Study Flashcards
The six steps in the appraisal process are:
- Definition of the Problem. 2.Preliminary Survey and Planning. 3.Data Collection and Analysis. 4.Application of Approaches to Value. 5.Correlation of Value Estimates. 6.Final Value Estimate
The three basic approaches to value are:
Cost
Income
Sales Comparison
The appraisal process is a systematic, logical method of
collecting, analyzing, and processing data into reasoned value estimates.
Millage is a tax rate expressed as
1/1000 of $1.00; a mill is one-tenth of one cent.
The Assessor’s Responsibilities
A. Discover, list, and value all taxable property
B. Collect, analyze, and process data into values
C. Establish uniform and equitable values
D. Review and defend values
The property tax is an ( ? ) ; it is based solely on value.
ad valorem tax
The assessor is responsible for ( ? ) , ( ? ) , and ( ? ) all taxable property.
discovering, listing, and valuing
As assessed value not at 100 percent of market value is known as a ( ? ) assessment.
fractional
The assessor’s value estimate is subject to ( ? ).
review
All taxable property can be classified as ( ? ) property or ( ? ) property when assessed for ad valorem tax purposes.
real / personal
A property tax rate is derived by dividing the total ( ? ) by the total ( ? ) of the taxing jurisdiction.
levy / assessed value
An individual assessed value is multiplied by the ( ? ) to obtain an individual tax amount.
tax rate
An adequate ( ? ) system is essential to the initial task of discovering real property.
mapping
If the assessed value increases and the budget remains constant, the tax rate will ( ? )
decrease
A mill is the ( ? ) part of $1.00.
one-thousandth
The relationship between the assessed value and the market value of a property is known as an ( ? )
assessment ratio
An appraisal is an ( ? ) or ( ? ) of value.
opinion / estimate
The five steps in the definition of an appraisal problem are:
- Indentification of Property 2.Property Rights Involved 3.Purpose and Function of the Appraisal 4. Date of the Appraisal 5. Definition of Value
The type of value usually sought by the assessor is ( ? ) value.
market
The opinion of value is established as of the ( ? ).
date of appraisal
Collection of data on individual properties, and application of the data to estimate the value of many properties, is termed ( ? ).
mass appraisal
The two major types of appraisal reports are the ( ? ) appraisal report and the ( ? ) appraisal report.
form report / narrative report
The fifth step in the appraisal process is the ( ? ) of the indicated values.
correlation
All three approaches ( ? ) pertinent for the valuation of all properties.
are not
The ( ? ) process encompasses the appraisal process and includes additional responsibilities as well.
assessment
The six basic rights associated with property are:
- Use 2. Sell 3. Lease 4. Enter 5. Give Away 6. Do Nothing With
( ? ) is defined as the sacrifice made in acquiring property.
Cost
For a property to have value, it must have
Utility, Scarcity, and Desirability
( ? ) is the right of government to regulate property to protect the public health, safety, and welfare.
Police Power
( ? ) Is the right of government to take private property for public use with just compensation.
Eminent Domain
The principle of ( ? ) is the basis of the three approaches to value
Substitution
Highest and best use must be a ( ? ) and ( ? ) use and is determined by the ( ? ).
Probable and Legal / Market
A small house surrounded by larger houses may have a higher value than if it were surrounded by smaller houses. This demonstrates the principle of ( ? ).
Progression
A built-in oven in a house is an example of a ( ? )
fixture
A portable dishwasher is an example of a ( ? )
chattel
The market value is the present worth of all anticipated future benefits reflects the principle of ( ? )
anticipation
The maximum market value is reached when a reasonable degree of economic and social homogeneity exists reflects the principle of
conformity
( ? ) is highest possible degree of ownership.
Fee Simple Estate
Some private limitations on property are:
1.Co-Owner’s Rights 2.Deed Restrictions 3.Mortgages 4.Easements 5.Liens 6.Leases
The four forces to be analyzed in evaluating a neighborhood are:
1.Physical 2.Economic 3.Governmental 4.Social
The ( ? ) is the environment of the subject property that has a direct influence on its value.
