Fundamental of Real Property Appraisal - Sales Comparison Approach

Question 1

The Principle of ___________ holds that the value of a property tends to be set by the price that would be paid to acquire a property of similar utility and desirability within a reasonable amount of time.

Answer 1

Substitution

Question 2

The Principle of _____________ is the underlying principle in the adjustment process in the sales comparison approach.

Answer 2

Contribution

Question 3

A major principle in the sales comparison approach holds hat the relationship between a property and its environment must be in ___________ for a property to reflect its optimum market value.

Answer 3

balance

Question 4

A major advantage to the sales comparison approach is that it reflects the actions of _______ and ________ in the market.

Answer 4

buyers, sellers

Question 5

A unit of comparison that would be applicable to agricultural farmland or larger rural residential tracts would be the ______________.

Answer 5

price per acre

Question 6

In the selection of comparable properties in the sales comparison approach, list four comparability items that should be considered.

Answer 6

1. Financing
2. Current market condition (date of sale)
3. Similar in location
4. Similar in size, age, condition
5. Similar in design
6. Similar in construction type
7. Affected by the same four forces that influence value
8. Similar physical attributes

Question 7

List the order of adjustments in the sales comparison approach.

Answer 7

1. Financing
2. Market conditions (time of sale)
3. Location and other physical characteristics

Question 8

Which method of determining adjustments in the sales comparison approach cannot be used to determine market conditions (changes in value over time )

Answer 8

depreciated cost

Question 9

The first step in the sales comparison approach is to define the appraisal problem. List the five items that need to be included in defining the appraisal problem.

Answer 9

1. Identify the property to be appraised.
2. Determine the property rights to be appraised.
3. Define the purpose and function of the appraisal.
4. Specify the date of appraisal.
5. Define the type of value.

Question 10

A cardinal rule in the sales comparison approach holds that all adjustments are made to the _______ property, and never to the ________.

Answer 10

comparable, subject

Question 11

The Principle of ________ states that market value is never constant because physical (environment), governmental, social, and economic forces are at work, affecting the property.

Answer 11

Change

Question 12

When four forces - physical (environmental), governmental, social, and economic - are in balance, the market achieves a temporary state of ______________.

Answer 12

Equilibrium

Question 13

_________ _________ analysis, which is used primarily in single-property appraisal, requires the sale properties to be identical in all attributes except the one being measured (or adjustments have already been made for any differences).

Answer 13

Paired sales

Question 14

The sales comparison approach usually ________ be used to value special purpose or one of a kind properties.

Answer 14

cannot

Question 15

In the sales comparison approach step two is data collection and verification. This requires the appraiser to collect and verify general, _________, and comparative data,

Answer 15

specific

Question 16

The unit of comparison that we generally used in valuing office properties is the _______________________.

Answer 16

price per square foot of net rentable area.

Question 17

Price per animal unit might be the appropriate unit to use in the valuation of ________ _____________.

Answer 17

agricultural pastureland