Procedures Review - Final Exam Flashcards
What procedure of land or site valuation is based on ratio’s between land and total property value.
Allocation
What is a lump sum benefit that an investor “receives” at the termination of an investment.
Reversion
A house that rented for $750 per month was sold for $97,500. What was the Gross Rent Multiplier?
GRM = 130
97,500 130 | 750
An example of an indirect cost would be an?
Appraisal Fee
A house contains 2412 square feet. The cost manual indicates the base cost to be $62.47/sf. The local multiplier is .98 and the current cost multiplier is 1.22. What is the indicated replacement cost of the building?
Answer = $180,150
62.47 x .98 x 1.22 = 74.69 x 2418 = 180,150
An example of physical curable deterioration would be?
a. A bathroom that is functionally but old fashion in style.
b. A broken window.
c. An area rug.
d. A 20 year old oil-fire boiler.
A broken window
What analytical process requires the land or site to be “valued” separately from the improvement?
Cost Approach
A manufactured home is best described as housing that?
a. Has a towing hitch, axles and wheels attached.
b. Built on site.
c. Is classified as personal property.
d. Is classified as real estate.
Is classified as real estate.
What element of comparison is often referred to as a time adjustment?
Market Condition
If an appraisal assignment involves proposed construction with a current valuation date, what assignment condition should be addressed in the identification of the problem?
Hypothetical Condition
What is the land value procedure that “subtracts” the contributory value of the improvements from the sale price of an improved property?
Extraction
What yield rate is used to convert future payments into present value?
Discount Rate
If a tenant leases a warehouse for which he pays all operating expenses, what type of lease does the tenant have?
Net lease
An apartment building has four 2 bedroom apartments that rent for $560 and two 1 bedroom apartments that rent for $475. The owner’s apartment rents for $650. There is an income of $200 per month from coin operated washer/dryers when the property is at full occupancy. The estimated allowance for vacancy and collections is 6%. What is the PGI?
PGI = 48,480
4 x 560 = 2240
2 x 475 = 950
2240 + 950 + 650 + 200 = 4,040
4,040 x 12 = 48,480
An apartment building has four 2 bedroom apartments that rent for $560 and two 1 bedroom apartments that rent for $475. The owner’s apartment rents for $650. There is an income of $200 per month from coin operated washer/dryers when the property is at full occupancy. The estimated allowance for vacancy and collections is 6%. What is the EGI?
EGI = 45,571
48,480 x .94 = 45,571
An example of a “direct cost” would be?
Labor & Material
An appraiser has accounted for the following plumbing fixtures in a typical residential dwelling:
- 1 shower/tub
- 3 sinks
- 2 toilets
- 1 laundry tub
What other plumbing fixture must be included in the appraisers list?
Water heater
A building has an estimated current reproduction cost of $230,000. The effective age of 12 years and the remaining economic life of 38 years. What is the current depreciated cost of the building?
$174,800
12 + 38 = 50
12 / 50 = .24
230,000 x .76 = 174,800
A front foot unit of comparison is useful when appraising properties with?
Water frontage
A grandfathered legally non-conforming use is a?
a. An illegal use.
b. A permitted use that does not conform to current zoning.
c. A temporary use.
d. A variance of the zoning ordinance permitted for the elderly.
A permitted use that does not conform to current zoning.
What item must be included in every written appraisal.
A signed certification
The effective date of the “value opinion” is best described as the date _________________.
assigned to the opinion of value.
Which of the following is not an element of comparison in a sales comparison approach?
a. Financing terms
b. Intended use
c. Physical characteristics
d. Real property rights conveyed
Intended use
An overall capitalization rate provides a value estimate by converting income from ___________.
a. Building
b. Land
c. Owners equity
d. Total property
Total property
What is a long term lease that provides for “periodic” rent adjustment based on changes in “economic” measurements?
Index
A property has an effective gross income of 55,000 and the operating expense ratio is 42%. What is the net operating income?
31,900
What is the difference between the cost of development and the value of a property after completion?
