Chapter 8. Flashcards
Assessed Value
A valuation placed upon property by a public officer or a board, as a basis for taxation.
Comparative Market Analysis
A property evaluation that determines property value by comparing similar properties sold within the last year.
Cost
The total dollar expenditure(ხარჯი) for labor, materials, legal services, architectural design, financing, taxes during construction, interest, contractor’s overhead and profit, and entrepreneurial overhead and profit (may or may not equal value).
Cost Approach
A method of estimating the value of real property by calculating a current construction cost, subtracting ( გამოკლება) accrued ( წარმოშობა) depreciation and adding a land value obtained from the market. This method works best when the improvements are relatively new and estimates of depreciation are thus more likely to be accurate.
Depreciation
A loss of utility and thus value caused by physical deterioration, functional obsolescence or economic obsolescence or any combination thereof.
Direct Cost
The cost of labor and materials.
Evaluation
A study of the nature, quality, or utility of certain property interests in which a value estimate is not necessarily required, e.g. highest and best use, feasibility, market supply and demand, etc.
Income Approach
An appraisal technique whereby the value of an income producing property is estimating by capitalizing its net operating income using an appropriate capitalization rate. Value = Income / Rate. (tax.ny.gov - glossary)
Indirect Cost
Costs that support a construction project, such as legal or architectural fees.
Insured Value
The value of an asset or asset group that is covered by an insurance policy; can be estimated by deducting cost of noninsurable items (e.g. land value) from market value.
Investment Value
The specific value of an investment to a particular investor or class of investors based on individual investment requirements; distinguished from market value, which is impersonal and detached.
Market Price
The actual selling price of a property.
Market Value
The most probable price that a property should bring if exposed for sale in the open market for a reasonable period of time, with both the buyer and seller aware of current market conditions, neither being under duress.
Mortgage Value
The estimate worth of a particular asset which is established for the purposes of obtaining financing secured against that asset.
Obsolescence
One of the causes of depreciation. It is the loss of desirability and usefulness caused by new inventions, changes in design, and improved processes for production, or from the influence of external factors. Obsolescence may be either economic or functional.
Functional Obsolescence
Impairment of useful capacity or efficiency; loss of value caused by super adequacy, inadequacy or changes in the art inherent in the property itself. not to be confused with external effects of economic obsolescence. Curable if the cost to cure is justified by the resulting increase in value of the property; otherwise incurable.
Economic Obsolescence
A loss in value caused by influences external to the property such as increasing industrial activity near a residential neighborhood.
Plottage
Increment in unity value of a plot of land created by assembling smaller ownerships into one ownership
Price
The amount a purchaser agrees to pay and a seller agrees to accept in an arms length transaction
Sales Comparison Approach
Valuation method which compares a subject property’s characteristics with those of comparable properties which have recently sold in similar transactions.
Valuation
The process of estimating market value, investment value, insurable value, or other properly defined value of an identified interest or interests in a specific parcel or parcels of real property as of a given date.
Value-in-Use
The net present value (NPV) of a cash flow or other benefits that an asset (real property) generates for a specific owner under a specific use.
An estimate of a property’s value by an appraiser who is usually presumed to be an expert in his work is known as what…?
Appraisal
The actual selling price of a property is referred to as what…?
Market Price
Which of the following property types will most likely use a value-in-use value when conducting an appraisal…
School
A commercial property will most likely yield what type of value by an appraiser…?
Investment Value
Which of the following is used when analyzing the highest and best use of a property…?
Evaluation
What is required in order to determine the market value of a property…?
Reasonable exposure and marketing time
Which of the following may NOT change drastically in a market trending upward…?
Cost
When trying to estimate market value, how far back should sales be researched…?
3 months - 1 year
What is the difference between an appraisal and a comparative market analysis (CMA)…?
A CMA does NOT make adjustments based on data from sold properties
Which of the following is NOT an indicator that a market is depreciating…?
Time on market decreases
Which of the following is an example of a common unit of comparison…?
Price per sq.ft.
The sales comparison approach is based on what principle…?
Principle of Substitution
What is first in the order of adjustments when utilizing the sales comparison approach…?
Analyze any rights conveyed
What is the formula used to determine value using the cost approach…?
Replacement Cost – Depreciation
What property types use the income approach to determine value…?
Commercial properties
What must be determined first before a property can be valued using the income approach…?
Net Operating Income
The price that a property sold during a foreclosure auction is most likely equal to what value…?
Liquidation Value
When may the cost of construction exceed the price of a property…?What would be the highest and best use for a vacant property…?
When demand is low
Why is a comparative market analysis (CMA) NOT considered an appraisal…?
A CMA does NOT yield a defensible estimate of value
The market value of a property is determined using what price…?
Most probable price
A property sold as part of a bankruptcy proceeding is most likely equal to what value…?
Liquidation Value
An appraisal is NOT used in what analysis…?
Comparative Market Analysis
Which of the following will most likely yield the lowest price for a property…?
Liquidation Value
When can land have a negative value…?
When encumbered with an environmental hazard
What would be the highest and best use for a vacant property…?
The use that demands the highest return to the site
Due to the fact that real estate operates in an inefficient market, price does NOT equal what…?
Value
A property’s net operating income must be determined before a property can be valued using this appraisal method…?
Income Approach
Which of the following is NOT analyzed during the appraisal process…?
Credit history of the buyer
Mark, and his investor group, are looking to purchase an office building. To help in their analysis, they hire an appraiser to determine the value of the property. What value will the appraisal report most likely yield…?
Investment Value
An evaluation is used to determine which of the following…?
Highest and Best Use
The cash equivalency price of a property compares an all-cash purchase price and what…?
The price of the property being purchased with a mortgage
The amount a purchaser agrees to pay and a seller agrees to accept in an arms length transaction is known as…?
Price
Which of the following typically do NOT conduct a comparative market analysis…?
Homeowners
If offers are quickly being made on current asking prices, what might be happening in the market…?
The market is trending upwards
If offers are consistently coming in less than the listing price, what may be happening in the market…?
The market is trending downward
A site is always valued as if it is…?
Unimproved
The total dollar expenditure for labor, materials, legal services, architectural design, financing, taxes during construction, interest, contractor’s overhead and profit, and entrepreneurial overhead and profit is known as what…?
Cost
How will someone know if the current building on a property is the highest and best use for the site…?
If modifications to the building do not make economic sense
An appraisal is NOT used in what analysis…?
Comparative Market Analysis
Donald hires an appraiser to better understand the value of his warehouse. What value would the appraiser use in his conclusion…?
Value-in-use
Andrew hires an appraiser to better understand the supply and demand in a particular market. What will the appraiser produce for Andrew…?
Evaluation
What is the difference between an appraisal and a comparative market analysis (CMA)…?
A CMA does NOT make adjustments based on data from sold properties
What is the formula used to determine value using the cost approach…?
AReplacement Cost – Depreciation
Replacement Cost – Depreciation
The estimate worth of a particular asset which is established for the purposes of obtaining financing secured against that asset is known as what…?
Mortgage Value
An appraisal is used when determining the value of what…?
AAll of the above
BMarket Value
CAssessed Value
DValue-in-Use
What must an appraiser do before two properties can be compared…?
Find a common unit of comparison
