property value and appraisal

Question 1

Market value

Answer 1

The most probable price a property will sell for in an open market if neither the buyer nor the seller is under duress

Question 2

Value

Answer 2

property’s objective worth, which may not equal price or cost

Question 3

Cost

Answer 3

amount to create or recreate property if it were destroyed

Question 4

Market price

Answer 4

amount buyer paid for a property and seller accepted the price

Question 5

Demand

Answer 5

How popular or desirable a property is

Question 6

Utility

Answer 6

property’s function

Question 7

scarcity

Answer 7

relates to market supply

Question 8

Transferability

Answer 8

The ease with which another person can purchase the property; a property with a title defect may suffer a loss of value because of the difficulty in transferring title to another

Question 9

value in use

Answer 9

what is property worth to person using it

Question 10

assessed value

Answer 10

what local taxing authority think property is worth

Question 11

mortgage value

Answer 11

Price at which the property can be loaned on or sold for at a foreclosure sale

Question 12

insured value

Answer 12

cost to rebuild or replace a property

Question 13

investment value

Answer 13

return on investment a property might provide

Question 14

principle of conformity

Answer 14

property value is determined how well it is similar to surrounding area

Question 15

principle of competition

Answer 15

property’s value is determined in part based on what else is available

Question 16

principle of substitution

Answer 16

A reasonable person won’t pay more for a property if a comparable one can be had for less.

Question 17

principle of contribution

Answer 17

the value of any given change to the property is dependent on the property’s value as a whole. Because of this, the same improvement to two different houses may result in an increase in value in
one while the other sees no appreciable change.

Question 18

highest and best use

Answer 18

This is the most profitable (legally permitted and possible) use of a property. When vacant land is appraised, the appraiser should consider the highest and best use.

Question 19

Plottage

Answer 19

joining two adjacent parcels to increase overall property value

Question 20

regression

Answer 20

decline in property value due to neighboring property value decline

Question 20

regression

Answer 20

decline in property value due to neighboring property value decline

Question 21

progression

Answer 21

increase in value due increase in neighboring property value

Question 22

anticipation

Answer 22

expectation of event that might cause change in property value

Question 23

how does supply and demand affect property value?

Answer 23

More demand than supply means buyers are competing for

the same properties, driving prices up. Less demand, or fewer buyers, puts downward pressure on housing prices.

Question 24

real estate appraisal

Answer 24

an estimate or opinion of a property’s value, determined for a specific purpose, as of a specific date, and based on proven facts.

it help decide mortgage value, and etc.

Question 24

real estate appraisal

Answer 24

an estimate or opinion of a property’s value, determined for a specific purpose, as of a specific date, and based on proven facts.

it help decide mortgage value, and etc.

Question 25

steps of appraisal

Answer 25

State the problem. This means identify the specific property, the rights associated with it, the purpose of the appraisal, and what type of value needs to be estimated.

Identify data needed.

Gather and analyze data. Appraisers look at general city, neighborhood, demographic, and other data, as well as property-specific data.

Determine highest and best use. What would the best use of the property be if there were no existing building on it? This matters more for commercial properties, though residential properties in a mixed-use neighborhood can be
impacted.

Estimate the land value (as if the land were vacant).

Use one or more of the three approaches to valuation (sales comparison, cost, or income approach), depending on
property type.

Reconcile values to determine the final appraised value. This isn’t an average of the various estimates calculated.

Through a reconciliation (correlation) process, the most weight may be given to one or two of the comparable properties or even to the appraisal method used (sales comparison, income, or cost approach) and how well it
matches the subject property.

Develop and deliver the appraisal report.

Question 26

Sales Comparison Approach

Answer 26

used primarily for residential properties, is based on the principle of
substitution. It uses the prices for which similar properties have sold recently to estimate the market value of the property being appraised.

Question 27

subject property

Answer 27

the property that’s being appraised

Question 28

comparables or comps

Answer 28

similar properties to the one being appraisal

Question 29

bracketing

Answer 29

the process whereby an appraiser determines a probable range of values for a property by comparing a group of comparable sales to the subject.

Question 29

bracketing

Answer 29

the process whereby an appraiser determines a probable range of values for a property by comparing a group of comparable sales to the subject.

Question 30

appraisal order

Answer 30

1. financial term and cash equivalency
2. conditions of sale
3. market condition
4. location
5. physical characteristics

Question 31

cost approach

Answer 31

based on the concept that the entire property is worth the sum of the value of the land and the value of
the improvements on that land. usually used if property is unique and not used for rental income such as hospital, school, church and etc.

Question 32

income approach

Answer 32

based on current value on potential income property can make for residential investment rental properties

Question 33

gross rent multipler

Answer 33

used for apprised value of property having 4 or less units

Question 34

gross income multiplier

Answer 34

used for appraisal value of property having 5 or more units

Question 35

comparative market analysis

Answer 35

performed by real estate licensees. it help client make price decision.

Question 36

broker’s price opinion

Answer 36

licensee uses the BPO process
to determine a property’s potential selling price or estimated value. Like a CMA, the BPO is an informal estimate of market value.