Entrepreneurial process
What is the period of time over which improvements to real estate contributes to property value?
Economic life
A comparable property sold for 165,000. The land is estimated to be “35“,000 and the cost of the building is 198,750. What is the percent of depreciation?
35%
165,000 - 35,000 = 130,000
198,750 -130,000 = 68,750
68,750 / 198,750 = .35
An appriser is analyzing land for a new development that includes three parcels that individually would not be very valuable as developed land but “combined” would have a much higher value. What should the appraiser consider in the analysis?
Assemblage
A limitation of the sales comparison approach is that it should only be applied when ______________.
Sufficient quantity of data exist .
What sale should be paired with sale 5 to extract an adjustment for market conditions?
Sale 3
What is the indicated change in value over 6 months?
+3%
What is the indicated adjustment for difference in size?
$45.00
What is the indicated adjustment for the difference in age?
5,000
What is the indicated adjustment for the basement?
8,000
What is the first step in the appraisal process?
Identification of the problem
“Resolving” the “differences” among various value indications is called?
Reconciliation
If a property has a gross income of 38,000 and the Gross Income Multiplier is 7.3 what is the estimated value of the property?
277,400
Vacancy and collection loss is usually calculated as a percentage of _________________.
PGI
Potential Growth Income
A residential dwelling is 1600sf in area and has a wall hight of 9ft. The comparative unit cost is $65/sf based on an 8ft wall hight. If the wall hight factor is 3%, what is the adjusted cost for the building?
107,120
What is the most comprehensive, time consuming, and detailed method of measuring building cost?
a. Comparative Unit method
b. Breakdown method
c. Unit in Place method
d. Quantity Survey method
Quantity Survey
What age of the property is indicated by the amount of observed deterioration and obsolescence it has sustained?
Effective age
A building has a furnace with an actual age of 8 years. If the total useful life of the furnace is estimated to be 20 years, what is the percent of depreciation for this item?
40%
What type of foundation is most open to the outdoors?
a. Crawl-space
b. Monolithic slab
c. Pier
d. Slab on perimeter stem wall
Pier
Price per squar-foot of net rentable area, is the most appropriate unit of comparison when appraising what?
a. Movie theaters
b. Offices
c. Single family residences
d. 2 - 4 family small income properties
Offices
If the subject and the comparable all have “Fee Simple” title, no adjustment is required for _____________.
Property rights
What element in the identification of the problem provides the basis for how much information and analysis should be included in the development and reporting process leading to the scope of work decision?
Intended use
What is the conversion of income into value?
Capitalization
Cap-rate
An office building sold for 2,250,000. Its net operating income was 278,000. What is the indicated overall capitalization rate?
12.36
What is an example of a fixed expense that does not change with occupancy?
Real Estate Taxes
What is the estimated cost to construct an exact duplicate of the building being appraised ?
Reproduction
What is the most commonly used method of cost estimating?
a. Breakdown method
b. Comparative Unit method
c. Quantitive Survey method
d. Unit in Place
Comparative Unit method
In the breakdown method of depreciation, short lived components are evaluated on the basis of what type of age?
Actual age
If the effective age of a building is 20 years and the remaining economic life is 80 years. What is the percent of depreciation?
20%
Which of the following is not a major component of a building that appraisers should consider for valuation purpose?
a. Foundation
b. HVAC
c. Landscaping
d. Roofing
Landscape
Price per room is the most appropriate unit of comparison when appraising a _____________.
Hotel
What is the preferable procedure for land valuation where significant data exits?
Sales Comparisons
Effective gross income minus operating expenses and annual debt service results in _____________.
a. After tax cash-flow
b. Discounted cash-flow
c. Net operating income
d. Pre tax cash-flow
Pre tax cash-flow
A property sold for $690,000. The potential gross income at the time was $120,000. The appropriate allowance for vacancy and collection loss is 7%. What is the effective gross income multiplier?
6.18
120,000 x .93 = 111,600
690,000 6.18 | 111,600
