Questions (not multiple choice) Flashcards
The ability of a product to satisfy a human want, need or desire.
Utility
The price a willing buyer will pay and a willing seller will sell for, if neither is under undue pressure
Market Value
What are the four characteristics of value?
Demand, utility, scarcity, transferability
The purpose of USPAP
To promote and maintain a high level of public trust in appraisal practice.
Depreciation caused by a loss of utility is
Functional Obsolescence
What is a property’s highest and best use?
The use of the property that provides the greatest financial return
The three approaches to value
- Sales Comparison Approach
- Cost Approach
- Income Approach
The presence of lower priced properties in an area will cause a decline in the value of the subject property is called _______
Regression
The process of combining several parcels of land into one larger tract
Assemblage
What is postponed maintenance on property that results in increased physical depreciation (wear and tear)
Deferred Maintenance
The final step in the appraisal process using weighted averages to determine an estimate of value
Reconcilation
What are the 5 attributes of land?
- Immobile
- Durability
- Uniqueness
- Finite
- Useful
The difference between real estate and real property?
Real Estate: A parcel of land and its improvements
Real Property: Ownership, rights, benefits
What does USPAP stand for?
Uniform Standards of Professional Appraisal Practice
What is the important consideration regarding special use properties?
Their value may be affected to their limited purpose use
What are the 4 agents of production?
- Land 2. Labor 3. Capital 4. Entrepreneurial Benefit
The condition of a property measured in years, also know as______
Effective Age
What are the 4 phases that a neighborhood goes through?
- Growth 2. Stability 3. Decline 4. Revitalization
What is the most complete form of ownership of a property?
Fee Simple
What are the 4 government powers that can be imposed on a property?
- Police power 2. Eminent Domain 3. Escheat 4. Taxation
What are the (5) rights in property, or “sticks” in the bundle?
- Right to sell
- Right to lease
- Right to occupy
- Right to mortgage
- Right to give away
The absolute rights to a property limited to the lifetime of the designated party, also known as _____
Life Estate
Are the user and payer of the appraisal report always the client?
NO!
The client could be an agent. The client is the person who is engaging with the appraiser.
The right to use another’s real property for a particular use is a(n)_______
easement
Property sold in a less than typical marketing period and exposure is what type of value?
Liquidation value
What are the 4 tests of highest and best use?
- Physically possible
- Legally possible
- Economically Feasible
- Maximally Productive
______ Land is the portion over and above what is needed for the highest and best use, and does not have a stand alone value
Surplus Land
____ Land is land that is not necessary to support improvements. It has its own value.
Excess Land
The conversion of income value is called?
Capitalization
A fee appraiser seeks to get on the approved list for a local mortgage company. In order to be considered for approval, the lender requires appraisers to provide sample appraisal reports performed within the past year. Can the appraiser provide the reports without violating USPAP?
Yes, if all the essential elements of confidential information are removed through redaction of the process of aggregation
Who has oversight authority over state appraisal boards?
ASC
Appraisal Subcommittee
The concept that a higher priced property will be worth less in a lower-prices neighborhood than it would in a neighborhood of comparable properties is the definition of the principle of
regression
Trespassing on the domain of another is the definition of
encroachment
A firm agreement to preform an act, refrain from acting of make a payment or delivery is the definition of
Promise
The right to construct and maintain tunnels, subways, subcellars, pipelines, sewers, etc. is the definition of what kind of rights
Subsurface
A facade easement is what type of easement?
Historic Preservation
USPAP includes performance standards for the appraisal of
real property, personal property, and business/intangible property
A right or interest in a property is a(n)
Estate
Which type of investment has historically generated the highest return on investment?
Real Estate
what kind of contract is one that has not been fully performed or completed?
Executory
Mary Jones has a property with no road frontage. She has an access right of way across the property of her neighbor Bob Smith for ingress, egress, and regress. Who has the dominant tenement in this situation?
Mary Jones
The Federal Reserve can influence the level of economic activity by
Regulating the availability of money and the rate of interest
The appraisal standards and qualification criteria promulgated by the boards of The Appraisal Foundation achieves legal authority by adoption, citation or implementation by
Government Agencies
The price expected for a whole property, e.g., a house, or a part of a property, e.g., a plumbing fixture, that is removed from the premises usually for use elsewhere” is the definition of ____________ value.
Salvage
Property Owner A has the right to develop his property into 10 lots. He sells this right to nearby Property Owner B who wishes to develop his property into additional lots. This is an example of
Transferable Development Rights
In the 1970s, who developed uniform rules for mortgage underwriting?
Fannie Mae and Freddie Mac
Definition of appraisal:
An opinion of value
The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified by the lease
Leasehold Estate
Who are the main lenders (3) on the secondary mortgage market?
Fannie Mae, Freddie Mac, Ginnie Mae
In a trust deed, the title to a property is vested in WHO until the mortgage lien is satisfied?
