Part 1 The Valuation Process

Question 1

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

Answer 1

Valuation process

Question 2

The steps of the valuation process include

Answer 2

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

Question 3

Identification of the problem includes

Answer 3

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

Question 4

Step 3 (valuation process)

Data collection and property description
includes

Answer 4

1. Market Area Data
2. Subject Property Data
3. Comparable Property Data

Question 5

Step 4 Data Analysis

includes

Answer 5

Market Analysis

Highest and Best Use Analysis

Question 6

Step 6 Application of the Approaches to Value

Answer 6

Sales Comparison Approach

Income Capitalization Approach

Cost Approach

Question 7

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

Answer 7

when the conclusions are reported to the client.

Question 8

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

Answer 8

the nature of the appraisal assignment and available data.

Question 9

The valuation process is ideally suited for_______

Answer 9

market value opinions

Question 10

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

Answer 10

The valuation process

Question 11

What is the first step in the valuation process?

Answer 11

To identify the client’s problem

Question 12

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

Answer 12

Identify the client’s problem

Scope of work decision

Question 13

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

Answer 13

an exercise in execution.

Question 14

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

Answer 14

The client

Question 15

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

Answer 15

intended user

Question 16

Who determines who the client is?

Answer 16

The appraiser

Question 17

If the client wishes to remain anonymous,

Answer 17

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.

Question 18

Intended users must

Answer 18

be identified by the appraiser in the appraisal report.

Question 19

An appropriate scope of work decision is driven by

Answer 19

intended use.

Question 20

Intended use is identified by the appraiser (when)______

Answer 20

prior to accepting the assignment

Question 21

If the intended use changes the scope of work,

Answer 21

the opinion and conclusions developed might also change.

Question 22

Identifying the purpose is the same as identifying the

Answer 22

type and definition of value

Question 23

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

Answer 23

Purpose of an assignment

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

Question 24

The purpose of an appraisal is usually to____

Answer 24

develop an opinion of a certain type of value.

Market value
Use Value
Investment value
insured value

Question 25

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

Answer 25

True

Question 26

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

Answer 26

True

Question 27

In what terms can the defined value be reported?

Answer 27

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

Question 28

An opinion of value is valid for_____

Answer 28

only for the exact date specified.

Question 29

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

Answer 29

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)

Question 30

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

Answer 30

the forces that influence value are subject to change

Question 31

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

Answer 31

Current

Question 32

Features that may affect a property | s value or marketability such as legal, economic, or physical characteristics.

Answer 32

Relevant characteristics

Question 33

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.

Answer 33

Physical characteristics

Question 34

Examples of relevant property Characteristics include:

Answer 34

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

Question 35

What are examples of assignment conditions?

Answer 35

Extraordinary assumption Special assumptions Hypothetical condition Other assignment conditions

Question 36

Market data is general data bout what four forces?

Answer 36

Economic Environmental social governmental

Question 37

Market area data includes information about:

Answer 37

``` population climate topography employment interest rates building codes zoning ```

Question 38

Market area data focuses on

Answer 38

trends

Question 39

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

Answer 39

General Data

Question 40

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

Answer 40

Specific Data

Question 41

Market area data falls into the category of

Answer 41

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

Question 42

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

Answer 42

Trend

Question 43

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

Answer 43

Trend

Question 44

Market area trends analyzed as general data can include:

Answer 44

population shifts declining office building occupancy rates increased housing starts

Question 45

Comparable property data can be

Answer 45

general data or specific data

Question 46

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

Answer 46

Market analysis

Question 47

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

Answer 47

Highest and best use

Question 48

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

Answer 48

legal permissibility physical possibility financial feasibility maximum productivity

Question 49

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

Answer 49

usually eliminated from further analysis

Question 50

Highest and best use conclusions should specify the following criterisa:

Answer 50

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

Question 51

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

Answer 51

.

Question 52

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

Answer 52

H&BU of the site as though vacant | H&BU as improved.

Question 53

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

Answer 53

Continue in use as is Modify the improvements through renovation or conversion to another use. Demolish the improvements

Question 54

A tax appeal assignment will commonly involve a ______effective date.

Answer 54

retrospective.

Question 55

Intended use affects both appraisal ______ and reporteding.

Answer 55

devlopment

Question 56

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

Answer 56

valuation process

Question 57

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

Answer 57

highest and best use.

Question 58

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

Answer 58

identifying the problem

Question 59

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

Answer 59

true

Question 60

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

Answer 60

true