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Real Estate > National Chapter 7 > Flashcards

National Chapter 7 Flashcards

1
Q

estimate or opinion of value

A

appraisal

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2
Q

the goal of the appraiser is to determine

A
  1. market value, insurance value, salvage value or the tax value of a property
  2. compensation is baed on time and effort never on the established price of the property
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3
Q

appraiser’s ground rule

A
  1. payment must be in cash or its equivalent
  2. buyer and seller must be unrelated and acting without undue influence, menace, or duress
  3. property must be marketable for a reasonable time in an open and free-flowing market
  4. both buyer and seller must be well-informed consumers
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4
Q

steps of the appraisal process

A
  1. state the problem
  2. gather, record and verify the necessary data
  3. analyze and interpret
  4. estimate land value
  5. estimate the value of the property
  6. reconcile estimated values for the final value estimate
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5
Q

ways to analyze and interpret

A

neighborhood analysis, neighborhood cycle, and site analysis

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6
Q

ways to estimate the value of the property

A

market data (sales comparison), cost (or summation) and income

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7
Q

types of appraisal reports

A

letter, short or form, narrative

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8
Q

short business letter stating all essential data but not including supporting data

A

letter appraisal

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9
Q

contains all basics of a regular appraisal and is used primarily for homes

A

short or form appraisal

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10
Q

most comprehensive of all reports, used for commercial and investors

A

narrative appraisal

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11
Q

the possible use of a property that would produce the greatest net income and thereby develop the highest value

A

highest and best use

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12
Q

the max value of a property tends to be set by the cost of purchasing an equally desirable and valuable property

A

substitution

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13
Q

value of a property increases when the supply is short and decreases when there is too much - value increases when the supply is short and decreases when there is little demand

A

law of supply and demand

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14
Q

more a property or its components are in harmony with the surrounding properties or components, the greater the contributory value

A

conformity

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15
Q

occur between dissimilar properties - the value of the better quality property is affected adversely by the presence of the lessor quality property and a lesser house will benefit from a larger house

A

regression and progression

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16
Q

property can increase or decrease in value in expectation of something in the future such as appreciation or rezoning

A

anticipation

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17
Q

means the value of any component of a property is what it gives to the value of the whole or what is absence detracts from the whole

A

contribution

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18
Q

is the combining of 2+ adjoining lots into one larger tract to increase their total value

A

assemblage

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19
Q

when one business attracts another business of similar types - together they may make more money than they would have singularly

A

competition

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20
Q

real property is constantly changing - expanded, stabilizing, declining or rebirth

A

change

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21
Q

sales comparison approach is used for

A

appraising residential property and vacant land

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22
Q

holds that if a buyer will pay a certain price for a property, they will pay a similar price for a “substitute” property of similar characteristics

A

principle of substitution

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23
Q

steps in the sales comparison approach

A
  1. ID comparable sales
  2. compare comparables to the subject and make adjustments to comparables -
  3. reconcile values indicated by adjusted comparables for the final value estimate of the subject
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24
Q

used for properties with limited comparable data or income data or for properties where the original cost is particularly applicable

A

cost approach

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25
Q

cost can be determined by

A

square foot cost, unit in place, quality survey method

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26
Q

using outside measurement, how many square feet times a cost for either replacement or reproduction of the improvement

A

square foot cost

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27
Q

based on the construction cost per unit of measure of individual building components

A

unit in place

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28
Q

quality. and quality of all materials and labor are estimated on a unit costs basis - these factors are added to indirect costs to arrive at the total cost of the structure

A

quantity survey method

29
Q

steps of the cost approach

A
  1. estimate the value of the land alone as if vacant
  2. determine the replacement or reproduction cost of the improvements
  3. deduct all accrued depreciation from the replacement cost
  4. add the estimated land value to the depreciated replacement or reproduction cost
30
Q

land _ depreciated

A

NEVER

31
Q

3 classes of depreciation

A
  1. physical
  2. functional
  3. economic
32
Q

form of depreciation caused by the action of the physical elements

A

physical

33
Q

loss of value of an improvement due to functional inadequacies, often caused by age or poor design

A

functional depreciation

34
Q

loss of value resulting from extraneous factors that exist outside of the property itself’ environmental, social or economic forces over which an owner has little or no control

A

economic depreciation

35
Q

actual age in years of the building, based on building date - cannot be changed

A

chronological age

36
Q

differs from the actual age by such variable factors as depreciation, quality of maintenance and the like

A

effective age

37
Q

actual age or life of a structure that is considered habitable - defined by the durability of its structural components

A

physical life

38
Q

estimated period where an improved property will yield a return over and above economic rent

A

economic life

39
Q

the deterioration of an improvement that is not economically feasible to repair is

A

incurable

40
Q

based on the present value of the rights to future income

A

income approach to value

41
Q

steps in the income approach h

A
  1. estimate the annual potential gross income
  2. deduct an allowance for vacancies to arrive at effective gross income
  3. deduct annual operating expense from effective gross income to = NOI
  4. estimate the rate of return that an investor would demand for this investment - cap rate
  5. divide cap rate into NOI = property’s value
42
Q

ratio number reflecting the relationship between a property’s price or value and its income

A

GRM

43
Q

GRM = _ rent

A

monthly

44
Q

GIM = _ income

A

annual

45
Q

grantor =

A

seller

46
Q

grantee =

A

buyer

47
Q

state things you can never do

A

limiting restrictions

48
Q

state things you must abide by

A

affirmative restrictions

49
Q

grantor decides how the grantee can use the property and creates deed restrictions,(encumbrances) which limit the use of the property

A

private land use controls

50
Q

US government is empowered to control land for the benefit of all citizens

A

public land use controls

51
Q

right of the US government to make laws to control local property

A

enabling acts

52
Q

statement of policies, presentation of how it will be implemented once adopted

A

master plan

53
Q

controls density and avoids overcrowding

A

bulk zoning

54
Q

requires that new buildings conform to specific types of architecture

A

aesthetic zoning

55
Q

encourages zoning as a planning tool to use land for tis highest and best use

A

directive zoning

56
Q

reclassification of one piece of property in an area for a specific purpose

A

spot zoning

57
Q

describe the positioning of a structure on a lot so that one side rests directly on the lot’s boundary line

A

zero lot line zoning

58
Q

produces a high density of housing chapters while max the use of open space

A

PUD

59
Q

exemptions to zoning

A

buffer zones and nonconforming use

60
Q

may be sought to provide deviation from an ordinance so long as it is before the construction or reconstruction takes place

A

variance

61
Q

for a property deemed to be in the public interest contrary to the zoning that exists

A

conditional use permit

62
Q

lot and block system

A
  1. used to describe properties in residential, commercial and industrial subdivisions
  2. in a large subdivision, lots may be grouped together into blocks
  3. surveyor incorporates the survey data into a plat of survey
63
Q

metes and bounds system

A
  1. must begin and end at the point of beginning

2. monuments are fixed objects that serve as markers for the property and are used to establish the parcel’s boundaries

64
Q

rectangular survey system

A
  1. based on intersecting lines
  2. principal meridians run north and south
  3. base lines run east and west
  4. township lines are lines running east and west, parallel with the base line and 6 miles apart
65
Q

lines on either side of a principal meridian and are divided into 6 mile wide strips by lines that run north and south parallel to the meridian

A

range lines

66
Q

townships are _ miles areas formed by the intersection of a township and range line

A

36

67
Q

each township is divided into what

A

36 sections each 1 mile square

68
Q

one section is equal to _ acres

A

640

69
Q

plat survey is used under what method?

A

lot block

Real Estate (19 decks)

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