Trustee
There are stipulations that make a deed valid. What does NOT have to happen to make a deed valid?
Having the deed recorded
Cost approach formula
Property value = Land value + (cost new-accumulated depreciation)
Which entity is responsible for making periodic changes to USPAP?
ASB. Appraisal Standards Board.
The real property market is generally classified as a(n) _____ market.
Imperfect
“The rate at which vacant space in a property or a group of properties for sale or lease has been or is expected to be successfully sold or leased over a specified period of time” is the definition of a(n) __________ rate.
Absorption rate
Under the current qualification criteria, an applicant for Appraiser Trainee must have completed ___ creditable hours of experience.
0 hours of experience
The primary purpose of USPAP is to protect
Public Trust
The website with the largest amount of demographics information is
Cencus.gov
Which entity is responsible for monitoring state appraiser licensing and certification agencies?
ASC
Appraisal Subcommittee
Short term money instruments are traded on the
Money Market
Who is responsible for appointing members to the ASB and AQB?
Board of Trustees
The four components of the Appraiser Qualification Criteria are:
Qualifying education, examination, experience, continuing education
As part of the overall requirement for continuing education, certified and licensed appraisers must complete the 7-Hour National USPAP Update Course or its equivalent ________ calendar year(s).
every 2
Twenty years ago, most appraisal reports that were sent electronically were sent using _____ technology; today, most appraisals are sent electronically using a _______ format.
EDI, PDF
Low interest rates encourage __________, while high interest rates encourage _________.
borrowing, saving
When comparing printers, make sure to compare the cost per
Printed page
A problem with the real property market is that the amount of ________ is slow to change.
Supply
When estimating the value of a fireplace in a single-family home, the most important principle is the principle of
Contribution
Normally the first step in highest and best use analysis is to research the uses that are
Legally permissible
The Uniform Commercial Code covers the sale of goods over $________.
500
The principle of supply and demand states that the price of a commodity, good, or service varies __________, but not necessarily _____________, with demand.
directly, proportionately
“A business arrangement in which two or more persons jointly own a business and share in its profits and losses” is the definition of
partnership
What is the purpose of a state’s statute of frauds?
prohibits fraud in real estate transactions
Multiple Listing Services (MLS) can be utilized for gathering what kind of data
general and specific data
The basic principle underlying the cost approach is the principle of
substitution
“Data concerning the property being appraised, comparable sale and rental properties, and relevant local market characteristics” is the definition of
Specific Data
An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be __________.
biased
A one-and-a-half-story house is commonly known as a
cape-cod
“Data that relates to the four forces that affect real property values—social, economic, governmental, and environmental forces” is the definition of
general data
If an appraiser uses a cost manual to estimate cost new for a property, the result is
replacement cost
The ground rent capitalization method should only be used when appraising a property that is
income producing/suitable for income production
The first step in the valuation process is
define the problem
The most complex method of site valuation is the _______________ method.
subdivision development
Which of the stages in the life cycle of a market area does not always occur?
revitalization
The cost approach formula states that reproduction or replacement cost new _______________, _______________ equals property value.
minus depreciation, plus site value
A short-lived item is a building component with an ___________ life that is shorter than the ___________ life of the entire structure.
Expected remaining economic,
Remaining economic
In a market value appraisal, every comparable sale should have been sold in an _______________ transaction, with no undue _______________.
arm’s length, duress
An entrepreneur is taking on a development project, and by his calculations, he expects to receive a 25% return on his investment in the project. This 25% figure represents
entrepreneurial incentive
Which was the earliest form of electrical wiring?
knob and tube
An estimate of remaining economic life is required by
VA
“An amount paid for the use of land, improvements or a capital good” is the definition of
RENT
“A method of estimating land value in which the depreciated cost of the improvements on an improved property is calculated and deducted from the total sale price to arrive at an estimated sale price for the land” is the definition of the ___________ method of site valuation
extraction
GRMs are derived by dividing the __________ by the property’s ___________ at the time of sale.
sale price, gross monthly unfurnished market rent
When measuring a condominium you should calculate ____ using _______ measurements.
GLA, interior
“The estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout” is the definition of__________ cost.
Replacement
J-bolts are used to anchor the _________ to the __________.
sill plate, foundation
Parging is used on which kind of foundation wall?
concrete block
Construction materials and workers’ wages are examples of __________costs.
direct
An appraisal with an effective date at some point in the future is called a(n) ___________ appraisal.
prospective
The Fannie Mae Single Family Comparable Rent Schedule is designated as Form
1007
EIFS is also known as
synthetic stucco
Architectural and engineering fees are examples of _____________ costs.
indirect
The “summation approach” is another name for the _______________
cost approach
It is common in appraisal reports to include a map that shows the location of the _______________.
subject property and comparable sales
Condemnation occurs when a municipality exercises
Eminent domain
Under USPAP, when is an appraiser required to develop the cost approach in a real property appraisal?
