Part 2 Land Value Opinion

Question 1

The term land commonly refers to _____

Answer 1

either unimproved or improved land

both

Question 2

Of the three approaches to value, only the ______ approach requires a separate land value estimate.

Answer 2

Cost approach

Question 3

What are the six different procedures used in developing opinions of land or site value.

Answer 3

GLADES

Ground rent capitalization
Land residual
Allocation
Development (subdivision
Extraction
Sales comparison

Question 4

______ land is typically considered to be raw land that may have development potential.

Answer 4

Unimproved land

Question 5

______ is considered as being prepared for development by grading, draining, installing streets and utilites, ect.

Answer 5

Improved

Question 6

The term ____ commonly refers to improved land that does not require further land development or subdivision. It is ready for property improvements suited to its highest and best use.

Answer 6

Site

Question 7

_________ is based on improved sales, and the depreciated cost of the improvements is subtracted from the sales price.

Answer 7

extraction

The appraiser extracts the value of the land from the total value.

Question 8

______ also uses sales of improved properties. Allocation is based on a ratio of land value to improved property value.

Answer 8

Allocation

Sale price x typical ratio of land value to improvement value= Land value

Question 9

_____ can be used to establish land value when the number of vacant land sales is inadequate.

Answer 9

Allocation

Question 10

_________ is an income approach based on the economic principle of surplus productivity. As the other three agents of production have been paid, land as the residual receives income, which is capitalized into land value

Answer 10

Land residual technique

Question 11

In this procedure, the appraiser separates the rent between the improved land and building improvements.

Answer 11

Land residual technique. In the LRT, the appraiser converts the net income to the improved land only through the capitalization process to develop a value for the land

Question 12

When vacant sales are unavailable, the appraiser can analyze improved property sales similar to the subject property in relevant land characteristics.

Answer 12

Extraction

Question 13

This procedure is most applicable when improvements can be reliably valued, such as when the improvements are wither new or very old (that is, nearing the point when the improvements will be demolished)

Answer 13

Extraction

Question 14

This procedure can be used when the improved land rent is a known amount, as in an improved land lease.

Answer 14

Ground rent capitalization

Question 15

In this procedure, the appraiser divides the net amount estimated for the right to use and occupy the improved land by a land capitalization rate (derived from the market) to form an opinion of improved land

Answer 15

Ground rent capitalization

Land Rent
__________ = Land Value
Capitalization Rate

Question 16

This procedure requires the appraiser to separate the rent between the improved land and the building improvements

Answer 16

Land residual technique

Question 17

__________ is also an income approach to the valuation of tracts of unimproved land with subdivision potential.

Answer 17

Subdivision development

Question 18

The _____ approach is a summation approach to value.

Answer 18

Cost approach

Question 19

In this approach, the value of the sit is first estimated, then the value contribution of the building and site improvements are added to indicate the value of the overall property.

Answer 19

Cost approach.

Question 20

The _____ approach 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. It is based on the conversion of the income-producing capability of a property into value through he capitalization process.

Answer 20

Income approach

Question 21

______ is the process of resolving the differences among the various value indications and arriving at a final opinion of value.

Answer 21

Reconciliation

The value opinion can be a single dollar figure or a range into which the value will most likely fall.

Question 22

In ______, you explain what made you arrive at the value based on sales comparison.

Answer 22

reconciliation

Question 23

The land residual technique is primarily used on which of the following?

Answer 23

Income properties

This land valuation technique requires the appraiser to separate the rental income between the land and the improvements.

Question 24

When would the extraction method of land valuation be most applicable?

Answer 24

When the value of the improvements cab be reliably estimated.

Ideally, the extraction method is best when the improvements are either new or very old.

Question 25

While appraising an income property, an appraiser separates the rent between the land and the improvements and then converts the net income of the land into a value opinion. Which land valuation technique is the appraiser using?

Answer 25

land residual

Question 26

Accurate statments regarding the reconciliation process include?

Answer 26

Reconciliation logically leads the reader of the appraisal report to a final opinion of value.

Reconciliation occurs throughout the valuation process

Reconciliation is a disciplined process using reason and judgement.

THERE IS NO MATHEMATICAL FORMULA FOR THE RECONCILATION PROCESS.

Question 27

Which approach to value requires a separate valuation of the site?

Answer 27

Cost approach

The cost approach is the only analytical procedure that includes a separate valuation of the site as though vacant and available to be put to its highest and best use.

Question 28

In the sales comparison approach, when an appraiser makes adjustments, what is the appraiser adjusting?

Answer 28

the comparable sales

Question 29

During reconciliation, the appraiser may develop an opinion of value that is:

Answer 29

not derived through mathematical process

a single dollar amount

within a range of values

Question 30

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

Answer 30

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.

Question 31

When an appraiser resolves differences among several value indications, what is this called?

Answer 31

reconciliation

Question 32

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

Answer 32

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

Question 33

When does reconciliation take place?

Answer 33

throughout the valuation process

Question 34

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 techniques is the appraiser using?

Answer 34

Ground rent capitalization

Question 35

What is the first step in the cost approach?

Answer 35

estimate the value of the land

Question 36

What are the three traditional approaches to value?

Answer 36

cost,
sales comparison
income capitalization

Question 37

Elements of comparison

Answer 37

a. Real property rights conveyed
b. Financing terms (compared to cash equivalency)
c. Conditions of sale (consider motivation)
d. Expenditures made immediately after purchase
e. Market conditions (commonly known as a “time” adjustment)
f. Location
g. Physical characteristics (including energy-efficient, high-performance, and
green features)
h. Economic characteristics
i. Use (based on comparable zoning, highest and best use, and utility)
j. Non-realty components of value (for example, personality, leased solar
photovoltaic systems, business value, franchises, and trademarks)

Question 38

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?

Answer 38

extraction

Question 39

Non-realty components of value are an element of comparison considered within the sales comparison approach.

Answer 39

True

for example, personality, leased solar systems, business value, franchises, trademarks