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Unit 19: Real Estate Appraisal > Identify the different types and basic principles of value / appraisal > Flashcards

Identify the different types and basic principles of value / appraisal Flashcards

1
Q

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

A

Comparative market analysis (CMA)

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2
Q

Knowledge of the appraisal process allows a real estate licensee to recognize a(n) ___.

A

Unacceptable appraisal

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3
Q

Appraisal reports are typically ___ in a uniform format

A

Written

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4
Q

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

A

Federally

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5
Q

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…

A

state certified or licensed

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6
Q

State qualifications for appraisers must conform to the federal requirements that follow the criteria for certification established by the ___ of the ___

A

Appraiser Qualifications Board
Appraisal foundation

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7
Q

In IL, the ___ provides for mandatory licensure with limited exceptions of IL appraisers

A

Real Estate Appraiser Licensing Act of 2002

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8
Q

What are the 3 categories of appraisers recognized in IL?

A

1) Associate real estate trainee appraiser
2) Certified residential real estate appraiser
3) Certified general real estate appraiser

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9
Q

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

A

Associate real estate trainee appraiser

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10
Q

In IL, all reports made by an associate real estate trainee appraiser must be cosigned by a(n) ___ or ___.

A

state-certified residential real estate appraiser
or
state-certified general real estate appraiser

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11
Q

In IL, certified residential real estate appraiser’s may appraise other types of real property having a transaction value of less than $___.

A

250,000

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12
Q

In IL, an appraisal report must identify on the report the ___ who ___ or ___ the appraisal assignment by ___.

A

individual who ordered or originated the appraisal assignment by name.

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13
Q

In IL, the appraiser must retain the ___ of all contracts engaging their services as an appraiser.

A

original copies

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14
Q

In IL, an appraiser must retain all ___, including any ___ used to develop it.

A

Appraisal reports
Supporting data

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15
Q

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 ___.

A

5, 2, longer

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16
Q

In IL, and appraiser must retain contracts, logs, and appraisal reports used in ___ for a period of 5 years.

A

meeting pre license experience requirements

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17
Q

In IL, and appraiser must retain contracts, logs, and appraisal reports used in meeting pre license experience requirements for a period of ___ years.

A

5

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18
Q

In IL, associate trainee appraisers must become ___ within 2 years of initial licensure.

A

certified residential appraisers

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19
Q

In IL, associate trainee appraisers must become certified residential appraisers within ___ of initial licensure.

A

2 years

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20
Q

An appraisal is based on analysis of properties that have ___ as well as ___.

A

Actually sold
Competitive Listings

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21
Q

The CMA features properties that are similar to the subject property in ___, ___, and ___.

A

Size, location, amenities

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22
Q

What 3 things are the CMA based on?

A

1) Recently closed properties (solds)
2) Properties currently on the market (competition for the subject property)
3) Properties that did not sell (expired listings)

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23
Q

The CMA features properties that are…

A

similar to the subject property

24
Q

___ 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.

A

Historical and expired

25
Q

An appraisal is a more ___ of gathered information than a Broker’s price opinion (BPO)

A

in-depth analysis

26
Q

A Broker’s price opinion (BPO) can NOT be used if the matter involves a(n)….

A

federally related transaction that requires an appraisal

27
Q

A Broker’s price opinion (BPO) can NOT be used if the matter occurs in a state that…

A

Requires an appraiser’s license

28
Q

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,

A

data and statistics

29
Q

What are the 4 characteristics of value?

A

1) Demand
2) Utility
3) Scarcity
4) Transferibility

30
Q

The goal of an appraiser is to express an opinion of ___ value.

A

Market

31
Q

An essential factor in rendering an opinion of value is that the most probable price is not the ___ or ___ price

A

Average or highest

32
Q

An essential factor in rendering an opinion of value is that the buyer and seller must be ___ and acting without ___

A

Unrelated
Undue pressure

33
Q

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 ___.

A

use and potential
defects and advantages

34
Q

An essential factor in rendering an opinion of value is that a reasonable time must be allowed for ___ in the ___

A

Exposure in the open market

35
Q

An essential factor in rendering an opinion of value is that payment must be made in ___ or ___

A

Cash or equivalent

36
Q

An essential factor in rendering an opinion of value is that the price must represent a(n) ___ for the property sold, unaffected by ___.

A

Normal consideration
special financing amounts

37
Q

Market ___ is a historical fact.

A

Price

38
Q

Cost most often NOT represent ___, however sometimes it may be the same.

A

Market value

39
Q

when improvements on a property are new, ___ and ___ are likely to be the same

A

cost and value

40
Q

Value can increase or decrease in ___ of some future benefit or detriment.

A

Anticipation

41
Q

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?

A

Anticipation

42
Q

What are the 4 economic and social forces that impact a market?

A

1) Growth
2) Stability
3) Decline
4) Restoration

43
Q

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?

A

Competition

44
Q

Maximum value is realized if the use of land ___ to existing neighborhood standards

A

Conforms

45
Q

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?

A

Homogeneity
Conformity

46
Q

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?

A

Contribution

47
Q

A property’s highest and best use must meet which 4 requirements?

A

1) Legally permitted
2) Physically possible
3) Economically or financially feasible
4) Most profitable or maximally productive

48
Q

The highest and best use of a site can change with __, ___, and ___ forces

A

Social
Political
Economic

49
Q

Which appraisal principle is discussed in every appraisal?

A

Highest and best use

50
Q

The Law of Increasing returns applies as long as improvements…

A

produce an increase in income or value

51
Q

The law of diminishing returns apples when improvements…

A

DO NOT increase value or income

52
Q

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?

A

Plottage

53
Q

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?

A

Regression

54
Q

A modest home is valued higher due to being located amongst larger & fancier properties. This is an example of which appraisal principle?

A

Progression

55
Q

Opposite of regression

A

Progression

56
Q

Opposite of progression

A

Regression

Unit 19: Real Estate Appraisal (5 decks)

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