Lesson 5 Flashcards
When is a time adjustment made?
Its a market condition so it would be last transactional
Adj made before any preoprty adj are made
The principle of substitution
Substitution holds thst the value of property tends to be set by the price that woukd be paid to aquire a substitute property of similar utility and desirability within a reasonable amount of time.
Statements about Reconciliation
Recon is inherent throughout the appraisal process
Recon is done with all three approaches to value having been completed
Recon is the appraiser asking questions about data and techniques in the various approaches.
Is ranking analysis qualitative or quantitative?
A qualitative technique for analyzing comparable sales . Ranking in ascending or descending order of desirability and analyzed to determine its positiom relative to the subject.
Statistical analysis , paired sales and graphic analysis are all quantitative.
If property has a latent possess latent value, what approach is best
Residual method of appraisal
Direct comparison is best when there are……
Sufficient sales and provides the most reliable estimate of market value.
Examples of quantitative analysis
Grouped data, statistical analysis and scenario analysis are considered quantitative.
Is trend analysis quantitative or qualitative.
Trend analysis is qualitative
Facts for hbu and direct comparison approach
Hbu of comparables should match subject property
Hbu of subject is fundamental to the direct comparison approach
Hbu of subject provides the basis for research for comparable properties
Adjsutment for real property rights conveyed reflects:
Differences in the rights in realty transfered between subject and the comparables
So the rights could be less than all the rights
Or rights to other properties
Appraiser must 1st ensure that the sale price of comparable applies to property rights that are similar to those being appraised.
Factors considered when using the direct comparison approach
The date of the sale and the number of comparables available
The dimensions and the area are important
Comparables must have similar title status to be comparable
For ex one house with an easement and one without may not be comparable
Current listings exposed to the market for a reasonable time, tell the appraiser what?
Indicate that the market value that the subject property is not likely to exceed.
When is the direct comparison approach most applicable?
When there are sufficient recent, reliable transactions to indicate value patterns or trends in the market.
What is a typical unit of measure of a comparable for an office property.
Price per sq ft of net rentable area
Price per sq ft of usable area
Price per sq ft of gross building area
But not price per sq ft of building area
When evaluating comparables and financing was an option remember to investigate
If financing actually affected the sale price. Did the buyer pay more to get a lower financing rate. Market evidence is always the best indicator
