Set 4 Flashcards
Is assessed value used for tax purposes?
Yes
Assessed value is used for tax purposes.
T/F: Assessments are relative measures of value that indicate how this same property will be taxed by the government
True
Appraisals (which are based on recent sale prices of properties in your area and other factors) are used to determine your home’s actual value.
Assessments are relative measures of value that indicate how this same property will be taxed by the government instead.
T/F: Land value going down does not affect appreciation
True
Land value going down does not affect depreciation as land never depreciates.
T/F: Physical deterioration, functional obsolescence and exterior obsolescence are the three items that cause depreciation
True
Physical deterioration, functional obsolescence and exterior obsolescence are the three items that cause depreciation
Cost approach
An approach to value best used on special purpose properties, such as churches and hospitals; the approach values a property by determining the current replacement cost, less depreciation, plus the current land value
T/F: The cost approach is best used on special purpose properties (such as churches and hospitals)
True
Best on special purpose properties
values a property by determining the current replacement cost, less depreciation, plus the current land value
T/F: functional obsolescence refers to factors outside the property lines
False
Functional obsolescence refers to factors INSIDE the property lines that lower the value that are not related to physical deterioration.
T/F: Functional obsolescence refers to factors INSIDE the property lines that lower the value that are not related to physical deterioration.
True
functional obsolescence - inside property lines
Would adverse economic conditions be considered “Functional obsolescence”?
No
Functional obsolescence refers to factors INSIDE the property lines that lower the value that are not related to physical deterioration.
Would a poor lay-out design be an example of “Functional Obsolescence”?
Yes
its inside the property lines
Functional obsolescence refers to factors INSIDE the property lines that lower the value that are not related to physical deterioration. Poor design is clearly that
An appraiser considers the conditions of a neighborhood to determine:
A » economic obsolescence
B » functional obsolescence
C » curable obsolescence
D » physical obsolescence
A economic obsolescence
(A) Economic obsolescence refers to factors OUTSIDE the property lines that lower the value (hence the neighborhood). (B) Functional obsolescence refers to factors INSIDE the property lines. (C) Curable is not a type of obsolescence. (D) Physical obsolescence refers to lowering of value due to wear and tear.
T/F: Functional obsolescence results from factors INSIDE the property lines such as poor design, outdated fixtures.
True
A property was in an area with a lot of smoke and soot from nearby factories. It suffers from:
A » physical depreciation
B » functional obsolescence
C » locational depreciation
D » economic (external) obsolescence
D » economic (external) obsolescence
(D) The factory is OUTSIDE the property lines, therefore it is economic or external obsolescence. (A) Physical depreciation results from wear and tear. (B) Functional obsolescence results from factors INSIDE the property lines such as poor design, outdated fixtures. (C) Locational depreciation is an older term for economic obsolescence.
T/F: The Market Data approach uses the sale price of comparable properties in estimating value.
True
Market Data approach uses the sale price of comparable properties in estimating value.
Which approach to value would an appraiser be using when one adds the land value to the depreciated replacement cost of a property?
ANSWERS A » Market Data B » Cost C » Income D » Gross Rent Multiplier
B cost approach
(B) The cost approach formula consists of three steps: take current replacement cost minus depreciation plus land value to determine current fair market value. (A) The Market Data approach uses the sale price of comparable properties in estimating value. (C) The income approach takes the net operating income of a commercial property divided by a capitalization rate to estimate the value. (D) The gross rent multiplier is using the income approach to estimate the value of a rental house.
