Chapter 7 Appraisal Flashcards
The income approach is used for:
Income producing properties like
- apartment buildings
- office buildings
- shopping centers
What are the steps in an appraisal process?
- gather specific data on the subject property
- gather general data for the area of the subject property
- apply the 3 approaches to value to the collected data
What would require the value of the land to be calculated separately from the value of the improvements
The cost approach
It is necessary to calculate a dollar value for depreciation when using which approach?
The cost approach to value
The gross rent multiplier is used as a guidance for estimating value based on:
The relationship of the sales price to the gross monthly income
What would the appraisal report reference?
- Highest and best use of the parcel
- the most probable price the parcel will bring
- physical dimensions of the parcel
Reconciliation is an appraisal term used to describe:
The appraiser’s analysis and comparison of the results of each appraisal approach
What are some comparable properties an appraiser would use in the sales comparison approach?
- sold recently but located in similar area
- sold by owners who are undergoing a foreclosure
- sold recently but on a much larger lot
An appraisal report should contain:
- a reconciliation of value
- date of appraisal
- highest and best use
In the cost approach to value, the appraiser makes use of:
The estimated replacement cost of the building
Reconciliation is best described as:
Analyzing the results obtained from the three approaches to value
What is functional obsolescence?
Loss in value from market’s response. Outmoded or unacceptable physical or design features that are no longer considered desirable by purchasers. (Curable)
With the income-approach-to-value, if the operating income and capitalization rate were known, the appraiser would:
Divide the net operating income by the capitalization rate
The loss of value due to normal wear and tear on a property is called:
Physical depreciation (Functional and external are other 2)
The purpose of an appraisal is to:
Estimate the value of a property
When appraising a commercial property, the appraiser is most concerned with:
Income generated by the property
The income approach to value would be most important in the appraisal of a(n):
Office buildings, apartment buildings, and shopping centers.
What is considered by the appraiser in the cost approach?
- estimate cost of land
- estimate current cost of constructing the building and improvements
- estimate amount of accrued depreciation
The term depreciation refers to the:
Real estate’s loss of value from any cause
The market price of real estate is generally the same as:
The sales price
When appraising real estate, the first consideration of the appraiser should be the:
Selling prices of similar properties
In the valuation of a large apartment complex, the most weight would be given to:
Income approach
The period of time over which an improvement to the property will contribute to its value is known as:
Economic life
What is external depreciation?
Negative factors not on the subject property
The sales comparison approach is most to value would be most important when estimating, the value of a(n):
Existing residence
What is specific data?
Details and comparative data on subject property and comparative properties like costs, sales, income, and expenses
The income approach uses:
Capitalization rate
A building is valued at $215,000 and contains 4 apartments that rent at $470 each per month. The owner estimates that the net operating income is 65 percent of the gross rental receipts. What is the capitalization rate?
6.8 percent
An appraiser is responsible for:
Estimating value
What are the characteristics of value?
Demand
Utility
Scarcity
Transferability
