Chapter 7: Appraising Waterfront Residential Properties Flashcards
What is the first step you should complete if you have been asked to assist in a waterfront valuation assignment?
1.) Complete research on the legal aspects of the water lot tenure
2.) Interview the client to understand the interest to be appraised and intended use of the appraisal
3.) Obtain navigation charts, air photos, and other technical background information
4.) Conduct a title search
2.) Interview the client to understand the interest to be appraised and intended use of the appraisal
Which of the following statements regarding docks is FALSE?
1.) Floating docks are an impairment cost for physically challenged waterfront lots
2.) Docks are costly but can contribute significant value to a waterfront property
3.) Dock manufacturers are a good source of cost information and maintenance issues
4.) Movable docks are considered a positive attribute in colder climates
1.) Floating docks are an impairment cost for physically challenged waterfront lots
A property consisting of both water lot and upland sold recently for $250,000. Based on comparable upland sales and other data, the upland portion of the sale was valued at $220,000. Therefore, the water lot portion of the subject sale was calculated to be $30,000. What water lot valuation technique is this?
1.) Land residual method
2.) Utility method
3.) Zoning method
4.) Extraction method
4.) Extraction method
If the market value of a water lot has been estimated at $60,000, according to the 4-3-2-1 rule of thumb, what is the front quarter of the water lot nearest to the upland worth?
1.) $12,000
2.) $15,000
3.) $24,000
4.) $30,000
3.) $24,000
A riverfront property that has become slightly larger over time due to the river washing up and depositing silt is known as which of the following?
1.) Accretion
2.) Dereliction
3.) Tidal waters
4.) Tide flat
1.) Accretion
As a CRA-designated appraiser who specializes in waterfront properties, in which of the following situations must you decline the assignment, due to the scope of practice limitations of the CRA designation?
1.) Riparian or littoral rights
2.) A property that is legally non-conforming due to setbacks
3.) Archaeological findings of historic importance
4.) None of the above
4.) None of the above
Which of the following is NOT one of the geographic information systems (GIS) features useful for waterfront appraisal?
1.) Measured the lineal distances for driveways, waterlines, waterfront lengths, distance improvements setback from the water’s edge, as well as distance to schools, town, or paved roads
2.) Measures areas for a total area calculation, effective size measurement or size of negative influences like swamps, steep banks or cliffs
3.) Generates values for waterfront properties, though the quality is dependent on statistics and data quality
4.) Shows zoning, OCP, and other restrictions like flood areas.
3.) Generates values for waterfront properties, though the quality is dependent on statistics and data quality
How does the statement, “shelter is a basic human need, but discretionary spending may be cut in times of economic uncertainty” relate to waterfront valuation?
1.) Recreational waterfront is considered a luxury item, so values may be more prone to market volatility than basic residential land
2.) In good economic times, less desirable quality waterfront may come into demand, and vice versa in downturns
3.) It may not be financially feasible to “cure” waterfront properties with problem topography unless the market outlook is strong
4.) All of the statements above are true
4.) All of the statements above are true
Which of the following is NOT a method that can be used to estimate the value of a water lot?
1.) Effective area method
2.) Percentage of upland method
3.) Overall method
4.) Extraction method
1.) Effective area method
You are appraising a waterfront lot and believe you have found the perfect comparable located in the same area as the subject. The MLS listing says, “200 front feet of waterfront” and the assessment records show a size of 2.08 acres. If you rely on this information, what possible trap are you liable to fall into?
1.) Third party measurements can never be relied upon
2.) Depending on the lot’s features, its actual size may be less important than the effective size
3.) Neither dollar per front foot nor dollar per acre are relevant measures for waterfront land
4.) All of the above are potential appraisal traps for waterfront land valuation
2.) Depending on the lot’s features, its actual size may be less important than the effective size
What can you do to help avoid the appraisal trap of effective size vs. actual size?
1.) Phone people involved with this sale, to interview them and ask questions about the property
2.) visit the property in person and make the most detailed inspection you can
3.) Review an orthophoto and GIS map for the property
4.) All of the above
4.) All of the above
If you have been hired to appraise a waterfront property located in the Muskoka Region of Ontario, which of the following is the MOST important factor that will influence the estimated market value?
1.) The view and orientation of the waterfront property
2.) The size of the waterfront
3.) The quality of the waterfront
4.) Cannot be determined because the extent to which each factor influences value will depend on current consumer preferences in the market
4.) Cannot be determined because the extent to which each factor influences value will depend on current consumer preferences in the market
Which of the following regarding the definition of waterfront property boundaries is FALSE?
1.) For a property on tidal waters, the property boundary is defined as the high tide mark of the water
2.) Accreted land for deposited sediments that adds to the property upland is automatically included in the waterfront property boundary
3.) For a property on a river, lake, or stream, the property boundary is defined as the natural boundary made by the watercourse
4.) A strip of publicly held land on the water’s edge may cause the subject property to be redefined as a water view property
2.) Accreted land for deposited sediments that adds to the property upland is automatically included in the waterfront property boundary
Which of the following presents a challenge of using the direct comparison approach in water lot valuations?
1.) Water lots are often held under lease, complicating the analysis
2.) There are very few sales of water lots to rely on as comparables
3.) Water lots may have quite different improvements on them, making comparison difficult
4.) All of the above
4.) All of the above
James, a CRA-designated appraiser, is hired to appraise a waterfront lot that has 200 feet of water frontage and 300 feet of depth. The only comparable properties are substantially smaller, with standard lots that have only 100 feet of frontage and 300 feet of depth. There is no “waste” land on the subject property or comparable properties. Which of the following statements regarding size adjustments is TRUE?
1.) The size of the property is secondary to other factors such as view and water frontage quality, so the adjustments are negligible.
2.) The comparables have half the frontage of the subject, so the size adjustment s +100%
3.) James must be careful not to over-value the positive adjustment to the comparable properties, because the value of the subject’s additional 100 feet of frontage may not add value proportionately to its first 100 feet.
4.) James needs to only consider value per square foot of total area in size adjusting the comparable properties
3.) James must be careful not to over-value the positive adjustment to the comparable properties, because the value of the subject’s additional 100 feet of frontage may not add value proportionately to its first 100 feet.
