PRRE - Unit 5: Residential Property Valuation

Question 1

The average number of days on the open market that listed properties take to sell.

Answer 1

Days on Market (DOM)

Question 2

The average sale price of property as a percentage (ratio) of their list price at the time of sale.

Answer 2

Sale Price to List Price Ratio

Question 3

The percentage (ratio) of newly listed properties relative to the number of sold properties over a specified period

Answer 3

Sales to New Listings Ratio

Question 4

For Seller’s Market:
DOM is ______
Sale $ to List $ Ratio is ______
Sales to New Listings is _____

Answer 4

Decreasing
Increasing
Increasing

Question 5

For Buyer’s Market:
DOM is ______
Sale $ to List $ Ratio is ______
Sales to New Listings is _____

Answer 5

Increasing
Decreasing
Decreasing

Question 6

The Municipal Government Act sets _____ as the valuation date in Alberta

Answer 6

July 1

Question 7

___________ is the process of determining the fair market value of a property for taxation purposes.

Answer 7

Property Assessment

Question 8

_____________ is the method used by real estate professionals to provide an estimate of value for residential properties (non-income producing properties)

Answer 8

Comparative Market Analysis

Question 9

Steps in a Comparative Market Analysis (6)

Answer 9

1) Communicate with client
2) Background research on property
3) View the property
4) Select comparable sales
5) Make adjustments based on comparables
6) Determine value of property

Question 10

Sequence of Comparable Adjustments (3)

Answer 10

1) Time
2) Location
3) Physical Characteristics

Question 11

Differences in Time / Location use ___ adjustments.
Differences in physical characteristics use ___ adjustments

Answer 11

%
$

Question 12

________________ of any property is the use at the time of the valuation, which will likely produce the highest net return over a given period of time.

Answer 12

The Highest and Best Use

Question 13

____________ is used to evaluate the performance of an operation by matching revenue earned during a given time period with the expenses incurred in obtaining that revenue.

Answer 13

Income Statement

Question 14

For ‘small income producing properties’ you can use either ___________ or _____________ to determine Income Analysis

Answer 14

• Monthly Rental Factor (single unit)
• Gross Income Multiplier

Question 15

Monthly Rental Factor = __________ / ___________

Answer 15

Value / Gross Monthly Income

Question 16

Gross Income Multiplier = ________ / ________

Answer 16

Value / Effective Gross Income

Question 17

_______________ is a method that records cash when it is received and expenses when they are paid

Answer 17

Cash Accounting

Question 18

_____________ is method that recognizes revenues and expenses when the transaction occurs

Answer 18

Accrual Accounting

Question 19

CMA order of topics (3)

Answer 19

1) Sold Properties
2) Active Properties
3) Brokerage services

Question 20

Principle of __________: a buyer will pay no more for a property than the cost of acquiring a similar and equally desirable property in the market without unreasonable delay.

Answer 20

Substitution