Study Flashcards
Surplus land
Additional size (which is more than standard) doesn’t provide more utility. For example a standard size lot of 120 feet deep myself for $8 per sq. foot if a lot is 160 feet deep then the extra depth of 40 feet may only be worth $4 dollars per sq. foot the appraiser must be able to support these rates by reference to market sales data collected during their investigation.
Real Estate Appraisal
Estimate the TYPE of VALUE of a PROPERTY for SPECIFIC
PURPOSE @ a SPECIFIC DATE
Most common value in REAL ESTATE APPRAISAL?
MARKET VALUE
Real estate
Physical ASSETS
LAND + BUILDINGS
Real Property
The LEGAL RIGHTS that is ATTACHED to land.
Can REAL PROPERTY be touched?
NO
Can REAL PROPERTY be appraised and sold?
YES
What is a Physical entity that is IMMOBILE and TANGIBLE?
REAL ESTATE
A LEASE OR EASEMENT IS Real Property or Real estate
REAL PROPERTY
REAL ESTATE APPRAISAL
Estimate the Type of Value of a property for
SPECIFIC PURPOSE and SPECIFIC DATE
What are 3 Main Categories of Appraisal Practice.
- FEE APPRAISER
- INSTITUTIONAL
- GOVERNMENT
Example of a INSTITUTIONAL APPRAISER?
- Mortgage Loans
* Advise on Purchase of Investment Property
Characteristics of a Land/Site
- IMMOBILITY
- DEVELOPMENT
- DURABILITY
- DIVISIBILITY OF OWNERSHIP
What are the 2 terms related to VALUE
Objective Value:
Property based solely on the COST
Subjective value:
Value in the MINDS of Buyers and Sellers. What they PERCEIVE something to be worth
Price definition
Is WHAT YOU PAY
VALUE
Is what you Buy
What 4 Factors make up value?
Supply 1 UTILITY 2 SCARCITY Demand 3 DESIRE 4 EFFECTIVE PURCHASING POWER
Do Appraisers value CHATTELS?
No
Stoves, Fridge, washer and dryer are examples of what in a home. Fixture or Chattel?
Chattel
EFFECTIVE PURCHASING POWER
Low interest rates and innovative Financing make buying easier and cheaper
T or F
Does CUSPAP dictate form, format, and style of reporting?
FALSE, these are determined by the users and appraisers.
T or F
Is a FORM REPORT most commonly used in Mortgage Financing for Residential properties?
True
What ha called the VALUE considering alternative uses?
HIGHEST AND BEST USE
What kind of Value determines the value of a property as it is currently used or for a specific use.
USE VALUE
T or F
Is INTENDED USE an important concept for both CUSPAP and First Principles of Value?
True
The Value
The value to be determined in an appraisal depends upon the PURPOSE and INTENDED USE the use of the appraisal
Use value
Is the value of a property as it is currently used
True or false
Our trade fixtures regarded in law as part of the real estate in appraising a real property?
Foss trade fixtures are not real estate and dad with the rights of real property ownership a trade fixture is to be removed by the tenant when the lease expires an example of a trade fixture is a baker having a fancy oven in their lease bakery.
True or false
Value is never a fact but always an opinion of the worth of a property at a given time
True
6 Steps of the valuation process
- Identify the problem
- Collect and analyze the data
- Apply the applicable approaches
- Reconcile their Approaches used
- Write a final reconciliation
- State your estimated opinion of value
What is Marketability study?
A marketability study is founded on analysis of the four factors of UTILITY SCARCITY DESIRE EFFECTIVE PURCHASING POWER that create value.
Short-term capture is referred to as ______________ whereas long-term capture is referred to as__________
Absorption,
Share of the market
Legal nonconforming use
If the store is badly damaged more than 50% is destroyed or vacant for certain period of time that any new building would have to conform to the current zoning requirements.
True or false
Zoning is critical to determining the highest and best use of a property and should be investigated carefully specially were changes are taking Place.
True
Excess land add value and if so give an example
Yes. The extra line on its own or by assemblage with adjoining properties be used to create additional lots for example if you have 100 foot wide lots they can be subdivided into 3 of 33’ front foot wide lots
Residential property is assessed at $350,000 the property mill rate for the residential class is established at 9.067 mills for every $1000 value the owner pays $9.67 in taxes
the tax payable Is calculated as follows
Property taxes= Mill Rate x Assessed Value / $1,000 =
9.067 x $350,000 / $1,000
= $3,173.45
Paired sales method when determining a value of a property with extensive landscaping
This approach involves finding two identical or similar sales one with average and one with better than average landscaping the difference should represent the value of the above average landscaping.
How do you find the value of not New (Mature) Landscaping on a property?
Use RESIDUAL APPROACH
What is RESIDUAL APPROACH?
Find sales of comparable properties and deduct the site value and depreciated value of the buildings. Any residual figure might indicate the depreciated value of the landscaping.
True or false
The Ultimate test of FUNCTIONAL UTILITY is Marketability
True
True or false
QUANTITATIVE ANALYSIS develops adjustments as dollar percentage or decimal amounts quantities
True
True or false
Qualitative analysis makes non-numerical adjustments such as rating comparable properties as superior or inferior to the subject ranking them and then placing the subject within the rank
True
What are some examples of qualitative techniques In Direct comparison approach
Relative comparison analysis superior, inferior
Ranking analysis
Personal interviews
What are some examples of quantitative techniques in the direct comparison approach
P Paired data analysis Group data analysis Statistical analysis Secondary data analysis Cost analysis Trend analysis graph analysis
Replacement cost
Modern equivalent
Reproduction cost
Exact replica
Examples of incurable physical Depreciation
Decaying foundation
Carpeting that is only half worn out
Example of physically curable depreciation
Old paint on a house
The use of an Appraisal is determined by_______ needs which will determine the ______ and ________ of work and the fee to be charged
Client’s
Type
Amount
First Principles of Value
Problem identification Property content Legal Considerations Highest and Best Use Economic Analysis
Real Estate
It is Tangible (Land+Buildings) and immobile.
Appraisers may do the following: ESTIMATE \_\_\_\_\_\_\_\_ Consult on real \_\_\_\_\_\_ matters EXPERT\_\_\_\_\_\_\_\_\_ Review \_\_\_\_\_\_\_\_\_\_ Reports
VALUES
estate
WITNESS
Appraisal
Are property values constant all the time
No
What is the ratio to determine AGE/LIFE METHOD
EFFECTIVE AGE/ECONOMIC LIFE
The actual age of a building may be shorter or longer than it’s EFFECTIVE AGE by determining the __________ of the property.
CONDITION
If the Property is in Great condition will the EFFECTIVE AGE be > or < the ACTUAL AGE
< (Less than) it looks younger than it’s actual age
What is the meaning of UTILITY
The ability of a product to satisfy human want need or desire
Functional
Obsolescence
This represents a loss of utility where an item does not perform its proper function
Market value is
The amount of money a property should sell for on the open market
Which of the following types of value reflects a subjective relationship between a particular investor and a given investment
1) special number
2) lending number
3) market number
4) going concern
1) special
- Helps the appraiser interpret the market forces that affect the subject property.
- Identifies the use or uses a watch the final opinion is based.
- Helps the appraiser identify comparable properties.
What are these characteristics is which kind of analysis
Highest and best use analysis
True or false
Does a data array grid only present property data not the adjustments necessary.
true
Which of the land surveying methods was developed as an outgrowth of the rectangular survey system and can be used to simplify the location description of small parcels?
Lot and block system
