Module 12&13

Question 1

depreciation

Answer 1

is the loss in value of improvements not land. when property ages or its hbu is no longer represented depreciation accrues until renovation or demolition occurs

Question 2

mkt extraction

Answer 2

1) select similar improved properties
2) subtract land value
3) result will be value contribution of the improvements of comp sale
4) compare the value of contribution of the improvements will be calculated not as a date of appraisal, but as date of sale. This amount is the same as the depreciated cost of improvements as date of sale.

Question 3

4 essential formulas

Answer 3

1) effective age & remainin economic life = total econ life
2) basic age/life ratio = eff age/econ life =% of depreciation
3) % of depreciation accrued multiplied by cost gives amount depreciated
4) cost - depreciation =depreciated cost known as contributory value of improvements

Question 4

deferred maintenance

Answer 4

regular maintenance easily cured physical deterioration

Question 5

incurable items

Answer 5

short lived like carpet ,roof,

Question 6

long lived components

Answer 6

building components….steel frame, concrete foundation

Question 7

when would appraiser ever need to know value of land or site

Answer 7

1) vacant land
2) hbu
3) cost approach - value land separate as if vacant and then adds depreciated value of the building& site improvements; only approach that requires separation of land
4) income capitalization approach
5) property taxation
6) insurance
7) condemnation

Question 8

3 approaches to value

Answer 8

sales comparison
income capitalization
cost approach

Question 9

economic principles that should be taken into account when valuing land

Answer 9

anticipation - worth of future benefits
change - population growth or decline or change in traffic patterns & employment
supply& demand
substitution
balance
externalities

Question 10

transferable development rights

Answer 10

used to preserve agriculture land. preserve historic sites on buildings & open space or to protect scenic features

Question 11

6 procedures in performing land value

Answer 11

GLADES
1) ground rent captializatio
2) land residual technique
3)allocation
4)subdivision developmet
5)extraction
6) sales comparison
most common - sales comp, extraction & allocation

Question 12

most reliable sales data

Answer 12

closed sale - contract between buyer and seller; title transferred
contract for sale - meeting of the minds, but sale had not closed yet…pending on MLS
listing - offer to sell can be used to analyze competition; offer to sell often sets the upper limit of potential sales
offers to purchase - but not yet accepted; gives most current picture of what is taking place in the mkt. In balance mkt an offer to purchase sets the lower limit of potential sale prices
options - rearranged future purchase prices executable by the purchaser; provides the appraiser with info about future thoughts of the mkt

Question 13

elements of comparison

Answer 13

aspects of comp sales that we compare to subject property & make adjustments for differences

Question 14

elements of comparison

Answer 14

1) property rights conveyed
2) financing terms
3) condition of sale - sold low mkt sale due to job loss
4)expenditures made immediately after purchase ex. utility lines
5) mkt conditions - change in mkt that occurs over time
6) location & geography
7) physical& geological characteristics - size, shape, and frontage (river, lake, ocean) *corner lot influence *plottage value (process that creates plottage is assemblage) *excess land, surplus land, landscaping, streets, sidewalks, lighting, accessibility, etc.
8) economic characteristics - interest rates, credit, employment rates, general economic outlook, rural areas,
9) use/zoning
10) non-realty items, i.e. transferrable development rights

Question 15

units of comparison

Answer 15

sq feet, front ft, cubic ft, room, bed, seat,apt, or another unit

Question 16

gross adjustments

Answer 16

total amount of adjustments regardless of they are positive or negative; shall not exceed 25%

Question 17

net adjustments

Answer 17

net amount after all plus and minuses have been applied; shall not exceed 15%

Question 18

paired data analysis

Answer 18

extracting adjustments by comparing 2 sales that are similar in most respects with the exception of the one for which you are seeking the adjustment. The principle of contribution comes into play here; source of adjustment.

