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Appraisal Procedures 2022 > Part 1 The Valuation Process > Flashcards

Part 1 The Valuation Process Flashcards

1
Q

A systematic set of procedures an appraiser follows to provide answers to a client’s questions about real property values.

A

Valuation process

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2
Q

The steps of the valuation process include

A
  1. Identification of the problem (also referred to as Definition of the problem)
  2. Scope of Work
  3. Data collection and property description
  4. Data analysis
  5. Land value opinion
  6. Application of the three approaches.
  7. Reconciliation
  8. Report of defined value
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3
Q

Identification of the problem includes

A
  1. Identify client and intended users
  2. Identify the intended use
  3. Identify the purpose of the assignment (type and definition of value)
  4. Identify the effective date of the opinion
  5. Identify the relevant characteristics of the property
  6. Identify assignment conditions
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4
Q

Step 3 (valuation process)

Data collection and property description
includes

A
  1. Market Area Data
  2. Subject Property Data
  3. Comparable Property Data
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5
Q

Step 4 Data Analysis

includes

A

Market Analysis

Highest and Best Use Analysis

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6
Q

Step 6 Application of the Approaches to Value

A

Sales Comparison Approach

Income Capitalization Approach

Cost Approach

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7
Q

The valuation process begins when the appraiser agrees to perform an assignment and ends______

A

when the conclusions are reported to the client.

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8
Q

The number of steps employed in the valuation process will depend on_____-

A

the nature of the appraisal assignment and available data.

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9
Q

The valuation process is ideally suited for_______

A

market value opinions

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10
Q

What is the blueprint used in forming an opinion of market value, as well as other types of value.

A

The valuation process

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11
Q

What is the first step in the valuation process?

A

To identify the client’s problem

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12
Q

What two steps are an exercise in judgment designed to produce credible assignment results?

A

Identify the client’s problem

Scope of work decision

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13
Q

Once the assignment’s scope of work is determined, the remaining steps are

A

an exercise in execution.

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14
Q

The party or parties, who engage an appraiser by employment or contract

A

The client

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15
Q

The CLIENT and any other party as identified, by name or type, as users of the appraisal, based on communication with the client at the time of the assignment

A

intended user

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16
Q

Who determines who the client is?

A

The appraiser

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17
Q

If the client wishes to remain anonymous,

A

they must still be identified in the work file. Parties other tan the client can actually pay for the appraiser, but this does not make them an intended user.

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18
Q

Intended users must

A

be identified by the appraiser in the appraisal report.

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19
Q

An appropriate scope of work decision is driven by

A

intended use.

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20
Q

Intended use is identified by the appraiser (when)______

A

prior to accepting the assignment

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21
Q

If the intended use changes the scope of work,

A

the opinion and conclusions developed might also change.

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22
Q

Identifying the purpose is the same as identifying the

A

type and definition of value

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23
Q

The objective of an assignment__e.g., to develop an opinion of the defined value of a specified interest in real estate.

A

Purpose of an assignment

The appraiser should also cite the source of the value definition.

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24
Q

The purpose of an appraisal is usually to____

A

develop an opinion of a certain type of value.

Market value
Use Value
Investment value
insured value

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25
Q

The appraiser must provide a statement of defined value to be developed in the assignment.

True or False

A

True

26
Q

The value defined in the appraisal must address whether the opinion is reported in terms of cash, cash equivalency, or other precisely defined terms.

True or False

A

True

27
Q

In what terms can the defined value be reported?

A
  1. Terms of cash
  2. Cash equivalency
  3. other precisely defined terms
28
Q

An opinion of value is valid for_____

A

only for the exact date specified.

29
Q

Professional standards require the appraiser to state at least two dates in each appraisal report:_____

A
  1. the effective date of the appraisal (appraisers often use the inspection date)
  2. the date of the report (usually the date the report is signed)
30
Q

The appraiser must specify the date of the value opinion. This is because

A

the forces that influence value are subject to change

31
Q

The effective date is contemporaneous with the date of the report.

A

Current

32
Q

Features that may affect a property

s value or marketability such as legal, economic, or physical characteristics.

A

Relevant characteristics

33
Q

Attributes of a property that are observable or measurable as a matter of fact, as distinguished from opinions and conclusions, which are the result of some level of analysis or judgment.

A

Physical characteristics

34
Q

Examples of relevant property Characteristics include:

A

Location and physical, legal, and economic attributes
Real property interest to be valued, fee simple, leased fee, leasehold interest, partial interest

Personal property that is included in the appraisal
easements, encumbrances, leases, contracts

35
Q

What are examples of assignment conditions?

A

Extraordinary assumption
Special assumptions
Hypothetical condition
Other assignment conditions

36
Q

Market data is general data bout what four forces?

A

Economic
Environmental
social
governmental

37
Q

Market area data includes information about:

A 
population
climate
topography
employment
interest rates
building codes
zoning
38
Q

Market area data focuses on

A

trends

39
Q

Data that relates to the four forces that affect real property values

A

General Data

40
Q

Details about the property being appraised, comparable sale and rental properties, and relevant local market characteristics

A

Specific Data

41
Q

Market area data falls into the category of

A

General data

and focuses on trends that are affected by the four forces that influence value.

42
Q

A series of related changes brought about by a chain of causes and effects

A

Trend

43
Q

A _____ is a momentum or tendency in a general direction brought about by a series of interrelated changes.

A

Trend

44
Q

Market area trends analyzed as general data can include:

A

population shifts
declining office building occupancy rates
increased housing starts

45
Q

Comparable property data can be

A

general data or

specific data

46
Q

The study of the supply and demand in a specific area for a specific type of property

A

Market analysis

47
Q

The reasonably probable use of property that results in the highest value.

A

Highest and best use

48
Q

The 4 criteria that the highest and best use must meet are:

A

legal permissibility
physical possibility
financial feasibility
maximum productivity

49
Q

Comparable properties that do not have the same highest and best use as the subject property are______

A

usually eliminated from further analysis

50
Q

Highest and best use conclusions should specify the following criterisa:

A

a. Use
b. Timing for the use
c. Typical market participants for the use

51
Q

Highest and best use as improved (A two-step process)

A

.

52
Q

If the property is improved, the appraiser must reach two separate conclusions of highest and best use. What are they?

A

H&BU of the site as though vacant

H&BU as improved.

53
Q

Potential conclusions for the highest and best use of a property as improved include the following:

A

Continue in use as is

Modify the improvements through renovation or conversion to another use.

Demolish the improvements

54
Q

A tax appeal assignment will commonly involve a ______effective date.

A

retrospective.

55
Q

Intended use affects both appraisal ______ and reporteding.

A

devlopment

56
Q

A systematic procedure appraisers can employ to provide the answer to a client’s question about the value of a property is called the

A

valuation process

57
Q

In ___________analysis, the appraiser analyzes the idea improvement for the property.

A

highest and best use.

58
Q

The relevant characteristics of a property are part of _________the problem.

A

identifying the problem

59
Q

Identifying characteristics of the subject property is specific data rather than general data.

A

true

60
Q

Developing an opinion of insurable value can be identified as the purpose of an appraisal assignment.

A

true

Appraisal Procedures 2022 (17 decks)

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