Market Identification Flashcards
The appraiser must decide how much of the market - called the _______ - he or she is concerned with for the particular assignment.
segment
Defining the market _________is the first step in the market analysis process.
segment
A custom-built high-quality home is currently listed for sale, and is the only high-value home on the market in its area. The current owner/builder was a single man who disliked his family; consequently he built a one-bedroom home to discourage any of his grown children from moving back in with him. Which statement is true?
The home has no value because it has no utility.
Even though it is the only home for sale, if it does not meet utility requirements of buyers, it has a lower value.
Because the subject is the only high-value home for sale in this area, it will sell quickly.
The seller should be able to pick and choose among the numerous offers he will be receiving.
Even though it is the only home for sale, if it does not meet utility requirements of buyers, it has a lower value.
When analyzing a market for a high-value home, what is the MOST important consideration?
the number of residents in the local community
the number of potential buyers in the market place
the number of acceptable and qualified buyers in the market for this type of property
these are all equally important
the number of acceptable and qualifies buyers in the market for this type of property
Which would NOT be an appropriate segmentation for a market analysis? Residential - single family - townhouse Residential - multifamily - 2-4 units Commercial - office - single story Residential - retail - restaurant
residential-retail-restaurant
-retail and restaurants not submarkets of residential
What would be an appraiser’s concern in analyzing the market for a high-value residential property?
How far away am I going to have to go in order to find comparable sales?
How many buyers can afford to purchase this property in this location?
Why did the owner build a home of this type in this location?
How long is this analysis going to take?
How many buyers can afford to purchase this property in this location?
One of the problems in appraising high-value homes is:
The value of high-value homes will always be less than their cost.
Many of these homes are custom built for their current owners, and may not match the needs and desires of buyers.
There are very few sales of high-value homes in a market at any given time.
There is always a buyer’s market for high-value homes
Many of these homes are custom built for their current owners, and may not match the needs and desires of buyers.
Market identification involves:
gathering general data
finding sales data
subdividing the larger market into a workable study area
preliminary analysis of anticipated conclusions
subdividing the larger market into a workable study area
There is a significant oversupply of high-value homes on the market in Community A, and demand for these homes has not increased. Which statement is FALSE?
The value of high-value homes will decline.
The value of all homes in the area will decline.
This will likely create a buyer’s market for high-value homes.
None of the above
the value of all homes in the area will decline
A prediction of future market conditions based on inferences drawn from general market information, published data, and historical trends in rents and absorption rates and occupancy for similar property types.
Inferred analysis
A prediction of future market conditions based on comparison of a quantified estimate of future demand with a quantified estimate of future supply; also known as fundamental demand analysis
Fundamental Analysis
This type of analysis examines the present worth of a future benefit. You are right if you equate that statement to the principle of anticipation.
Investment Analysis
This type of analysis will relate to the client whether the market considers such a project worthwhile – that is, whether or not the market “needs” this particular project.
Feasibility Analysis
Who is responsible for making an appropriate scope of work decision in an appraisal assignment? the client only the appraiser only the appraiser and client jointly the Appraisal Standards Board
the appraiser only
Who determines the appropriate level of analysis for appraisal assignment? the client the appraiser the state appraisal board the Appraisal Standards Board
the appraiser
What type of analysis consists of primary economic research by an analyst? econometric analysis fundamental analysis consulting analysis none of the above
fundamental analysis
Which statement is TRUE regarding the scope of work decision in an appraisal assignment?
It is the sole responsibility of the appraiser.
It is the sole responsibility of the client.
It is a decision that is made jointly by the appraiser and the client.
It is the appraiser’s decision; however the client can exercise veto power over it
it is the sole responsibility of the appraiser
What does a real estate investor expect in return for tying his or her money up in an investment property? instant liquidity to break even an acceptable rate of return unfavorable tax treatment
an acceptable rate of return
Steps in the analysis process
Survey the market
Study the market
projecting future economic growth potential
In most appraisal situations, what is the appraiser’s best source for data about the subject property’s physical characteristics?
government maintained deed and assessment records
MLS data
visual inspection of the subject property
USPAP
visual inspection of the subject property
A community's total employment is 29,120. The number of total core industry employees is 18,200. If the core industry adds 450 more jobs, how many additional jobs will be generated in the community? 270 300 160 162
270
29,120 / 18,200 = 1.6
450 x .06 = 270
What is the most common type of market study that appraisers are asked to complete? feasibility analysis inferred analysis fundamental analysis all of the above
feasibility analysis
A community's total employment is 52,220. The number of total core industry employees is 37,300. If the core industry adds 920 more jobs, how many additional jobs will be generated in the community? 153 328 404 368
368
Steps in the analysis process
52,220 / 37,300 = 1.4
920 x 1.4 = 368
A community’s total employment is 52,220. The number of total core industry employees is 37,300. What is the base core multiplier?
- 3
- 4
- 71
- 1
1.4
steps in the analysis process
52,220 / 37,300 = 1.4
An appraiser notes that there is a projected increase in production by major employers, which will result in a large increase in area employment. Which of the following conclusions is MOST TRUE?
An increase in demand will likely precede an increase in supply.
