Procedures Flashcards

1
Q

What is the valuation process?

A

Systematic set of procedures an appraiser follows to a clients questions about real property.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Valuation Process first step?

A

Identification of the problem.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the 6 factors of identifying the problem?

A
  1. identifiy the client and the intended useres.
  2. Identify the intended use.
  3. Identify type and definition of value.
  4. Identify effective date of the opinion.
  5. identify relevant charactertiscs of the property.
  6. Identify assignment conditions.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

1st set in valuation process. Second item. What is intended use?

A

The use of report or appraisal review assignment results.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Purpose of an appraisal to development an opinion and can include these types of values (6 of them).

A
  1. Market value
  2. Use value
  3. Investment vaule
  4. Insurable value
  5. Assessed value
  6. Fair value
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

1st step in valuation process. Step #3 What is purpose of assignment?

A

Object of the assignment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the effective date and the three different types?

A

Date of the value opinion.

  1. current
  2. retrospective
  3. prospective
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Step 1 of valuation process. #5 in process. Characteristics of subject property. There are two types, what are they?

A
  1. Relevant characteristics

2. physical charateristics

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is relevant characteristics?

A

Features that may affect property value - legal, economic or physical

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is physical characteristics?

A

Attributes of a property that are obserable or measurable as a matter of fact.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

1st step in valuation system. 6th item. Identify assigment conditions (there are 4 types)?

A
  1. Extraordinary assumption
  2. Special assumption
  3. Hypothetical condition
  4. Other assigment conditions
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is extraordinary assumptions?

A

Assignmnet specific assumption as of the effective date regarding uncertain information used.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is special assumptions?

A

An assumption directly applicable to a appraisal if found false.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is hypothetical condition?

A

Condition that is contrary to what exists but is supposed for the purpose of analysis.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are other assignment condtions?

A

Might include laws, regulations, or guidelines.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is client?

What is indented user?

A
  1. Party who engages an appraiser by employment/contract in a specific assignment.
  2. Identifed by name as user of the appraisal.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the 2nd step in the valuation process?

A

Scope of work determination.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is scope of work?

A

The type and extent of research and analysis in an appraisal.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Under the scope of work. Ther are two items that help determine the scope of work. What are they?

A
  1. Type of assignment

2. Type of property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

3rd step in valuation process?

A

Data collection and property description

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

3rd step in valuation process has 3 steps, what are they?

A
  1. Market area data
  2. subject property data
  3. comparible property data
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

3 step in valuation process - data collection & property description. There are two types of data, what are they?

A
  1. General data

2. Specific data

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is general data?

A

relates to the 4 forces that affect values - social, economic, government and enviromential.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is specific data?

A

Details about the property.

Primary - you collect

secondary - others collect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What is trend?

A

Series of related changes brought about by a chain of causes and effects.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

4th Step in valuation process

A

Data Analysis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

4th step in valuation process has two steps, what are they?

A
  1. Market analysis

2. Highest and best use analysis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is market analysis?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

what is the highest and best use, four areas, what are they?

A
  1. legally permissibility
  2. Physicially possible
  3. Financial feasible
  4. Max production

TREAT LAND AS VACANT/RAW

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

5th step in valuation process. What is it?

A

Land value opinion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

2 tyes of land terms, what are they?

A
  1. Raw land

2. Improved land

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What is raw land?

A

unimproved

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What is improved land?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What is a site?

A

Improved land that doesnt require further developement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What are the 6 procedures that analyze land improved or unimproved?

A
  1. sales comparasion
  2. extraction
  3. allocation
  4. land residual technique
  5. ground rent capitalization
  6. subd development analysis
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What is sales comparasion?

A

Searchs for sales of similar vacant parcels

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

What is extraction?

A

When vacant sales are unavailable analyze improved property sales similar to subject property.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

What is extraction?

A

sales price - contibutory value of the improvements = extracted land value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What is allocation?

A

Analyzes improved property sales and allocates prices paid between the improved land and the total property usually as a ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What is land residual technique?

A

a method of estimating the value of land when given the NOI and value of improvements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

What is ground rent capitalization?

A

land that rent is known amount as an improved land lease (eg parking lot). acutal ground rent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What is subdivision development analysis?

A

aka cost development method. Can be used for larger tracts of unimproved land that has potential for development in subdivisions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

should be after card 60. What is Comparative Unit Method?