Neighborhood
Only data that affect the ( ? ) ( ? ) will be useful to the assessor.
Local Market
A ( ? ) is a series of changes brought about by a chain of causes and affects.
Trend
The most important physical factor affecting real estate value is ( ? ).
Location
The three types of boundaries used in defining neighborhoods are:
1.Natural 2.Man-Made 3.Political
The prime consideration in analyzing commercial areas is the amount of ( ? ) available
Parking
Neighborhoods can be ( ? ), ( ? ), or ( ? ).
Growing, Declining, or Stable
Property classifications include ( ? ), ( ? ), ( ? ), and ( ? ).
1.Residential 2.Commercial 3.Industrial 4.Rural
Boundaries are necessary to establish ( ? ) of ( ? ).
level of homogeneity.
The land identification system based on semi-permanent physical features or bearings on a compass is known as ( ? ) and ( ? ).
Metes and Bounds
A quarter section is about ( ? ) acres.
160 Acres
A township is divided in ( ? ) sections, each section ( ? ) mile(s) square, containing ( ? ) acres.
36 Sections / 1 Mile / 640 Acres
Residential subdivisions are commonly described by the ( ? ) and ( ? ) system of land identification.
Lot and Block
A numerical code representing a parcel’s legal description is a ( ? ).
Parcel Indentifier or Parcel Number
Corrections are made on the north and/or west side of townships and sections. Sections in which corrections are made are termed ( ? ) ( ? ).
Fractional Sections
In mapping and land survey two terms, ( ? ) and ( ? ) are substituted for measurements and boundaries when addressing a form of land description based on semi-permanent landmarks.
Metes and Bounds
A map displaying property ownership boundaries, dimension, and other useful information is called a(n) ( ? ) ( ? ).
Cadastral Map
There are ( ? ) square feet in an acre and ( ? ) linear feet in a mile.
43,560 Sq Ft / 5,280 Linear Feet
Baselines run ( ? ) and ( ? ) meridians run ( ? ) and ( ? ).
East and West / North and South
An appropriate scale for a cadastral map in a rural area is ( ? ).
1” = 400’
The rectangular survey description of NW ¼ of the NW ¼ of the NW ¼ of the NW ¼ is ( ? ) acres.
2.5 Acres
Rectangular Land Surveys:
Congress established The U.S. Public Land Survey System in 1785
( ? ) is a description type sometimes called the Platted Legal Description method.
Lot and Block Survey:
Rectangular Coordinates:
During the 1930s the United States Coast and Geodetic Survey developed a state plane coordinate system for each state.
An assessment at less than full market value is known as:
A fractional assessment.
An ad valorum tax is a tax based solely on:
Value.
The sum of tangible and intangible property rights vested in land and improvements is termed
real property.
A property tax rate is derived by
dividing the jurisdiction’s budgeted expenditures by the total assessed value.
Ownership of all legal right to property is limited by government through four ways:
Taxation, Police Power, Eminent Domain, Escheat
The fourth step of the appraisal process is:
Application of the approaches to value.
The duties of the assessor are to ( ? ), ( ? ), and ( ? ).
discover, list and value.
Highest and best use is defined as the use
that will generate the highest net return to the property.
When a property’s highest and best use is likely to change in the near future, the prevailing highest and best use is called.
an interim use.
The land identification system commonly used for residential subdivisions is
ot and block survey.
The state plane coordinate system, the latitude and longitude system, and the Universal Transverse Mercator grid systems are examples of
rectangular land coordinate systems.
Single-property appraisals differ from mass appraisal in ( ? ), ( ? ), and ( ? ).
market research / quality control / definition of the appraisal problem
The benefit derived from the use of an item can be described as
value in use.
Which of the following is a major element in the cost of production?
Labor
The five generally accepted methods of land valuation are:
1.direct sales comparison 2.abstraction-allocation 3.anticipated use 4.capitalization of ground rent 5.land residual capitalization.
( ? ) is the most reliable method of land valuation.
Sales Comparison
Tables and rules are available (or can be developed) to measure ( ? ), ( ? ), and ( ? ).
