Part 2 Flashcards

From Analysis to Solutions

1
Q
  1. Sales comparison
  2. Extraction
  3. Allocation
  4. Land residual technique
  5. Ground rent capitalization
  6. Subdivision development analysis

These are the six procedures for which step in the valuation process?

A

Analyzing land or site value

Step 5: Land Value Opinion

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2
Q

involves searching for similar vacant parcels, analyzing them in comparison to the subject parcel, and adjusting the sales for salient differences.

A

Sales comparison procedure

1/6 procedures used in developing opinions of land or site value

Step 5: Land Value Opinion

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3
Q

When vacant sales are unavailable, the appraiser can analyze improved property sales similar to the subject property in relevant land characteristics. The appraiser forms an opinion of the improved land value by subtracting the contributory value (that is, depreciated cost) of the improvements from the sale price.

A

Extraction procedure

2/6 procedures used in developing opinions of land or site value

Step 5: Land Value Opinion

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4
Q

The appraiser analyzes sales of improved property and allocates prices paid between the improved land and improved property, usually on a ratio basis to get land value.

Formula: Sale price × Typical ratio of land value to improvement value = Land value

A

Allocation method

3/6 procedures used in developing opinions of land or site value

Step 5: Land Value Opinion

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5
Q

This procedure requires the appraiser to separate the rent between the improved land and the building improvements. Then the appraiser capitalizes the net income attributed to the improved land into a value opinion. The technique is primarily used on income properties.

Formula: IRV, Income ÷ Rate = Value

A

Land residual technique

4/6 procedures used in developing opinions of land or site value

Step 5: Land Value Opinion

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6
Q

If an appraiser uses a known rent amount for land and divides the rent by a land capitalization rate to form an opinion of value, which land valuation technique is the appraiser using?

Land rent / Capitalization Rate = Land Value

A

Ground rent capitalization

5/6 procedures used in developing opinions of land or site value

Step 5: Land Value Opinion

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7
Q

This procedure is an income approach to the valuation of larger tracts of unimproved land that have the potential for development into subdivisions.

A

Subdivision development analysis

6/6 procedures used in developing opinions of land or site value

Step 5: Land Value Opinion

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8
Q
  1. Cost approach
  2. Sales comparison approach
  3. Income capitalization approach

These are the three approaches for which step in the valuation process?

A

The valuation of improved land and building properties

Step 6: Application of the approaches to value

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9
Q

In this approach, the value of the site is first estimated using one of the six procedures for valuing land, then the value contribution of the building and site improvements are added to indicate the value of the overall property.

A buyer will not pay more for a property than the cost to acquire a similar site and construct improvements of equivalent desirability and utility without undue delay describe which approach?

A

Cost approach

1/3 approaches to value

Step 6: Application of the approaches to value

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10
Q

The appraiser derives a value indication by comparing the subject property to similar properties that have sold recently.

A

Sales comparison approach

2/3 approaches to value

Step 6: Application of the approaches to value

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11
Q

The ________ ________ ________ measures the present value of the future benefits derived from property ownership, such as collecting future rent payments and eventual resale of the property in the future.

A

Income capitalization approach

3/3 approaches to value

Step 6: Application of the approaches to value

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12
Q

Property rights conveyed
Financing terms
Conditions of sale
Expenditures made immediately after purchase
Market conditions
Location
Physical characteristics
Economic characteristics
Use/zoning
Non-realty components

Most adjustment grids, commonly use these ________ ________ ________ in the sales comparison approach

A

Elements of comparison

2/3 approaches to value

Step 6: Application of the approaches to value

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13
Q

the process of resolving the differences among the various value indications and arriving at a final opinion of value. The value opinion can be a single dollar figure or a range into which the value will most likely fall.

A

Reconciliation

Step 7: Reconciliation of the value indications and final opinion of value

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14
Q

The three approaches to value are the cost approach, the sales comparison approach, and the income capitalization approach. Which of the following is a true statement regarding the application of these approaches to value?

A

The appraiser may apply more than one approach, which will likely result in differing value indications that will need to be reconciled by the appraiser.

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15
Q

In a land valuation assignment, an appraiser subtracts the depreciated cost of the improvements from the sale price to obtain the value of the land. Which land valuation technique is the appraiser using?

A

extraction

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16
Q

The allocation method of site valuation is based on which of the following?

A

a ratio of the value of the land to the value of the property

17
Q

Which of the following statements about the extraction method of site valuation is true?

A

The depreciated value of the improvements is subtracted from the sales price of the entire property.

18
Q

In the subject property’s neighborhood, improved properties are selling for prices ranging from $140,000 to $160,000. Research reveals a typical land value-to-total property value ratio of 20%. What is the range of value for a similar site in this neighborhood?

A

This example requires the use of the allocation procedure to land valuation, which uses the formula

Sale Price X Ratio = Land Value.

In this example, the calculations are:

0.20 x $140,000 = $28,000 for the low end of the range,

and 0.20 x $160,000 = $32,000 for the high end of the range.

19
Q

Which of the following is the most preferred procedure for deriving a land value opinion?

A

sales comparison approach

I got this answer wrong on the quiz but I think this is the right answer based on the hint given