Exam 2

Question 1

What are the Quantitative Adjustments?

Answer 1

Data Analysis, Statistical, Graphic, Cost and Capitalization of Income differences

Question 2

What are Qualitative Adjustments?

Answer 2

Relative Comparison Analysis, Ranking Analysis and Trend Analysis

Question 3

what is Graphic Analysis?

Answer 3

Quantitative Adjustment, $ per acre and # acres. Look for Trend line after plot the data

Question 4

Reconciling Value Indicators

Answer 4

Quantity is not as important as quality of comps. Bad info in will bring bad info out. Need to find a reliable data source.

Question 5

Cost analysis

Answer 5

Quantitative Adjustments Depreciation of properties. Cost - loss in depreciation = value. Can be physical, functional and/or external depreciation.

Question 6

Statistical Data

Answer 6

Quantitative adjustments, There are many sales with or without features. Take sample data and make a regression graph. Find M and Median. Find value of extra room. Caution because outlier can mess with means. volatility of prices

Question 7

Relative Analysis Comparison

Answer 7

Superior, equal, inferior. Listing comps in order of quality to subject property. Qualitative

Question 8

Data Analysis Techniques

Answer 8

Quantitative adjustments, paired data or matched pairs. Two comps same accept one thing. The extra thing accounts for price difference. tough because location can never be the same. Sales with or without feature. Secondary data from 3rd party.

Question 9

Capitalization of income Differences

Answer 9

Quantitative Adjustments, Gross rent multiplier = sales price/ gross rent. Direct cap rate of single years income= noit+1/noit. Caution: make sure GRM is same as comps and subject

Question 10

What is Comparative Analysis?

Answer 10

Comparing Comps to find an adjusted value. Uses quantitative and qualitative

Question 11

Property Adjustments

Answer 11

Location, physical ( size, conditions, quality, age, amenity). Economic (rent), legal (zoning), Non realty components of value( personal property)

Question 12

Step 3 Transactional Adjustments

Answer 12

Condition of Sale, was buyer or seller in duress? Ex: arms length as normal sale

Question 13

Cascading Errors and Inbreeding Data

Answer 13

Bad input= bad output, one bad outlier will skew result so dig to find reliable data. All 3 approaches should not use same data because that would not mean independence.

Question 14

Step 3 of Procedure of Sale Comps

Answer 14

Make sure unit of data matches. Gross Living Area or gross building area or price per sf. Pick the best data set for the subject property.

Question 15

Step 1 of Procedure of sales comps

Answer 15

Market Research. Lost of data and transactions. Sales, listings, pending sales, offerings. Use MLS, Costar RCA. Bad data ruins research. Dig to find good ones.

Question 16

Step 4 procedure sales comp

Answer 16

Analyze and Adjustments comps. Identify and measure of adjusting. Look for similarities. Make sure transational is in order

Question 17

Trend Analysis

Answer 17

Plot data and find trend line in the prices. Offshoot of statics and graphical analysis. Qualitative Adjustment.

Question 18

Procedure of sales Comparison Approach

Answer 18

1. Market Research
2. verify info per Scope of work
3. select relevant Unit of comparison
4. Analyze and adjustments
5. Reconcile value conclusions

Question 19

Step 5 Procedure of Sales comp

Answer 19

Reconcile value conclusion. Is it range or a point. Adjust sales price on comps

Question 20

Step 2 Procedure sales comp

Answer 20

Verify info per scope of work. was it arms transactions, with cash equivalent terms. Adjust for market value and cash equivalent terms

Question 21

Step 2 Transational adjustments

Answer 21

Financing of property. Pay more for good terms. Market value = cash equivalent sale price

Question 22

What is the relation to appraisal principles?

Answer 22

Supply and Demand: 1st sign of non equilibrium. See cycle of RE
Substitution: basis of sales comp. Buy lower option even if same quality
Balance: if over supply, price will drop. Will builds stop construction, no they need paycheck
Externalization: Positive and negative
Market value and Highest and best use

Question 23

Step 5 of Transaction Adjustment

Answer 23

Market Conditions. Time adjustment for up or down market.

Question 24

Does double SF mean double cost?

Answer 24

No the area will double but the perimeter will not. The building supplies for the walls will not be the same.

Question 25

How many comps do we need?

Answer 25

There is no set number needed for comps. the more the better. They need to be quality comps. Residential ask for 3 but you do not need to do that many.

Question 26

What does Historical Approach mean?

Answer 26

Use old data to determine value of subject property. Easy to understand. Direct reflection of market. Good data in means good data out.

Question 27

Order of Transational Adjustments

Answer 27

1. Property Rights conveyance
2. Financing
3. Condition of sale
4. Property fixes immediately after sale
5. Market Conditions

Question 28

Step 4 of Transational adjustments

Answer 28

expenditures after sale. new roof, pain etc. Pay less for house because you spend money right after you bought. Adjustment to gross sale price

Question 29

Step 1 of transational adjustments

Answer 29

Property rights conveyed. lease fee vs fee simple

Question 30

Ranking analysis

Answer 30

Putting data into array. Put it is order or price for ex and put subject property into array at best point.