Depth, Irregular Lot, and Corner Influences
Tables, formulas, and rules are only guides and should be supported by ( ? )( ? )( ? ).
Local market evidence.
( ? ) often dictates the highest and best use of a site.
Zoning
The ( ? ) portion of a parcel is usually more valuable than the ( ? ).
Front / Rear
( ? ) is the combination of two or more sites, yielding a single site having greater value than the sum of the individual sites.
Plottage Value
Assign portion of total property value to site; ratios established to find value (of limited usefulness).
Allocation:
Subtract depreciated replacement costs from sale price; the remainder is land value (of limited usefulness)
Abstraction:
Primarily for land in transition
Anticipated Use (Development) Method
The cost approach to value is based on the principle of ( ? )
Substitution.
Cost does ( ? ) equal value but can be a valid determinant of value.
not necessarily
( ? ) cost is the cost of producing an exact replica of a building or improvement.
Reproduction Cost
( ? ) cost is the cost of producing a building or improvement having the same utility as the original building.
Replacement Cost
( ? ) is the actual cost of constructing an improvement, at the time it was built
Historical Cost
The five principal characteristics that influence cost are:
a) Design type
b) Construction type
c) Quality class
d) Floor area
e) Building shape
The four methods of estimating cost are:
a) Quantity survey
b) Unit in place
c) Square foot (or cubic foot)
d) Factored historical cost
( ? ) ( ? ) is the overall desirability and usefulness of property and its componenents.
Functional Utility
( ? ) ( ? ) is a complete cost itemization of all direct and indirect costs incurred in constructing a building.
Quality Survey
Direct Costs
labor, supervision, materials, components, equipment rental, utilities
Indirect Costs
building permits, real estate taxes, overhead and profit, architecht’s fees, insurance, sales expense
A classification system for improvements is valuable in ( ? )
mass appraisal
The cost approach to valuation is based on the principle of ( ? )
Substitution
Indexing base costs from a general cost manual to current costs for a particular area is accomplished by means of a ( ? )
time-location factor.
V = LV + (RCN – D)
Cost Approach, Summation Approach
List the steps in the cost approach.
1.Estimate land value as if vacant. 2.Estimate the replacement cost new. 3.Estimate accrued depreciation. 4.Subtract the accrued depreciation from RCN. 5.Add back land value.
( ? ) is defined as the loss from the upper limit of value from all causes (except depletion) of property having a limited economic life
Depreciation
In the ( ? ) approach, depreciation means ( ? ) depreciation.
Cost Approach / Accrued Depreciation
( ? ) is the difference between reproduction or replacement cost new of an improvement and its market value as of the date of appraisal.
Accrued Depreciation
( ? ) is not depreciation.
Depletion
There are three categories (causes) of depreciation:
a. Physical deterioration (curable and incurable)
b. Functional obsolescence (curable and incurable)
c. Economic obsolescence (usually incurable)
Depreciation can be measured ( ? ), from the subject property, and ( ? ) from similar properties.
Directly / Indirectly
Type of Depreciation : Over-improvement (not highest and best use of the site)
FUNCTIONAL OBSOLESCENCE
Type of Depreciation : Under-improvement (not highest and best use of the site)
FUNCTIONAL OBSOLESCENCE
Type of Depreciation : Poor layout and design
FUNCTIONAL OBSOLESCENCE
Type of Depreciation : Inferior workmanship or materials
FUNCTIONAL OBSOLESCENCE
Type of Depreciation : Unnecessarily high quality or capacity of components
FUNCTIONAL OBSOLESCENCE
Type of Depreciation : Outmoded equipment and fixtures
FUNCTIONAL OBSOLESCENCE
Type of Depreciation : Changing public tastes and standards
FUNCTIONAL OBSOLESCENCE
Type of Depreciation : Nonconforming architectural style
FUNCTIONAL OBSOLESCENCE
Type of Depreciation : Encroachment of inharmonious land use
ECONOMIC (LOCATIONAL) OBSOLESCENCE
Type of Depreciation : Heavy traffic, excessive noises, unpleasant odors, physical hazards, and so forth
ECONOMIC (LOCATIONAL) OBSOLESCENCE
Type of Depreciation : Inadequate public services
ECONOMIC (LOCATIONAL) OBSOLESCENCE
Type of Depreciation : Inadequate land use controls and protection
ECONOMIC (LOCATIONAL) OBSOLESCENCE
Type of Depreciation : Inadequate access to conveniences
ECONOMIC (LOCATIONAL) OBSOLESCENCE
Type of Depreciation : Legal actions (changes in zoning, etc.)