Lower and moderately-priced homes will increase in value; however high-value homes will not.
The appraiser should make negative adjustments in the sales comparison approach for market conditions (time).
An increase in the supply of housing will occur before an increase in demand is noted.
an increase in demand will likely precede an increase in supply
When a client asks for a feasibility analysis, what do they want to know?
how many houses have gone into foreclosure in the area in the last year
when the market will start to decline
how long it will be before the current oversupply of homes will be absorbed
whether a proposed project is feasible for the market place at this time
whether a proposed project is feasible for the market place at this time
Offsite Improvements
Public/private street
View
Street Length and Curvature
Street lights, storm sewers
Some of the different types of roofs are
Gable Hip Pyramid Mansard Shed Flat
Most of the framing allowed by building codes is of the
Western framing technique
What entity produces flood hazard maps and assigns flood area designations? FEMA ASB HUD DEP
FEMA
Another term for platform framing is: balloon framing western framing metal pole framing post framing
Western Framing
A two-story home measures 32 feet by 41.5 feet on the exterior. There is an open two-story foyer area which measures 12 feet by 12 feet. What is the gross living area (GLA) of this home? 2,656 square feet 2,512 square feet 2,800 square feet 1,184 square feet
2512 SQ FT
32’ x 41.5’ x 2 stories = 2,656
12 x 12 = 144
2656 - 144 = 2512
When there is an open two-story foyer area, the ANSI standard for measuring residential square footage requires that this open second floor area:
be included in the square footage totals
be subtracted from the square footage totals
be included in the below-grade area only
be included if the ceiling height is at least 5 feet
be subtracted from the square footage totals
If a home has central air conditioning, what would be the minimum electrical amperage an appraiser would expect to see in the home? 100 150-200 60 400
150 - 200
What zones are designated as Special Flood Hazard Areas (SFHAs)? A and B only A and C only A and V only A, B, C, and V
A and V only
Which of these would generally be considered examples of functional obsolescence?
four bedroom home with only one bathroom
older, outdated lighting and plumbing fixtures
walk-through (captive) bedrooms
all of these
all of these
A property suffers from functional obsolescence because it has outdated single-pane windows. Installation of new multipane windows would cost $24,000 and would increase the value of the property by $20,000. This functional obsolescence is:
curable
incurable
it cannot be determined from the information provided
incurable
Generally, a HEATING system should be able to maintain an interior temperature of \_\_\_\_\_\_ degrees Fahrenheit. 55 98.6 90 70
70
Generally, an AIR CONDITIONING system should be able to maintain an interior temperature of \_\_\_\_\_\_ degrees Fahrenheit. 65 78 98 62
78
What is an appraiser’s responsibility in determining whether the home’s footings are at least one foot below the frost line?
assume the home was inspected at the time it was built
conduct soil-boring tests on the footer and observe it
ask the property owner to provide photos of the home when it was being built
phone or e-mail the builder and confirm this personally
ASSUME THE HOME WAS INSPECTED AT THE TIME IT WAS BUILT
What is typically used to prevent back flow of sewer gasses into homes? pressure reduction valves reduction in the size of the water line gas-fired burners "p-traps"
“P-traps”
What type of new home is MOST likely to have a pier and beam foundation? a high-value home a log home a manufactured home a home located in a sub-arctic region
a manufactured home
The ANSI standard for measuring residential square footage in homes is based on \_\_\_\_\_\_\_\_\_ measurements, for detached dwellings. interior exterior metric tape measure
exterior
An appraiser moves his business from Arizona to Minnesota. What characteristic will she undoubtedly notice regarding the homes in Minnesota? they will not have double-glazed windows they will have steeper roof pitches they will have thicker exterior walls they will have thicker interior walls
they will have steeper roof pitches
An appraiser's exterior measurement of a single story residential property indicates a GLA of 1,300 square feet. An interior inspection reveals an entry foyer of 370 square feet and an eight foot by ten foot unfinished storage area not accessible from the interior of the house. The GLA of the home is: 1,800 square feet 1,380 square feet 350 square feet 1,220 square feet
1,220 sq ft
foyer - irrelevant
8 x 10 = 80
1300 - 80 = 1220
Which statement is TRUE regarding market identification?
The market should include a cross-segment of all different property types in a geographic area.
Market identification is best accomplished by using maps.
The appraiser should draw market boundaries in a way that will support his or her expected conclusions.
The market may be subdivided more than once in order to arrive at an appropriate segmentation.
The market may be subdivided more than once in order to arrive at an appropriate segmentation.
What helps an appraiser determine the appropriate level of analysis to employ in an appraisal assignment?
communiciation with the client
the amount of the fee
the appraiser’s knowledge of appraisal techniques
the amount of time given for the appraiser to complete the appraisal
communication with the client
When analyzing a market, an appraiser notes that there is a projected increase in production by major employers, which will result in an increase in employment. Which of the following conclusions is MOST TRUE?
An increase in supply will likely precede an increase in demand.
The area is in the decline phase of the neighborhood life cycle.
The appraiser should make negative adjustments in the sales comparison approach for market conditions.
An increase in the supply of housing is necessary.
an increase in the supply of housing is necessary
