Real Estate Appraisal Flashcards
ACE
Appraiser Continuing Education.
Act
The Texas Appraiser Licensing and Certification Act.
Administrative Law Judge
A judge employed by the State Office of Administrative Hearings (SOAH).
Analysis
The act or process of providing information, recommendations or conclusions on diversified problems in real estate other than estimating value.
Applicant
A person seeking a certification, license, approval as an appraiser trainee, or registration as a temporary out-of-state appraiser from the Board.
Appraisal practice
Valuation services performed by an individual acting as an appraiser, including but not limited to appraisal and appraisal review.
Appraisal report
A report as defined by and prepared under the USPAP.
Appraisal Standards Board
The Appraisal Standards Board (ASB) of the Appraisal Foundation, or its successor.
Appraisal Subcommittee
The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council or its successor.
Appraiser Qualifications Board
The Appraiser Qualifications Board (AQB) of the Appraisal Foundation, or its successor.
Appraiser trainee
A person approved by the Board to perform appraisals or appraiser services under the active, personal and diligent supervision and direction of the supervisory appraiser.
Board
The Texas Appraiser Licensing and Certification Board.
Certified General Appraiser
A certified appraiser who is authorized to appraise all types of real property.
Certified Residential Appraiser
A certified appraiser who is authorized to appraise one-to-four unit residential properties without regard to value or complexity.
Classroom hour
Fifty minutes of actual classroom session time.
Client
Any party for whom an appraiser performs an assignment.
Complex appraisal
An appraisal in which the property to be appraised, the form of ownership, market conditions, or any combination thereof are atypical.
Council
The Federal Financial Institutions Examination Council (FFIEC) or its successor.
Feasibility analysis
A study of the cost-benefit relationship of an economic endeavor.
Licensed Residential Appraiser
A licensed appraiser who is authorized to appraise non-complex one-to-four residential units having a transaction value less than $1 million and complex one-to-four residential units having a transaction value less than $250,000.
Supervisory Appraiser
A certified general or residential appraiser who is designated as a supervisory appraiser, as defined by the AQB, for an appraiser trainee. The supervisory appraiser is responsible for providing active, personal and diligent supervision and direction of the appraiser trainee.
Trade Association
A nonprofit voluntary member association or organization:
whose membership consists primarily of persons who are licensed as appraisers and pay membership dues to the association or organization;
that is governed by a board of directors elected by the members; and
that subscribes to a written code of professional conduct or ethics.
USPAP
Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards Board of the Appraisal Foundation.
Workfile
Documentation necessary to support an appraiser’s analysis, opinions, and conclusions, and in compliance with the record keeping provisions of USPAP.
§153.3 The Board
A quorum of the Board consists of five members.
Meetings of the Board may be called by the chair on a motion by the chair or upon the written request of five members. Unless state law or Board rules require otherwise, meetings shall be conducted in accordance with Robert’s Rules of Order.
At the end of a term, members shall continue to serve until their successors are qualified.
Highest and Best Use
A use must meet the following four criteria:
Physically Possible
Legally Permissible
Financially Feasible
Maximally Productive.Replacement vs. Reproduction Cost
The replacement cost is the amount of money it would take to replace a property with one of equal value. Reproduction cost is the amount of money it would take to exactly replicate a property.
Reconciliation
Reconciliation, in accounting terms, is the process of examining accounting records to make sure that figures add up especially between the money that is left in an account and the amount that was recorded as being spent.
Depreciation
A loss of property value is called depreciation.
Obsolescence
Obsolescence
Obsolescence refers to something becoming useless and unusable. Obsolescence in objects can occur from wearing down and not being worth repairing. Something can also become obsolete if it is replaced by a newer, more useful item.
Functional Obsolescence
Functional obsolescence is the loss of value in a property improvement, like a structure, due to qualities of the improvement that cannot be easily changed. Functional obsolescence can sometimes be curable, depending on how much needs to be done to correct the situation that is decreasing the property’s value.
Economic Obsolescence
The other relevant kind of obsolescence is economic obsolescence. This is a situation where the value of a property is lost because of factors external to the property. Changes in zoning, market shifts, and proximity to environmental factors like airport noise or nearby sewage treatment plants are all examples of things that cause economic obsolescence.
Economic obsolescence is almost always incurable since it is caused by external forces.
Cost Approach
This method projects that the value of a piece of property should be equal to the cost to build an equivalent building. It is typically used for unique property types like warehouses, museums, hospitals, and municipal buildings. Relatively few of these types of buildings exist so there is not a great amount of historical sales data.
Income Approach
The income approach bases the value estimate on the amount of money a property should generate. The net amount of money earned by the property is multiplied by a ratio of the net income to the purchase price of the property, which is known as the capitalization rate, or cap rate.
Market Comparison/Comparative Sales Approach
The market comparison, or sales comparison approach, estimates the value by comparing the property to similar properties that have sold in the local market, and then accounting for differences between the evaluated property and the comparison properties.
There are four major factors that must be adjusted for when comparing properties for this type of comparison:
Date of sale - generally it is best to keep comparables within six months of the date of the appraisal, anything further out than that might skew the findings.
Location - certainly look for properties in the same neighborhood, but make adjustments if you have to change neighborhoods to more or less desirable ones. (Be sure to take note if you have picked a comp that is in a more or less desirable area in the same neighborhood.)
Physical features - Physical features vary greatly from property to property, even if two houses are the same, 3 bedrooms, 2.5 baths, in Neighborhood X, they are not the same. All of these factors (and more): age of the properties, age of the houses, lot size, type of construction, condition of properties, attached or detached garage, fireplace, landscaping, heat pump, deck, yard size
Terms and conditions of the sale - Real estate owned (REO) sales, short sales, and foreclosures all are factors, especially depending on the type of financing the buyer is utilizing.
Comparative Market Analysis (CMA)
A comparative market analysis (CMA) is a report on the estimated value of a property. This estimate is found by selecting properties that are very similar to the evaluated property and then adjusting for the differences that do exist.
