Part 1 Vocab

Question 1

“The party or parties who engage, by employment or contract, an appraiser in a specific assignment.
Comment: The _____ may be an individual, group, or entity, and may engage and communicate with the appraiser directly or through an agent” (USPAP,
DEFINITIONS).

Answer 1

client

Question 2

An assignment-specific assumption as of the
effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.

Answer 2

extraordinary assumption

Note: Comment: Uncertain information might include physical, legal, or economic characteristics of the subject property; or conditions external to the property,
such as market conditions or trends; or the integrity of data used in an analysis” (USPAP, DEFINITIONS).

Question 3

data that relates to the four forces that affect real property values—social, economic, governmental, and environmental forces

Answer 3

general data

Note: as opposed to specific data

Question 4

The reasonably probable use of property that results
in the highest value. Alternatively, the probable use of land or improved property– specific with respect to user and timing of the use–that is adequately supported and results in the highest present value.

Answer 4

Highest and best use analysis

Note:

The four criteria that the _____ must meet are legal permissibility, physical possibility, financial feasibility, and maximum
productivity.

• land as though vacant
• ideal improvement
• property as improved

Question 5

This is a condition that is contrary to what exists but

is supposed for the purpose of analysis. Often a “what if” scenario intended to clarify a value issue.

Answer 5

hypothetical condition

Ex: intended to clarify a value issue such as the appraisal of proposed construction on a vacant site with the value opinion effective as of a current date.

Question 6

“The ____ (reason) of an appraiser’s reported appraisal or
appraisal review assignment results, as identified by the appraiser based on communication with the client at the time of the assignment” (USPAP, DEFINITIONS).

Answer 6

intended use

Question 7

“The client and any other party as identified, by name or type, as ____ of the appraisal or appraisal review report by the appraiser, based on communication with the client at the time of the assignment” (USPAP, DEFINITIONS).

Answer 7

intended user

Question 8

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

Answer 8

market analysis

Ex:

• Demand Studies
• Supply Studies
• marketability studies

Question 9

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

Answer 9

specific data

Note: As opposed to general data

Question 10

“The type and extent of research and analyses in an appraisal or appraisal review assignment” (USPAP, DEFINITIONS

Answer 10

scope of work

Question 11

A series of related changes brought about by a chain of causes and effects. ____ are forecast through economic base analysis, statistical analysis, market analysis, and analysis of economic indicators and surveys.

Answer 11

trends

Question 12

A systematic set of procedures an appraiser follows to

provide answers to a client’s questions about real property value

Answer 12

valuation process

Note: begins when the appraiser agrees to take an assignment and ends when the conclusions are reported to the client.

Question 13

1) Type and definition of value 2) The objective of an assignment—e.g., in an appraisal assignment, to develop an opinion of the defined value of a specified interest in real estate.

Answer 13

purpose

The purpose of an appraisal is usually to develop an opinion of a certain type of value. These could include (but are not limited to):

a. Market value
b. Use value
c. Investment value
d. Insurable value
e. Assessed value
f. Fair value

Question 14

An assumption, directly applicable to a specific service,
which, if found to be false, could alter the opinions or conclusions in an appraisal or review (SVP, Definitions section).

Answer 14

special assumption

Notice that an extraordinary/special assumption is an assumption directly related to a specific
assignment/service. Assumptions in general are things
taken to be true and are a normal part of every appraisal assignment. An extraordinary/special assumption is a unique assumption and must be treated more carefully by the appraiser.

Question 15

The type of data that falls into the category of general data and focuses on trends that are affected by the 4 forces that influence value. Consists of general characteristics of region, city, and neighborhood. 2) discussion and interpretation of the effects from the 4 forces influencing the use and value of the subject are included in the report. 3) supply and demand data on competing properties to the subject property is studied.

Answer 15

Market area data

ex: population shifts, declining office building occupancy rates, and increasing housing starts.

Question 16

1) The specific data that focuses on geographic and geologic characteristics of the land or site and characteristics of the improvements (such as the type of building, physical components, legal components, and personal property). 2) ownership history 3) cost and depreciation data 4) income and expense data

Answer 16

subject property data

Question 17

A type of data that can be general or specific and focuses on the comps. 1) physical and legal characteristics, 2) sale date and price, cost and depreciation data, income and expense data, capitalization rate 3) financing arrangements that could affect selling prices 4) supply and demand data pertaining to comps

Answer 17

comparable property data

Question 18

Data that includes inventories of existing and proposed competitive properties, vacancy rates, and absorption rates.

Answer 18

supply data

Question 19

Data that may consist of population, income, and employment data pertaining to potential property users and the impact future ____ might have on the present (or proposed) use of properties comparable to the subject property.

Answer 19

demand data

Question 20

First 4 steps of valuation process

Answer 20

1) Identify the problem
2) scope of work
3) data collection & property description
4) data analysis

Question 21

6 elements of the first step of the appraisal process

Answer 21

1) identify the 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 the assignment conditions