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Real Estate > Property Value & Appraisal > Flashcards

Property Value & Appraisal Flashcards

1
Q

What’s the most significant type of value for real estate licensees?

A

market value

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2
Q

Definition of Market Value?

A

a price a willing seller will sell & the price a willing buyer will pay

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3
Q

Appraisal Value

A

is always MV (Market Value)

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4
Q

4 basic characteristics of value

A

(DUST) Demand, Utility, Scarcity, & Transferability

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5
Q

Demand

A

is demand for the item & the purchasing power to acquire it

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6
Q

Utility

A

is needed or wanted

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7
Q

Scarcity

A

limited supply

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8
Q

Transferability

A

ownership rights must be transferable.

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9
Q

Appraisal

A

Is an opinion - it is an estimate of value

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10
Q

Highest and best use

A

Most important detail by appraisers. Gives greatest returns in money/amenities

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11
Q

Principle of substitution

A

Cost to acquiring a similar substitution property

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12
Q

Principle of Conformity

A

Properties are the same/ have a reasonable degree of similarities

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13
Q

Principle of increasing and decreasing Returns

A

Invest in property whenever each dollar invested will return or more of increased value/ stop when each dollar returns less than a dollar in value

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14
Q

Law of Diminishing Returns

A

Over improvement of a property

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15
Q

Principle of Contribution

A

Value of a part by its contribution to the total value of the property rather its cost.

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16
Q

Principle of regression

A

Reduce value of property

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17
Q

Principle of Progression

A

Higher valued properties will increase the value of your properties

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18
Q

Principle of competition

A

Increase in competition will result in decrease profits

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19
Q

Principle of Change

A

change is constant and is reflected in values

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20
Q

Principle of Anticipation

A

purchase price is affected by the expectation of future appeal and benefits

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21
Q

Principle of Balance

A

mixed land use should result in maximum value for all properties involved

22
Q

Appraisal Process

A
  1. state the purpose
  2. collect & verify info about the property
  3. estimate value using all 3 approaches
  4. Reconcile the estimates by determining weighted average
  5. Prepare the report
23
Q

Reconciliation

A

completes the process of determining an exact #

24
Q

FIRREA (Financial Institutions Reform, Recovery, Enforcement Act

A

passed to regulate the appraisal industry nationwide

25
Q

USPAP

A

Uniform Standards of Professional Appraisal Practice -how appraisals are developed & communicated.

26
Q

3 approaches to appraisal

A
  1. market data/sales approach
  2. income/capitalization
  3. Replacement/Reproduction
27
Q

Market data/sales

A

used primarily in residential

28
Q

Add to value

A

subject property has more amenities

29
Q

Deduct from value

A

subject property has less

30
Q

Cost Approach

A

unique properties and no comparables for a particular property

31
Q

Value

A

Land Value + Bldg Reproduction - Depreciation

Land Value + Replacement Cost-Depreciation

32
Q

Reproduction Cost

A

exactly duplicate a building

33
Q

Replacement Cost

A

replace structure using today’s material

34
Q

3 types of depreciation

A
  1. Physical deterioration
  2. Functional Obsolescence
  3. Economic Obsolescence
35
Q

Physical deterioration

A

curable/Least impact on the appraisal

36
Q

Functional obsolescence

A

Factors in the property/outdated

37
Q

Economic obsolescence

A

aka external/environmental
loss of value from outside factors. it’s incurable

38
Q

income approach

A

aka capitalization - income producing properties.

hightest weighted criteria - NAI/NOI - Net Annual Income/Net Operating Income

39
Q

income approach

A

aka capitalization - income producing properties.

highest weighted criteria - NAI/NOI - Net Annual Income/Net Operating Income

40
Q

actual gross income/effective gross income

A

actual rent collected after subtracting for vacancies or uncollected rent

41
Q

Net rent/Net Operating income

A

actual rent collected after subtracting for vacancies or uncollected rent.

42
Q

GRM

A

Gross Rent Multiplier- used for residential properties

43
Q

Neighborhood GRM

A

Avg Price/Avg monthly rent

44
Q

Value for property

A

GRM * rent = price

45
Q

GIM

A

used for commercial properties/ based on annual rent rather than monthly

46
Q

CMA

A

determine realistic price for property

47
Q

CMA

A

is a range of value for a property

48
Q

BPO

A

Broker Price Opinion

49
Q

Assessed Value

A

value of your property for tax purposes. tax rate * assessed value will tell you the annual taxes

50
Q

per hundred valuation

A

$2.50 means the property owner will pay $2.50 of tax for every $100 of taxable value.

mill - $1000

51
Q

special assessment

A

tax levied against only those property owners who benefit from the improvement

52
Q

municipal improvement district

A

aka property improvement district -

Real Estate (5 decks)

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