Identify the different types and basic principles of value / appraisal Flashcards
Real estate licensees must be aware of the fundamental principles of valuation in order to complete an accurate and effective ___ that assists seller clients in arriving at a reasonable asking price and buyer clients in making appropriate offers based on current market conditions
Comparative market analysis (CMA)
Knowledge of the appraisal process allows a real estate licensee to recognize a(n) ___.
Unacceptable appraisal
Appraisal reports are typically ___ in a uniform format
Written
Title XI of the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 requires that appraisals used in connection with a(n) ___ related transaction be performed by someone who is state certified or licensed
Federally
Title XI of the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 requires that appraisals used in connection with a federally related transaction be performed by someone who is…
state certified or licensed
State qualifications for appraisers must conform to the federal requirements that follow the criteria for certification established by the ___ of the ___
Appraiser Qualifications Board
Appraisal foundation
In IL, the ___ provides for mandatory licensure with limited exceptions of IL appraisers
Real Estate Appraiser Licensing Act of 2002
What are the 3 categories of appraisers recognized in IL?
1) Associate real estate trainee appraiser
2) Certified residential real estate appraiser
3) Certified general real estate appraiser
In IL, all reports made by a(n) ___appraiser must be cosigned by a state-certified residential real estate appraiser or state-certified general real estate appraiser
Associate real estate trainee appraiser
In IL, all reports made by an associate real estate trainee appraiser must be cosigned by a(n) ___ or ___.
state-certified residential real estate appraiser
or
state-certified general real estate appraiser
In IL, certified residential real estate appraiser’s may appraise other types of real property having a transaction value of less than $___.
250,000
In IL, an appraisal report must identify on the report the ___ who ___ or ___ the appraisal assignment by ___.
individual who ordered or originated the appraisal assignment by name.
In IL, the appraiser must retain the ___ of all contracts engaging their services as an appraiser.
original copies
In IL, an appraiser must retain all ___, including any ___ used to develop it.
Appraisal reports
Supporting data
In IL, the appraiser must retain the original copies of all contracts engaging their services as an appraiser and all appraisal reports, including any supporting data used to develop the appraisal reports for a period of not less than ___ years, or ___ years after the final disposition of any judicial proceeding in which testimony was given, whichever is ___.
5, 2, longer
In IL, and appraiser must retain contracts, logs, and appraisal reports used in ___ for a period of 5 years.
meeting pre license experience requirements
In IL, and appraiser must retain contracts, logs, and appraisal reports used in meeting pre license experience requirements for a period of ___ years.
5
In IL, associate trainee appraisers must become ___ within 2 years of initial licensure.
certified residential appraisers
In IL, associate trainee appraisers must become certified residential appraisers within ___ of initial licensure.
2 years
An appraisal is based on analysis of properties that have ___ as well as ___.
Actually sold
Competitive Listings
The CMA features properties that are similar to the subject property in ___, ___, and ___.
Size, location, amenities
What 3 things are the CMA based on?
1) Recently closed properties (solds)
2) Properties currently on the market (competition for the subject property)
3) Properties that did not sell (expired listings)
The CMA features properties that are…
similar to the subject property
___ and ___ sales provide a snapshot of what price consumers were willing to pay and what they were not for comparable properties, and this data can be used to support a CMA.
Historical and expired
An appraisal is a more ___ of gathered information than a Broker’s price opinion (BPO)
in-depth analysis
A Broker’s price opinion (BPO) can NOT be used if the matter involves a(n)….
federally related transaction that requires an appraisal
A Broker’s price opinion (BPO) can NOT be used if the matter occurs in a state that…
Requires an appraiser’s license
When communicating value to a customer or client, it should be backed up with ___ and ___ that support your conclusion and are easy for them to understand,
data and statistics
What are the 4 characteristics of value?
1) Demand
2) Utility
3) Scarcity
4) Transferibility
The goal of an appraiser is to express an opinion of ___ value.
Market
An essential factor in rendering an opinion of value is that the most probable price is not the ___ or ___ price
Average or highest
An essential factor in rendering an opinion of value is that the buyer and seller must be ___ and acting without ___
Unrelated
Undue pressure
An essential factor in rendering an opinion of value is that both buyer and seller must be well informed about the property’s ___ and ___, including both its ___ and its ___.
use and potential
defects and advantages
An essential factor in rendering an opinion of value is that a reasonable time must be allowed for ___ in the ___
Exposure in the open market
An essential factor in rendering an opinion of value is that payment must be made in ___ or ___
Cash or equivalent
An essential factor in rendering an opinion of value is that the price must represent a(n) ___ for the property sold, unaffected by ___.
Normal consideration
special financing amounts
Market ___ is a historical fact.
Price
Cost most often NOT represent ___, however sometimes it may be the same.
Market value
when improvements on a property are new, ___ and ___ are likely to be the same
cost and value
Value can increase or decrease in ___ of some future benefit or detriment.
Anticipation
The value of a house may be affected if rumors circulate that an adjacent property may be converted to commercial use in the near future. This is an example of which principle?
Anticipation
What are the 4 economic and social forces that impact a market?
1) Growth
2) Stability
3) Decline
4) Restoration
The success of a retail store may cause investors to open similar stores in the area. This tends to mean less profit for all stores concerned unless the purchasing power in the area increases substantially. This is an example of which appraisal principle?
Competition
Maximum value is realized if the use of land ___ to existing neighborhood standards
Conforms
In single-family residential neighborhoods, buildings should be similar in design, construction, size, and age. This is called ___ and is an example of which appraisal principle?
Homogeneity
Conformity
Installing a swimming pool, greenhouse, or tennis court may not add value to the property equal to the cost, while remodeling an outdated kitchen or bathroom might add value to the property that is equal to the cost. This is an example of which appraisal principle?
Contribution
A property’s highest and best use must meet which 4 requirements?
1) Legally permitted
2) Physically possible
3) Economically or financially feasible
4) Most profitable or maximally productive
The highest and best use of a site can change with __, ___, and ___ forces
Social
Political
Economic
Which appraisal principle is discussed in every appraisal?
Highest and best use
The Law of Increasing returns applies as long as improvements…
produce an increase in income or value
The law of diminishing returns apples when improvements…
DO NOT increase value or income
2 adjacent lots valued at $35,000 each might have a combined value of $90,000 if consolidated. This is an example of which appraisal principle?
Plottage
In a neighborhood of modest homes, a structure that is larger, better maintained, or more luxurious would tend to be valued in the same range as the less-lavish homes. This is an example of which appraisal principle?
Regression
A modest home is valued higher due to being located amongst larger & fancier properties. This is an example of which appraisal principle?
Progression
Opposite of regression
Progression
Opposite of progression
Regression