When it is necessary for credible results
“Expenditures or allowances for items other than labor and materials that are necessary for construction, but are not typically part of the construction contract” is the definition of
indirect costs
“Improved land or a lot in a finished state so that it is ready to be used for a specific purpose”.
site
The method that estimates land value based on a percentage of the total property value is the _______________ method.
allocation
The most commonly used method for valuing sites is the ____________ method.
sales comparison
“A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis” is the definition of
hypothetical condition
Building permits and worker’s compensation are examples of __________costs.
direct
Flood maps are prepared by
FEMA
Soil maps produced by the Natural Resources Conservation Service are based on
Aerial Maps
“The amount by which contract rent exceeds market rent at the time of the appraisal….” is the definition of __________ rent.
Excess
The most common heating systems in residential construction today are
Forced warm air
Developers often value land on a basis of price per
buildable unit
Fannie Mae requires a single-unit residential appraisal report to include photographs of
the subject property and comparable sites
What are the three general types of depreciation?
physical, functional, and external
The identification of relevant characteristics is a judgment made by
the appraiser
When appraising a duplex, an appraiser should use __________ area.
gross building
Each written appraisal report must contain the date
of
the report and the effective date of the appraisal
“An element of comparison in the sales comparison approach; comparable properties can be adjusted for differences in the motivations of either the buyer or a seller in a transaction”
conditions of sale
The cost estimating method most commonly used by residential appraisers is the ____________ method.
Comparative unit
Appraisers are cautioned to identify the exact _______________ of market value, and its _______________, applicable in each appraisal completed for the purpose of market value.
definition, authority
“The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease” is the definition of _______________.
leasehold interest
In the age-life method of estimating depreciation, the ___________ age is divided by the ____________ life.
effective age, total economic life
Price per room is a common unit of comparison when appraising
2-4 unit residential properties
Market condition adjustments should always be calculated from the time of the ________ to the ___________.
contract, effective date of the appraisal
What unit of measurement is typically used for single-family homes?
gross living area
Which type of depreciation occurs off the site?
external
Appraisal fees are examples of _______________ costs.
indirect
The valuation process is a systematic procedure employed to provide the answer to a(n) _______ question about the value of _________.
client’s, real property
The results of a _________ test will determine if there is suitable drainage and the size of the drain field that will be required for a septic system.
percolation
Materials that transfer energy quickly are called __________ and those that transfer energy slowly are called __________.
conductors, insulators
In what type of heating system would you find an expansion tank?
hot water
What is another name for “indirect costs”?
soft costs
In the sales comparison approach, we always adjust the _________; we never adjust the ____________.
comparable sales, subject property
“The actual rental income specified in a lease” is the definition of ___________ rent.
contract
The SCOPE OF WORK RULE says that in each real property appraisal assignment, the appraiser must _______ the problem to be solved, and determine and perform the scope of work necessary to develop ________ assignment results.
identify, credible
When appraising a duplex, an appraiser should use __________ area.
gross building
In the sales comparison approach, sales data on __________ sales should be collected.
at least three
An appraiser encounters an underground storage tank and there are no signs of leakage or failure. An appraisal could be performed under the presumption that the tank is not leaking and the property is not contaminated. This would be an example of a(n)
extraordinary assumption
The _______________ method has good application in valuing land in rural areas and in older, urban areas.
extraction
Early ductless heating systems were called
gravity systems
Building permits and worker’s compensation are examples of __________costs.
direct
The most complex method of site valuation is the _______________ method.
subdivision development
If a comparable property sells with atypical financing, we may have to make an adjustment for ___________.
financing terms
The most common unit of comparison for land in rural areas is price per _______.
acre
The intended user of an appraisal is the __________ and any other user, as identified by _________.
client, name or type
“The process of valuing a universe of properties as of a given date using standard methodology, employing common data, and allowing for statistical testing” is the definition of
Mass Appraisal
Extensive research on current construction trends and figures is conducted by
NAHB
Keyways are employed in which type of foundation walls?
Poured Concrete
Today the _______________ technique of site valuation is used primarily in highest and best use analysis.
land residual
Segregated cost method is another name for the _________ method.
unit-in-place
The URAR form can be used to report the appraisal of which of the following property types?
One-unit property
One-Unit with an accessory unit
Unit in a PUD
Which site valuation methods should only be utilized when the subject property is income-producing by nature?
Land residual and ground rent capitalization
“The total period a building lasts or is expected to last…” is the definition of _________ life.
physical
The credibility of assignment results is always measured in the context of the _______________.
intended use
“The anticipated income from all operations of the real estate after an allowance is made for vacancy and collection losses and an addition is made for any other income” is the definition of ____________ income.
effective gross
A management fee usually is based on a percentage of the _________ income.
gross
A _______________ home has a permanent steel chassis, wheels and axles.
Manufactured
Drilled wells need to use __________ until the drilling enters ___________.
Casing, bedrock
Which type of valuation analysis would typically NOT include a separate site valuation?
Gross rent multiplier