A

A method of estimateing the cost of a structure. Most common method if estimating costs used. Offten called the square foot method of estimating cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

What is the 6th step in valuation process?

A

Application of the approches to value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

there are 3 steps in the application of the approaches to value, what are they?

A
  1. sales comparasion approach
  2. income capitalization approach
  3. cost approach
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Applicaton of the approaches to value has 3 approaches to it, what are they?

A
  1. cost approach
  2. sales comparison approach
  3. income capitalization approach
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

What is cost approach?

A

Reflects marketing thinking by recognizing that participants in the marketplace relate to cost.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What is sales comparasion apporach?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

There are 10 elements of comparasion under the sales comparasion approach, what are they?

A
  1. real property rights conveyed
  2. financing terms
  3. conditions of sale
  4. expenditures made immediately after purchase
  5. market conditions “time adjustment” MOST IMPORTANT
  6. location
  7. physical charatertiscs
  8. economic
  9. use
  10. non realty components (personal property)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

What is income capitalization approach?

A

Measure present value to the future benefit derived from property ownership. Involves income over a one year period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

What is cost?

A

Acutual or estimate amount to create, reproduce, replace or obtain a property.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

there are 8 steps in the cost approach, what are they?

A
  1. Estimate if vacant
  2. estimate direct and indirect cost of improvements
  3. estimate entrepreneurail incentive
  4. add 2 and 3 = total cost
  5. estimate depreciation
  6. deducted 5
    7 add site improvements
  7. add to get total
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

Estimate the depreciation from 3 different sources, what are they?

A
  1. physical deterioration
  2. functional obsolesences
  3. external obsolenscences
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

What is reproduction?

A

replica

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

What is replacement?

A

Estimated cost of construction at current prices with current (modern) products

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

What are direct costs?

A
  1. labor
  2. material
  3. security
  4. temp field office
  5. storage
  6. powerline installation/utiltiy costs
  7. insurance
  8. bonds
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

What are indirect or “soft” costs?

A
  1. permits
  2. planning and surveying fees
  3. legal fees
  4. cost to carry during construction
  5. insurance and taxes during construction
  6. cost ot carry after construction
  7. lease, marketing
  8. admin cost of title change
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

What is enterpreneurial incentives?

A

Marekt dervied figure that represents and enterpreneur expects or wants to receive.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

What is entrepreneurial profit?

A

The amount that the entreprentur receives for his/her contribution.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

What are the cost estimating methods?

A
  1. comparative unit
  2. unit in place
    3 quality survey
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

What is the unit-in-place method?

A

building cost is estimated by adding the unit costs for the various building components

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

What is quality survey method?

A

Detailed method. It is time consuming like a builders bid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

What is the 7th step in valuation process?

A

Reconciliation value indications and final opinion of value = last in development.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

Important note on reconciliation of value indications and final opinion of value.

A

Reconciliation takes place through out the valuation process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

8th and final step in valuation process?

A

Report of defined value. A written report is always signed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

What is misleading?

A

Intentionally or unintentionally misrepresenting, misstating or concealing relevant facts or conclusions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

What are the first two steps in the valuation system?

A

Exercise of judgment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

Steps 3 through 8 of valuation system are known as?

A

Excerise of execution

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

What are the elements of income capitalization approach?

A
  1. income producing property
  2. purchased as an investment
  3. earning capability is the critical element
  4. used to analyse future financial benefit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q

What is capitalization?

A

Conversion of income into value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

Two types of capitalization, what are they?

A
  1. direct capitalization

2. yield capitalization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

What is direct capitalization?

A

income apporach. A method that values a property by taking N.O.I and divide by the predetermined capitalization rate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q

What is yield capitalization?

A

A method converting future income from an investment into present value by discounting each years income buy using an appropriate discount rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q

How do you calcuate G.R.M. and what does it stand for?

A

Gross Rental Multiplier - sale price/monthly rent multiplier = value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
75
Q

What is N.O.I.?

A

Net Operating Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
76
Q

What is I.R.V. Income
Rate Value
> than one

A
What is V.I.F?                                  Value
                                         Income                Factor (more than one)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
77
Q

2 basic forumlas for direct capitalization?

A

I.R.V. and V.I F. income/rate value and value/income/factor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
78
Q

What is the future benefits of income capitalization?

A

A valuation method that appraisers use to estimate the value of income producing real estate. It is based on the expectation of future benefits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
79
Q

What is P.G.I.?

