Quiz Sales Comparison and Income Approach Ch 9-10 Flashcards
__________ is often referred to as the “bundle of rights”.
Real property
“A tangible or intangible benefit of real property that enhances its attractiveness or increases the satisfaction of the user, but is not essential to its use” is the definition of
Amenity
“The cost of options forgone or opportunities not chosen” is the definition of the principle of
Opportunity cost
“The illegal purchase and resale of property at an artificially inflated price; usually requires collusion among the borrower, loan officer, and appraiser, with the victim being the lender or investor” is the definition of
Flipping
“The value created by a proven property operation; considered as a separate entity to be valued with a specific business establishment” is the definition of __________ value.
Going concern
“A tangible or intangible benefit of real property that enhances its attractiveness or increases the satisfaction of the user, but is not essential to its use” is the definition of
Amenity
“The sum of the positive and negative adjustments made to a comparable sale price ” is the definition of
Net adjustment
Ad Valorem means
According to value
An appraisal for which of the following property types should NOT be reported on the URAR?
Hint: there is another form for this type
Manufactured home
Instead: 1004C Manufactured Home Appraisal Report
Fannie Mae expects an explanation when the net adjustments exceed ____% and the gross adjustments exceed _____%.
There is no set number
Fannie Mae requires a sales history of the subject property for ____ years and the comparable properties for ____ years.
3, 1
Fannie Mae requires an interior floor drawing
Only if the floor plan is a atypical or functionally obsolete
As of August xx, the 1004MC is xx xx xx by Fannie Mae.
2018
no longer required
Fannie Mae’s Market Conditions Addendum is also known as Form
1004MC
Historically, which investment has typically produced the highest overall rate of return?
Real estate
Historically, which investment typically produces the lowest overall rate of return?
Savings account
If you are appraising the value of a specialized industrial property to an owner/occupant, you might estimate ________ value.
Use
If you buy a bond, the return on your investment will be
Interest only
In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and -$2,000. How much is the gross adjustment?
17000
In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and -$3,000. How much is the gross adjustment?
18000
In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and -$3,000. How much is the net adjustment?
Minus 3000
In addition to estimating the market value of the fee simple interest in an income producing property, an appraiser can also estimate its
Investment value, Leasehold value, Leased fee value
In an appraisal of the leased fee interest, a lease that is below market rent could have a ________ effect on value. A lease that is above market rent could have a _________ effect on value.
Negative, positive
Owners buy _______ – investors buy __________.
Homes, houses
Residential investment properties are typically considered to be ___________ properties.
One- to four-unit
The Appraisal Standards Board has expressed the opinion that the level of information in a URAR report is consistent with:
an Appraisal Report
The decision to purchase by an investor is motivated more by the property’s __________ and ____________.
Income, risk
The income approach typically considers the value of a property to a
Typical investor
The most common methodology used to value residential investment properties is the
Gross rent multiplier
The primary principle upon which the cost and sales comparison approaches are based is the principle of
Substitution
The principle of __________ is defined as “the appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price will attract the greatest demand and widest distribution.”
Substitution
The principle of ________________ is defined as “the perception that value is created by the expectation of benefits to be derived in the future.”
Anticipation
(expectations!)
Most important for income producing properties
The principle of anticipation is the basis for which valuation methodology?
Income capitalization approach
USPAP requires an appraisal report to be identified as one of the following types:
Restricted Appraisal Report. Restricted Appraisal Report is the only valid report type listed. USPAP states: “Each written real property appraisal report must be prepared under one of the following options and prominently state which option is used: Appraisal Report or Restricted Appraisal Report.”
Which investment has historically entailed the most risk?
Stocks
Which investment typically incurs the highest burden of management?
Real estate
Which investment usually has the best liquidity?
Savings account
Which of the following are required exhibits for Fannie Mae appraisal reports?
Street map, Original photos of front, rear and street of the subject property, Photos of the front of each comparable sale
Which of the following is NOT a required exhibit for Fannie Mae appraisal reports?
Interior floor plan showing doors and closets
Which of the following is NOT a required exhibit for Fannie Mae appraisal reports?
Sketch showing the location of well and septic
Which of the following property types should be reported on the URAR?
Single unit, Single unit with accessory apartment, Unit in a PUD
Which of the following property types should NOT be reported on the URAR?
Unit in a condominium and Manufactured home.
Which of these is one of the written report options identified by USPAP?
Appraisal Report
You are appraising a property for an investor, and are valuing the property based on the investor’s specific criteria for financing and rate of return. What type of value is this?
Investment value
What is the absorption rate?
The rate at which properties for sale have been or can be sold (marketed) within a given area.
How to calculate absorption rate?
divide the total number of settled sales by the time frame being analyzed
