uses. A conservation easement may permit farming, timber harvesting, or other uses of a rural nature as well as some types of conservation-oriented development to continue, subject to the easement
conservation easement
The right to drain surface water from one owner’s land over the land of one or more adjacent owners
drainage easement
The preservation of historic sites, structures, and districts by regulation or rehabilitation.
historic preservation
raditionally considered a type of preservation easement that protected only the facade of a building, not the entire structure.
facade easement
The rights to the use and profits of the underground portion of a designated property; usually refers to the right to extract coal, minerals, oil, gas, or other hydrocarbon substances as designated in the grant; may include a right of way over designated portions of the surface.
subsurface rights
The right to undisturbed use and control of designated air space above a specific land area within stated elevations. Air rights may be acquired to construct a building above the land or building of another or to protect the light and air of an existing or proposed structure on an adjoining lot. Air rights do not always include development rights
air rights
A development right that cannot be used by the landowner, or that the owner chooses not to use, but can be conveyed to landowners in another location or leased for a period of years to then revert back to the original owner; TDRs are said to be transferred from a landowner in a sending district to the use of a landowner in a receiving district
transferable development rights
"The right to perform a specific act on a property owned by another" is the definition of License Negative Easement Encroachment Affirmative Easement
affirmative easement
A leasehold interest may have value when
The Contract Rent is less than Market Rent
The Contract Rent is more than Market Rent
There is a positive cash flow
The capitalization rate is more than the discount rate
the contract rent is less than market rent
“An easement that benefits a legal person or entity (individual, corporation, partnership, LLC, government entity, etc.) and not a particular tract of land; an easement having a servient estate but no dominant estate” is the definition of a(an) Easement Appurtenant Easement in Gross License Negative easement
easement in gross
most common types of partial interests:
Condominiums
Cooperatives
PUDs
Timeshares
A multiunit structure, or a unit within such a structure, with a condominium form of ownership.
condominium
A form of property ownership in which each unit owner holds stock in a cooperative apartment building or housing corporation. Stockholders receive a proprietary lease on a specific apartment and are obligated to pay a monthly maintenance charge that represents the proportionate share of operating expenses and debt service on any underlying mortgage, which is paid by the corporation. This proportionate share is based on the proportion of the total stock owned
cooperative
Type of building development designed as a grouping of complementary land uses, such as housing, schools, recreation, retail, office, and industrial parks, contained within a single master development; usually includes common area and common area maintenance obligations in the form of owners association dues
PUD
Planned unit development
Limited ownership interests in, or the rights of use and occupancy of, residential apartments or hotel rooms. There are two forms of timesharing: fee timeshares and nonfee timeshares. Fee timeshares may be based on timeshare ownership or interval ownership. There are three types of nonfee timeshares: a prepaid lease arrangement, a vacation license, and a club membership
timesharing
“A multiunit structure, or a unit within such a structure, with a condominium form of ownership” is the definition of a Condominium Cooperative Life estate REIT
condominium
The most desirable form of timesharing is called \_\_\_\_\_\_\_\_\_\_\_ timesharing. Nonfee Fee Title Warranty
fee
“Trespassing on the domain of another” is the definition of Adverse possession Easement Encroachment Conservation easement
encroachment
An estate held by two or more persons, each of whom has an undivided interest.”
tenancy in common
Joint ownership by two or more persons with the right of survivorship.
joint tenancy
An estate held by a husband and wife in which neither has a disposable interest in the property during the lifetime of the other, except through joint action
tenancy by the entirety
Besides the forms of individual ownership that we previously mentioned, real property can be owned by various legal entities, including:
Land Trusts
Partnerships
Corporations
Syndications
A legal vehicle for partial ownership interests in real estate in which independently owned properties are conveyed to a trustee; may be used to effect a profitable assemblage or in some cases to facilitate the assigning of property as collateral for a loan.
land trust
A business arrangement in which two or more persons jointly own a business and share in its profits and losses
partnership
An ownership arrangement in which all partners share in investment gains and losses and each has personal and unlimited responsibility for all liabilities.
general partnership
“An ownership arrangement consisting of general and limited partners. General partners manage the business and assume full liability for partnership debt, while limited partners are passive and liable only to the extent of their own capital contributions
limited partnership
In law, an organization that acts as a single legal entity in performing certain activities, usually business for profit; also includes charitable, educational, and religious organizations
corporation
A private or public partnership that pools funds for the acquisition and development of real estate projects or other business ventures
syndication
“A corporation or trust that combines the capital of many investors to acquire or provide financing for all forms of real property.
Real Estate Investment Trust (REIT)
Which statement is TRUE about syndications?
They are private partnerships only.
They are public partnerships only.
They can be either a private or public partnership.
They must be corporations.
They can be either a private or public partnership.
An estate in severalty involves \_\_\_\_\_\_\_\_\_\_\_\_ owner(s). Only one More than one At least two Corporate
`only one
A limited partnership has Limited partners only General partners only Both general and limited partners Only one general partner
both general and limited partners
"A limitation that passes with the land regardless of the owner; usually limits the property's type or intensity of use” is the definition of Encroachment Air rights Deed restriction Adverse possession
deed restriction
A tenancy in severalty involves \_\_\_\_\_\_\_\_\_\_\_\_ owner(s). Only one More than one At least two Corporate
only one
Which is NOT a form of partial interest? Fee simple estate Life estate Leased fee estate Leasehold estate
fee simple estate
Fannie Mae says most appraisal forms require the appraiser to use a \_\_\_\_\_\_\_\_\_\_ sales comparison analysis in which he or she assigns a dollar value to reflect the \_\_\_\_\_\_\_\_\_ reaction to any features of the comparable sales that differ from those of the subject property. Quantitative, market’s Quantitative, seller's Qualitative, market’s Qualitative, seller’s
quantitative, market’s
An estate in severalty involves \_\_\_\_\_\_\_\_\_\_\_\_ owner(s). Only one More than one At least two Corporate
one
In traditional appraisal theory, the first item in the adjustment sequence is Market conditions Real property rights appraised Sales or financing concessions Physical characteristics
real property rights appraised
Which of the following are NOT classified as negative easements? Conservation easements Drainage easements Historic preservation easements Transferable Development Rights
transferable development rights
"The order in which quantitative adjustments are applied to the sale prices of comparable properties” is the definition of Ranking Ordinal analysis Sales grid Sequence of adjustments
sequence of adjustments
A remainderman is found in a \_\_\_\_\_\_\_\_\_ interest. Fee simple Life Leased fee Leasehold
life
"Trespassing on the domain of another” is the definition of Adverse possession Easement Encroachment Conservation easement
encroachment
