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Michigan Certified Assessing Officer (MCAO) > Module 1 > Flashcards

Module 1 Flashcards

1
Q

Desirability:

A

want the product for it to have value

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2
Q

Utility:

A

ability to satisfy a human: want, need, or desire

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3
Q

Scarcity:

A

present supply relative to the demand for it

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4
Q

Transferability:

A

ability to purchase the property

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5
Q

In order to have value, the property must have ____

A

DUST:

Desirability,
Utility,
Scarcity,
Transferability:

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6
Q

Fee Simple Title:

A

rights of ownership enjoyed by the owner of real estate.

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7
Q

There are six rights in the Bundle of Rights:

A 
S – Right to Sell
L – Right to Lease or Rent
U – Right to Use
G – Right to Give Away
E – Right to Enter or Leave
R – Right to Refuse to do any of these
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8
Q

Real Estate:

A

the physical land and any structure attached to it

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9
Q

Real Property:

A

(bundle of rights) rights of ownership enjoyed by the owner of real estate.

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10
Q

Four (4) rights which government has retained for itself:

A

T.E.P.E.

  1. Power of Taxation
  2. Power of Eminent Domain
  3. Police Power – power to regulate
  4. Escheat
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11
Q

Supply:

A

the amount of a product available for sale

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12
Q

Demand

A

the amount of a product consumers are willing & able to buy at a given time for a specified price.

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13
Q

Supply is dependent on what 5 things:

A
  1. Number of sellers in the market,
  2. Expectations of the future economy,
  3. The cost of production,
  4. The price of other goods available
  5. ^ principle of competition
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14
Q

5 Demand factors:

A
  1. Price asked for the commodity
  2. Expectations
  3. Price of related commodities
  4. Income
  5. Preferences (tastes)
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15
Q 
Four external factors affect supply and demand, and
therefore value (PEGS):
A
  1. Physical
  2. Economic
  3. Governmental
  4. Social
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16
Q

Anticipation:

A

worth of all future benefits expected by market participants.

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17
Q

The basis of the income approach to value.

A

Anticipation

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18
Q

Substitution

A

an equally desirable substitute.

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19
Q

This principle applies to all three approaches to value.

A

Substitution

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20
Q

“the reasonably probable and legal use of
vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.”

A

highest and best use

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21
Q

four tests of highest and best use are:

A
  1. Legally permissible
  2. Physically possible
  3. Financially feasible
  4. Maximally productive
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22
Q

Cost approach is used when:

A
  1. estimate the cost of constructing improvements to the land.
  2. you do not have sufficient sales to compare
  3. the structure has just been built
  4. you are doing mass appraisal. It can be used on all property types.
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23
Q

Cost approach formula:

A

L + (RCN - dep) = Value

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24
Q

The cost to reproduce all components of the building with the same materials and same labor as found in the current structure.

A

Reproduction Cost:

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25
Q

Determines the cost to construct a building of similar utility using modern materials and methodologies.

A

Replacement Cost:

26
Q

Three Methods of estimating cost new (RCN):

A
  1. Quantity Survey Method (Trend)
  2. Unit-in-Place Method
  3. Comparative Method
27
Q

RCN stands for

A

Replacement Cost New

28
Q

Depreciation is the loss in value from RCN due to:

A
  1. Physical wear and tear
  2. Effects of nature
  3. Changing tastes and preferences
  4. Changing technology
  5. Forces outside the property reducing its value
29
Q

Three types of Depreciation:

A
  1. Physical Deterioration
  2. Functional Obsolescence
  3. External/Economic Obsolescence
30
Q

Sales Comparison Approach:

A

(a.k.a. market approach)
Sc +/- adj = Value
similar sold properties compared, adjusted for differences = market value is estimated.

31
Q

Sales Comparison Approach (a.k.a. market

approach) formula:

A

Sc +/- adj = Value

32
Q

Verification of sales determines:

A

arms-length sales transaction

33
Q

The most common types of ownership are:

A
  1. Fee Simple
  2. Partial Estate
  3. Life Estate
34
Q

Fee simple:

A

the highest degree of ownership

35
Q

Partial estate:

A

leased property

36
Q

Life estate:

A

right to use, occupy, and control a property for the length of the lessee’s life

37
Q

Value in exchange:

A

amount of money or goods you can receive if you sell the property.

38
Q

Value in use:

A

the value property has in a specific use.

39
Q

Personal Property:

A

All Property that is not real

40
Q

Tangible:

A

Physically exists; car, desk, tools, etc

41
Q

Intangible Property:

A

No physical existence; stocks, bonds, bank accounts etc.

42
Q

Three approaches to value:

A
  1. sales comparison
  2. income
  3. cost
43
Q

Cost approach: four situations when to use

A
  1. structure has just been built
  2. estimate the cost of constructing improvements to the land
  3. not sufficient sales to compare,
  4. doing mass appraisal.
44
Q

This approach is based on the principle of substitution.

A
  1. Cost approach
  2. Sales comparison approach
  3. Income approach
45
Q

Used to value the income stream of a property.

A

Income approach

46
Q

This approach to value uses the principles of substitution and anticipation.

A

Income approach

47
Q

Tax Day:

A

December 31st

48
Q

Ad Valorem:

A

At or according to value

49
Q

TCV:

A

True Cash Value

50
Q

MV:

A

Market Value

51
Q

AV:

A

Assessed Value

52
Q

SEV:

A

State Equalized Value

53
Q

CV:

A

Capped Value

54
Q

TV:

A

Taxable Value

55
Q

Mills:

A

1/1000

56
Q

Property Taxes:

A

TV x Mills

57
Q

ECF:

A

Economic Condition Factor

58
Q

IRM:

A

Inflation Rate Multiplier

59
Q

CPI:

A

Consumer Price Index

60
Q

CV formula:

A

CV = (last yr TV - losses) x (IRM) + AV Additions

61
Q

An appraisal is:

A

An expert estimate of something to attain its value.

Michigan Certified Assessing Officer (MCAO) (3 decks)

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