A

Potential Gross Income - property at full occupancy before vacancy and operating expenses are deducted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
80
Q

What is E. G. I.?

A

Estimate Gross Income - anticipated income from all operations after allowances made for vacancy and collection loses and addtion for any other income.

81
Q

what does N.O.I. mean?

A

Net income that remains after all operating expenses deducted from E.G.I. but before mortgage

82
Q

What is P.T.C.F.?

A

Pre tax cash flow - NOI after mortage debt service but before income tax

83
Q

What is A.T.C.F.?

A

After tax cash flow - after all expenses including income taxes

84
Q

What is reversion?

A

Lump sum benefit that an investor receives or expects to receive upon term. or sales of investment

85
Q

What is income rate?

A

Relationship between one years income and value of property.

86
Q

There are 4 types of income rates, what are they?

A
  1. Capitialzation rate (R)
  2. Overall Capitalization Rate (Ro)
  3. Equity Capitalization Rate (Re)
  4. Mortgage Capitalizaton Rate (Rm)
87
Q

What is Capitalization Rate (R)

A

Is the rate of return that an investmetn based on income that the proeprty is expected to generate

88
Q

What is the overall Capitalization Rate (Ro)?

A

The relationship between the expected N.O.I.for a given year and the price or total value

89
Q

What is Equlity Capitalization Rate (Re)?

A

Relfects the relationship between one years equity cash flow and the equity investment

90
Q

Equity Capitalization rate (Re) has four other names, what are they?

A

Cash on cash rate
cash flow rate
cash throw off rate
equity divided rate

91
Q

What is mortgage capitalization rate (Rm)?

A

Ratio of the annual debt service to the remaning principal balance annual debt service
Mortage Mortgage
Constant amt (loan)

92
Q

What is Yield Rate?

A

Rates of return on capital usually express as compound annual percentage rate (greater than a year)

93
Q

Yield rates include what (5)?

A
  1. interest rate
  2. Discount rate
  3. Equity yield rate
  4. Internal rate of return
  5. Overall yield rate
94
Q

What is interest rate?

A

Rate of return or yield on a debt capital

95
Q

What is discount rate?

A

Rate of return on capital used to convert future payment into present value

96
Q

What is risk?

A

The probability that foreseen events will not occur

97
Q

What is nominal interest rate?

A

Stated or contracted rate an interest rate usually annual

98
Q

there are two types of Income Capitalization, what are they?

A

Direct Capitalization

Yield Capitalization

99
Q

What is direct Capitalization ?

A

Method used to convert an estimate of a single years income expentacy into value in one step.

net income/cap rate or x by factor

100
Q

What is yield capitalization?

A

Method used to convert future benefits into present value aka discounted cash flow

101
Q

What is the income capitalization formula?

A

I.R.V.

102
Q

What is reciprocal?

A

number divded by 1 eg: reciprocal of 15 is 6.67

103
Q

What is lease analysis?

A

the income apporach to value is an apporach of appraisal where the value is determined by the income that is produced by the property

104
Q

What is Gross Lease?

A

Landlord pays all operating expenses

105
Q

What is net lease?

A

The tenant pays all of the operating expenses

106
Q

There are 5 types of leases, what are they?

A
  1. Flat rental lease
  2. Graduate rental lease
  3. Revaluation lease
  4. Index lease
  5. Percentage lease
107
Q

What is a flat rental lease?

A

Specific level of rent that continues throughout the lease

108
Q

What is graduated rental lease and there are two types?

A

Specific changes in rent at one or more points.

Step up lease - increase at certain times

Step down lease - rents adjustments based on market rental spaces

109
Q

What is revaluation lease?

A

A lease requiring a periodic appraisal of the property with rent based on it result

110
Q

What is percentage lease?

A

Some portion of the rent represents percent of value of business

111
Q

There are 8 types of rents, what are they?

A
  1. contract rent
  2. scheduled rent
  3. market rent
  4. effective rent
  5. deficit rent
  6. excess rent
  7. Percentage rent
  8. overage rent
112
Q

What is rent mean?

A

Amount paid for the use of land, improvements or a capital good.

113
Q

What is contract rent?

A

The actural rental income specified in a lease

114
Q

What is scheduled rent?

A

Income due under existing leases

115
Q

What is market rent?

A

Most probable rent that a property should bring in a competing and open market

116
Q

What is effective rent?