Question 19

cost to cure

Answer 19

deriving adjustments for the cost to effect necessary repair or renovation. An upward adj can be made to comparable if it had no utilities & sub property did; source of adjustments

Question 20

capitalization of ground rent

Answer 20

compares value of leased land, parcels, incomes, or rates; a source of adjustments

Question 21

present value calculations

Answer 21

if a finite time frame is involved (like 2 years until the road is completed or 6 months until lease up) in which have known for future value & solve for present value using an appropriate; a source of adjustment

Question 22

property rights

Answer 22

can be adjusted through a comparison of mkt rent & contract rent plus consideration of revisionary value. Very common comparison in commercial; a source adjustment

Question 23

linear regression

Answer 23

statistical graphing of sales & a trend line forecast for the subject. a change in one variable; a source of adjustment

Question 24

multiple regression analysis

Answer 24

statistical graphing of sales & a trend line forecast for the subject. based on more than one variable; a source of adjustment

Question 25

interviews with mkt participants

Answer 25

when none of the previous sources of adjustment are available

Question 26

personal judgment

Answer 26

least desirable

Question 27

percentage adjustment

Answer 27

made to sale price of comp sale

Question 28

extraction

Answer 28

sales price - depreciate cost of improvements = land value; most applicable when improvements are very new (no depreciation) or very old (almost total depreciation)

Question 29

allocation procedure

Answer 29

land value is represented y certain % of gross value

Question 30

effective date of an appraisal

Answer 30

is the date of inspection

Question 31

site characteristics

Answer 31

utilities: electricity, gas, water, and sanitary sewer. Offsite improvements such as streets and alleys

Question 32

sales comparison approach

Answer 32

necessary to produce a credible opinion of value for a SF residence

Question 33

economic principles of sales comparable approach

Answer 33

hbu - properties compared based on use
supply & demand - buyers constitute the mkt demand
substitution
balance
externalities

Question 34

sources of data

Answer 34

1) closed contract best indicator of mkt data
2) contracts - current sales tht hv not closed, hv not met conditions of closed sale
3) active listing - reflect current competition & price levels time & reasonable exposure time for similar property and subject

Question 36

quantitative analysis

Answer 36

involves math

Question 37

qualitative analysis

Answer 37

does not involve math

Question 38

paired data analysis

Answer 38

2 properties compared but only one difference, difference can be indicative of value quantitative

Question 39

statistical analyses

Answer 39

use statistical inference, linear analysis, & regressional analysis to est value & identity and measure adj to the sale price of comps; quantitative

Question 40

graphic analysis

Answer 40

graphically displayed data visually thru curve fit analysis. Graph can also be used to support & exhibit value trends for comparison elements in qualitative analysis.quantitaive

Question 41

cost analysis/cost-related adj

Answer 41

cost indicates such as depreciated costs. Cost to cure or cost to remodel as the basis for adjustments. Cost related adju are better suited in mkts with limited sales activity mkt; quantitative

Question 42

capitalization of income differences

Answer 42

capitalization of difference in net operating income can be used to derive an adj when the income loss incurred by a comp reflects specific deficiency in the property such as inadequate parking facilities for a retail store; quantitative

Question 43

trend analysis

Answer 43

identify & measure trends in the sales price of comp. Used when a large amount of mkt data; qualitative

Question 44

relative comparision analysis

Answer 44

analyze comp sales to determine whether the property’s relevant characteristics are inferior or superior or equal to those of subject; qualitative

Question 45

ranking analysis

Answer 45

1) sales ranked in ascending or descending order of desirability 2) each analyzed to determine the relative position of the subject

Question 46

personal interviews

Answer 46

subjective and less reliable

Question 47

comparative analysis

Answer 47

identify the process in which quantitative and qualitative techniques are applied to comp sales.

Question 48

% adjustments

Answer 48

reflect change in mkt conditions & diff locations commonly used with commercial appraisals and residential appraisals using land

Question 49

$ adjustments

Answer 49

relative to physical characteristics are commonly made in terms of $. % are frequently converted into a $ amount and vice versa.