Chapter 9

Question 1

A nonprofit educational organization formed by the appraisal profession in 1987

Answer 1

Appraisal Foundation

Question 2

A systematic procedure employed to arrive at an estimate of value and conveyed that estimate to the appraisal user

Answer 2

Appraisal Process

Question 3

Under FIRREA established minimum education and experience guidelines that states must see to issue appraisal licenses and certifications

Answer 3

Appraisal Qualifications Board

Question 4

Set forth the rules appraisers must follow when developing an appraisal and reporting its results

Answer 4

Appraisal Standards Board

Question 5

The estimated value of a property for tax purposes

Answer 5

Assessed Value

Question 6

The relationship between income and value, where the capitalization rate equals net operating income divided by property value

Answer 6

Capitalization Rate

Question 7

An appraiser who is certified by the state to perform appraisals on all property types

Answer 7

Certified General Appraiser

Question 8

An appraiser who is certified by the state to perform residential appraisals regardless of complexity

Answer 8

Certified Residential Appraiser

Question 9

A method used to estimate value by implementing the following steps: (1) estimate the value of the site as though it were vacant, (2) estimate the cost to produce the improvements, (3) subtract accrued depreciation, and (4) add site value to the estimated depreciated cost of the improvements

Answer 9

Cost Approach

Question 10

The amount by which the value of a building has declined since it was built as a consequence of physical deterioration, functional obsolescence, and economic obsolescence

Answer 10

Depreciation

Question 11

Loss in value resulting from factors outside the property that affect its income-producing ability or degree of use

Answer 11

Economic Obsolescence

Question 12

Law that established a regulatory framework for appraisers

Answer 12

Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)

Question 13

Loss in value that occurs because a property has less utility or ability to generate income than a new property designed for the same use

Answer 13

Functional Obsolescence

Question 14

The relationship between rent and value, where the gross income multiplier equals value divided by gross income

Answer 14

Gross Income Multiplier

Question 15

That use, found to be legally permissible, physically possible, and financially feasible, that results in the highest land value; that use of land most likely to result in the greatest long-term economic return to the owner

Answer 15

Highest and Best Use

Question 16

A method used to estimate value by discounting or capitalizing the expected future income that is expected to accrue to the property owner

Answer 16

Income Approach

Question 17

An estimate of value for insurance purposes

Answer 17

Insurable Value

Question 18

The worth of a property to a particular investor, based on that investor’s personal standards of investment acceptability

Answer 18

Investment Value

Question 19

A person licensed by the state to perform noncomplex residential appraisals

Answer 19

Licensed Real Property Appraiser

Question 20

The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby

1. buyer and seller are typically motivated;
2. both parties are well informed or well advised and acting in what they consider their best interests;
3. a reasonable time is allowed for exposure in the open market;
4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions by anyone associated with the sale

Answer 20

Market Value

Question 21

Loss in value that occurs from ordinary wear and tear, vandalism, or neglect

Answer 21

Physical Deterioration

Question 22

Actual amount for a property in a particular transaction

Answer 22

Price

Question 23

The anticipated utility or income that will accrued to the property owner in the future

Answer 23

Principle of Anticipation

Question 24

The notion that economic, social, political, and environmental forces are constantly causing changes that affect the value of real property

Answer 24

Principle of Change

Question 25

The principle that the value of a component part of a property depends on the amount it contributes to value of the whole

Answer 25

Principle of Contribution

Question 26

The principle that holds that a prudent buyer will pay no more for property than the cost of acquiring an equally desirable substitute

Answer 26

Principle of Substitution

Question 27

A method used to estimate value by comparing the property to other properties that have recently sold for known prices

Answer 27

Sales Comparison Approach

Question 28

A beginning appraiser who must work under the supervision of a licensed or certified appraiser who is responsible for the work of the trainee

Answer 28

Trainee Appraiser