Real Estate Appraisal

Question 1

Appraisal

Answer 1

opinion of value based on supportable evidence and approved method

Question 2

Appraiser

Answer 2

an independent professional trained to provide an unbiased opinion of value in an impartial and objective manner, following an identified appraisal process

Question 3

Comparative Market Analysis

Answer 3

an estimate of value based on solds, competition and expired listings in the area

Question 4

Broker’s Price Opinion

Answer 4

a less expensive alternative for evaluation property that is often used by lenders working with home equity lines

Question 5

Value

Answer 5

monetary worth based on desirability; demand, utility, scarcity & transferability

Question 6

Market Value

Answer 6

the most probable price that a property should bring in a competitive and open market; based on analysis of data

Question 7

Market Price

Answer 7

property’s sales price

Question 8

Anticipation

Answer 8

value created by the expectation that certain events will occur

Question 9

Change

Answer 9

real estate is subject to market demands

Question 10

Competition

Answer 10

the interaction of supply and demand

Question 11

Conformity

Answer 11

the maximum value is created when a property is in harmony with its surroundings

Question 12

Contribution

Answer 12

value of any part of a property is measured by it’s effect on the value of the whole parcel

Question 13

Highest and Best Use

Answer 13

most profitable single use of a property; must be physically possible, legally permitted, economically or financially feasible, most profitable or maximally productive

Question 14

Law of Increasing Returns

Answer 14

when money spent on improvements produces an increase in income or value

Question 15

Law of Diminishing Returns

Answer 15

when improvements do not increase income or value

Question 16

Plottage

Answer 16

consolidation of adjacent lots into a single larger one; adds value

Question 17

Assemblage

Answer 17

process of merging two separately owned lots under one owner

Question 18

Regression

Answer 18

worth of a better quality property is adversely affected by the presence of a lesser quality property

Question 19

Progression

Answer 19

the value of a modest home is higher if it were located among larger, fancier properties

Question 20

Substitution

Answer 20

maximum value of a property tends to be set by how much it would cost to purchase an equally desirable and valuable substitute property

Question 21

Supply and Demand

Answer 21

value of the product depends on the supply

Question 22

Sales Comparison Approach

Answer 22

value is obtained by comparing the property being appraised with recently sold comparable properties

Question 23

Functional Obsolescence

Answer 23

loss in value from the market’s response to the item

Question 24

External Obsolescence

Answer 24

depreciation caused by negative factors not on the subject property, such as environmental, social or economic forces

Question 25

Income Approach

Answer 25

value is based on the present value of the right to future income

Question 26

Net Operating Income

Answer 26

deducting the annual operating expenses from the effective gross income