M1U6S2

Question 1

What are the 8 steps in the appraisal process?

Answer 1

Define the problem
Preliminary inspection and planning the work
Data collection and analysis
Application of the direct sales comparison approach
Application of the cost approach
Application of the income approach
Reconciliation and final estimate 
Write the appraisal report

Question 2

What does the appraiser do in “Defining the Problem”

Answer 2

Must be certain what must be done and why. The appraiser needs to consider the client’s objectives to determine their own objectives and know the nature of the problem beforehand to avoid any possible misunderstanding with the client

Question 3

Name and state the function of the four major purposes for most appraisal assignments

Answer 3

To estimate market value: to help prospective sellers establish acceptable selling prices and to help prospective buyers set offering prices
To estimate assessed value: to provide a basis for property taxation
To estimate insurable value: to establish a proper amount of insurance coverage
To estimate rental value: to set rent schedules and lease provisions

Question 4

Why should the appraiser always define the specific type of value required?

Answer 4

Value is a word of many meanings and the type of value may be subject to different interpretations if its not clearly defined

Question 5

The value estimate may only be valid as of a specific date, why?

Answer 5

Value is the result of the interaction of the forces of the market supply and demand so the value estimate will change when the conditions change

Question 6

What are the six main steps that are taken into consideration in the appraisal process when doing a “Preliminary Inspection and Planning the work”

Answer 6

1. Preliminary estimate of the highest and best use
2. Determine data requirements and sources
3. Determine approaches to be used
4. Design the research plan
5. Outline the Appraisal Report
6. Plan the work schedule

Question 7

Define a trend

Answer 7

A series of related changes brought about by a chain of cause and effect

Question 8

Distinguish between general data and specific data

Answer 8

General data: data on economic, political, and physical forces affecting real estate values in the region. It includes information regarding trends in the immediate neighborhood.
Specific data: data that relates to the subject property and the specific comparables used in the appraisal. Specific data includes such facts as lot size, taxes, building size, room size, and title information

Question 9

What are the five main factors considered in a site analysis?

Answer 9

Physical, locational, legal-governmental, economic, environmental

Question 10

Define neighbourhood

Answer 10

A division of a city, town, or community. It is a section within a larger unit. It is shaped and molded by social, economic, civic, and physical factors and any fluctuation in these broad basic factors will modify its character.

Question 11

What are the four main forces affecting neighborhoods?

Answer 11

Social, economic, political, and physical