A

Total base rent minus any rent concessions

117
Q

What is deficit rent?

A

Contract rent less than market

118
Q

What is excess rent?

A

Contract rent that exceeds market

119
Q

What is percenage rent?

A

Percent of gross sales

120
Q

What is overage rent?

A

Percent of rent paid over and above the guaranteed nimimum rent or base rent

121
Q

What is operating expenses?

A

Periodic expenditures necessary to maintain real estate and continue production

122
Q

What is fixed expenses?

A

taxes

insurance

123
Q

What are variable expenses?

A

Expenses that vary with the level of occupancy - mgt chgs, lease fee, utilities

124
Q

What is replacement allowance?

A

Allowance that provices replacement of short lived building components (roof, flooring, boilers, driveways)

125
Q

What is a personal inspection?

A

Physical observation performed to identity characteristics

126
Q

What are the 6 buildling components?

A
  1. foundation
  2. framing
  3. roofing
  4. plumbing
  5. electricial
  6. HVAC
127
Q

3 types of foundations?

A
  1. Monolithic
  2. Slab
  3. Pier
128
Q

2 types of wall construction?

A
  1. Platform framing

2. Ballon framing

129
Q

What is Platform framing?

A

Sits on top of sub floor

130
Q

What is balloom framing

A

studs extend from sill to the roof

131
Q

Plumbing is divided into 3 divisions?

A
  1. supply
  2. septic
  3. mechanical - fixtures and applicances
132
Q

6 designs of a house?

A
  1. 1 story
  2. 1 1/2 story
  3. 2 story
  4. Split
  5. Contemporary
  6. Specialized
133
Q

What is G.L.A.?

A

Gross living area - finished above grade

134
Q

How are residential structures are measured that share walls?

A

To the center point of the party wall

135
Q

Condo units how are they measured?

A

Air space - inside the walls

136
Q

What is G.B.A.?

A

Gross Building Area - total floor area of above ground areas

137
Q

What is G.L.A. ? (new term)

A

Gross leasable area - total floor area for exclusive use of tenants

138
Q

What is N.R.A.?

A

Net rentable area - your area plus common area

139
Q

5 types of climate?

A
  1. servere cold
  2. cold
  3. mix - humid
  4. hot - humid
  5. hot - dry/mix dry
140
Q

IRV Formual is used in what multipler?

A

PGIM W/PGI = Potential Gross Income Multiplier / Potential
Gross Income
EGIM w/EIG & NIM - Estimated Gross Income Multiplier / Estimated
Gross Income & ?????

Ratio between sales and value

141
Q

When do you use IRV?

When do you use VIF?

A

IRV - method for commerical bldgs or large apartment bldgs.
basic formual is NOT/R = V

VIF - PGI or EGI

142
Q

what is direct capitalization?

A

methody used to conver an estimate of a single years income
expectancy into value in one step.

net income/cap rate or income x factor

143
Q

What is OER?

A

operating expense ratio

Total operating expense / estimated gross income

144
Q

What is reciprocal?

A

the number you would have to multiply it by to get the answer

Eg; 5 reciprocal is 1/5

145
Q

What is Net Income Ratio

A

N.I.R is NOI / EGI

Net operating income / effective gross income

146
Q

What is Equity Capitalization Rate Re

A

relfects the relationship between one years equity cash flow and the equity investment.

147
Q

What is overall capitalization Rate Ro?

A

the relationship between a singles years NOI expectancey and the total property price or value

148
Q

What is capitalizatyion Rate R?

A

ratio of 1 years NOI provided by an asset to the value of the asset

149
Q

What is phycial deterioration?

A

wear and over overtime

150
Q

Two types of Physical deterioration

A

Curable physical deterioration

uncurable physical deterioration

151
Q

What is curable physical deterioration

A

minor items normally taken care of with normal regular maintenance

152
Q

What is incurable Physical deterioration?

A

something that can not be practically or economicaly corrected as of the effective date of appraisal

153
Q

What is a short lived item?

A

shorter than economic life of a structure (roof, carpet, appliances)

154
Q

2 types of functional obsolescence

A

Curable functional obsolescence

incurable functional obsolescence

155
Q

what is curable functional obsolescence

A

cost of replacing outmodeled or unacceptable component

156
Q

What is incurable functional obsolescence?

