Res Market Anal and Highest and Best Use Ch 1 Quiz Flashcards
“A place where goods and services are exchanged” is the definition of a:
market
“The separation and identification of the parts of the whole” is part of the process of:
analysis
A change in a community’s zoning ordinance would be considered a(n) ___________ force affecting values.
governmental
A change in local employment and income levels would be considered a(n) ___________ force affecting values.
economic
A change in typical family size in a market would be considered a(n) ___________ force affecting values.
social
A person purchases a four-plex because it has a strong income stream. This is an example of the principle of:
anticipation
A property owner constructs a six-car garage at a cost of $80,000. It only adds $40,000 in value to the property. What economic principle does this best demonstrate?
Contribution
A single-family home is situated in a growing commercial area. The highest and best use is to raze the home and construct a commercial building. A client asks an appraiser to value the property as a single-family home, and not under its highest and best use as a commercial site. What type of value is this client asking for?
value in use
A study of the market as a whole, as well as the investigation of conditions of a component of that market, for a particular type of property, is the definition of:
market analysis
An appraiser must value the land and the improvements based on the same use. Which economic principle or theory does this demonstrate?
Consistent Use. Chapter 1, “Consistent-Use Theory”: The Consistent Use Theory holds that the land and the buildings must all be valued considering the same highest and best use of the property. The appraiser cannot value the land under one use and the improvements under another use.
An informed buyer is considering two properties, but will only purchase one of them. They are substantially equivalent, and each has an annual net operating income of $18,000. Property A has a listing price of $199,000, while Property B is listed at $189,000. Which property is the investor MOST likely to purchase?
Property B
An investor is looking at two properties, but will only purchase one of them. Each is similar in utility and location, and has an annual net operating income of $20,000. One has a listing price of $220,000, while the other is listed at $200,000. The investor purchases the $200,000 property. Which economic principle is demonstrated in this example?
Substitution
Appraiser Anne wants to convert a property’s anticipated income into an indication of value. Which approach to value is best suited for this purpose?
Income Approach
Assessed value is also known as:
ad valorem value
Before the advent of the Internet, appraisers were frequently hampered by:
lack of reliable local market data
Factors outside the subject property can have an effect on its value. What economic principle is this?
Externalities
Finish the sentence: Profit encourages ___________.
competition
Generally, which changes more rapidly in a real estate market?
Demand
Governmental restrictions on use of land include:
eminent domain, taxation, escheat
How is the type of value used in an appraisal assignment determined?
the appraiser identifies the type of value, based on the intended use of the appraisal
If a party has all their ownership rights intact, what type of ownership is this?
Fee simple
If a property has significant liens or clouds on the title, and the owner is unable to sell it because of these issues, the property can be said to lack ___________.
transferability. Chapter 1, “Forces That Create Value”: Transferability is the ability to sell or transfer the property freely in the marketplace. If there are liens or clouds on the title, zoning prohibitions, private restrictions, etc, the property will tend to have less value in the market due to the impediments which may affect its future use.
If a property is over-improved, or under-improved:
the four agents of production are out of balance
If there are not enough homes available in a market to satisfy demand, this is known as __________.
seller’s market
If there are not enough homes available in a market to satisfy demand, what will happen to home prices?
they will increase
If two substantially similar homes are offered for sale in a neighborhood at the same time, which one will sell first?
the one with the lower price
In a typical subdivision with a Homeowners Association, who is responsible for enforcing the deed covenants?
the homeowners association
In relation to real property, the term SLUGER refers to:
bundle of rights
Most appraisal assignments require an opinion of:
Market value
Most real property appraisal assignments are intended to develop an opinion of:
market value
Nothing ever remains stable or in balanced, as evidenced by the:
Principle of Change
One of the characteristics of land is heterogeneity. What does this mean?
each piece of land is unique
People tend to purchase homes in areas with amenities and facilities, and where they feel insulated from adverse property conditions. This is an example of the principle of:
Conformity
Perceived benefits from the ownership of income-producing property would include all of the following EXCEPT:
physical depreciation. Chapter 1, “Anticipation”: Perceived benefits derived from income-producing properties may include projected income to be received, tax shelter, probable appreciation, and use of the property for a personal business.
The amount of money that a financial institution is willing to lend the borrower on a particular property is the:
loan value
The appraisal profession has its own fundamental terminology, just like the medical and legal professions.
TRUE
The definition of market value included in USPAP Advisory Opinion 22:
is only an example
The fact that a property’s value may be different next week than it is today demonstrates what economic principle?
Change