A

cost of replacing outmodeled or unacceptable component is more than anticipated increase in value.

157
Q

What is deficiences

A

lacking need updates

158
Q

what is superadequacies

A

Has something buyers do not want

159
Q

What is external obsolescences?

A

depreciation that comes from outside the property. Flooding, traffic,
high interest rates, job market. It is considered uncurable

160
Q

What is depreciation?

A

Loss in value of improvements from any cause

161
Q

What is book depreciation?

A

Amount of capital recapture deducted on owners books

162
Q

What is economic life?

A

Period over which improvements contriubte to the property value

163
Q

What is remaining economic life?

A

Estimated period over which existing improvements are expected to contribute economically.

164
Q

What is actual age?

A

years elapsed since construction/purchase

165
Q

What is effective age?

A

age base on amount of observed deterioration and obsolescense it has sustained

166
Q

Three depreciation methods

A

Market Extraction
Economic age - life
breakdown

167
Q

What is market extraction method?

A

relies on the avalability of comparable sales which you can extract the depreciation

168
Q

What is economic age-life method

A

Estimate of depreciation in which a ratio between effective age
and total economic life is applied to curent cost with lump sum deduction (most common)

169
Q

What is breakdown method?

A

measuring each cause of depreciation seprately (phyiscal, functional and external)

170
Q

What is Market Extaction Method - 7 steps

A
  1. select verified sales
  2. adjust the sales for conditions
  3. subtract the value of land
  4. Estmate cost of improvements
  5. Subtract depreciated costs
  6. Convert dollars estimated of depreciation into a percent
  7. Divide percent of depreciation by age of building and convert to annual rate.
171
Q

What is economic age - life method of depreciation?

A

produces estimate of total depreciation - can’t be broken out.

172
Q

Breakdown methods of depreciation - 2

A

useful life

remaining useful life

173
Q

What is useful life

A

Period of time a component may be expected to perform

174
Q

What is remaining useful life?

A

Estimated period during which components will continue to provide

175
Q

2 type of adjustments

A

Percentage adjustment

dollar amount adjustment

176
Q

What is extraction?

A

land value with removed improvements

177
Q

What is allocation?

A

collects information about comparable sales and establishes a ratio between site value and total value

178
Q

What is corner influence?

A

the effect of value of a property located at or near an intersection of two streets.

179
Q

Elements of comparison - 10

A
  1. rights conveyed
  2. financial terms
  3. conditions of sale
  4. expenditures make right after sale
  5. market conditions MOST IMPORTANT
  6. location
  7. relative physical characteristics
  8. relative economic characteristics
  9. use/zone
  10. non-realty components
180
Q

What is exposure time?

A

before appraisal. length of time offered on the market available for sale.

181
Q

What is market time?

A

opinion on the amount of time to sell.

182
Q

What is sales comparasion approach

A

process od deriving a value for a property comparing sales of similar properties

183
Q

What is arms length transactions?

A

transaction between parties who are acting in their own best interest

184
Q

What is Quantitive Adjustments?

A

math process used to determine which comparative sales are inferior, similar ar superior.

185
Q

5 types of quantitie adjustments?

A
pair-data analysis
statistical
graphic
cost analysis/cost related
capitalization of income
186
Q

What is paired data analysis?

A

When two properties are equivalent in all respects except one.

187
Q

What is qualitatie analysis? 3 types.

A

Recognizes the ineffciencies of real estate market with mathematical precision

  1. trend
  2. relative comparsion
  3. ranking analysis
188
Q

What is trend analysis?

A

measures trends in sale prices of comparable properties.

189
Q

What is relative comparasion analysis?

A

Studies the relationship indicated by market data

190
Q

What is ranking analysis?

A

sales ranks in ascending or descending order

191
Q

What is sequence of adjustments?

A

order in which are applied

192
Q

important note. financing terms are adjusted to market (aka concessions)

A
193
Q

Again, what is reconcilation?

A

which 2 or more value indications are processed into a value opinion.

conclusion of final value

194
Q

What is reconciliation criteria?

A

criteria that enables an appraiser to form a meaningful conclusion about the final value opinion.

195
Q

What is point estimate?

A

final value report as single dollar amount

196
Q

What is range of value?

A

The range in which the final market values fall in.

197
Q

What is probability range?

A

confidence level associated with a specific value opinion.

198
Q

a tax appeal assignment will commonly involve what effective date

Retrospective

A