ECONOMIC (LOCATIONAL) OBSOLESCENCE
Type of Depreciation : Action of the elements (weather)
PHYSICAL DETERIORATION
Type of Depreciation : Use and abuse
PHYSICAL DETERIORATION
Type of Depreciation : Inadequate repair and replacement
PHYSICAL DETERIORATION
Type of Depreciation : Pest or insect infestation
PHYSICAL DETERIORATION
Curable physical deterioration (deferred maintenance) is measured by ( ? ).
Cost to cure
Incurable physical deterioration that is measured by effective age divided by total economic life, applied to the cost of the item.
Short-life items (curable physical postponed)
Incurable physical deterioration that is measured by effective age divided by total economic life, applied to the cost of the basic structure portion of the building (RCN of building less RCN of curable items and RCN of short-life items).
Long-life items (basic or “bone” structure)
Curable functional obsolescence that is measured by excess of cost to cure over the cost new of the standard item if it had been installed when the structure was built.
Deficiency (normal)
Curable functional obsolescence that is measured by the cost of installing the modern component, plus depreciated value of the out-of-date component.
Deficiency ( replacement or modernization)
Curable functional obsolescence that is measured by the cost new of the item, less any physical deterioration already charged, plus the cost to install a normally adequate or standard item.
Superadequacy
Incurable functional obsolescence that is measured by the actual or estimated rent loss, multiplied by the gross rent multiplier (GRM)
Deficiency
Incurable functional obsolescence that is measured by the excess of the RCN of the superadequate item over the RCN of a standard or not superadequate item.
Superadequacy
( ? ) is defined as the capital requirements of cost new of the depreciated item, less physical deterioration, plus the present worth of the added cost of ownership, such as increased taxes, higher maintenance expense, and so forth.
Rent Loss
( ? ) can be measured by deduction of the capitalized value of the rent loss due to the condition.
Incurable functional obsolescence
Obsolescence measured by the actual or estimated rent loss, multiplied by the GRM or capitalization rate, multiplied by the building-value-to-total-property-value ratio.
Economic (locational) obsolescence
Sales Price divided by Monthly Rent
GRM Gross Rent Multiplier
GRM X Rent Loss x Land to Building Ratio = ( ? )
Economic (locational) obsolescence
( ? ) is loss of value due to consumption, such as mining and timber removal.
Depletion
Flaking paint on a bedroom ceiling is an example of ( ? ) ( ? ) deterioration.
curable physical
Another name for the straight-line depreciation method is the ( ? ) method.
Overall (age-life)
Effective age is the age of a building indicated by its ( ? ).
Observed condition
Economic obsolescence, unlike functional obsolescence and physical deterioration, is usually considered ( ? )
incurable
The end objective of the cost approach is to measure ( ? ) not cost.
value
The ( ? ) ( ? ) and the ( ? ) ( ? ) methods require separation of elements of accrued depreciation into various categories.
observed condition / engineering breakdown
The difference between reproduction or replacement cost new of a building and its market value as of the date of the appraisal is termed ( ? ).
accrued depreciation
( ? ) is the number of years from the date of appraisal to the date when the building becomes economically valueless.
Remaining economic life
Curable physical deterioration is also known as ( ? ) ( ? ).
deferred maintenance
The depreciation of short-lived items, as treated under incurable physical depreciation is also known as ( ? ) ( ? )
curable-physical postponed
An estimate is made of both the effective age of the building and its remaining
economic life. Together these form the life span of the building. The ratio of
effective age to life span, multiplied by the replacement or reproduction cost new,
yields the lump-sum deduction for accrued depreciation.
Overall (Age-life) method
First, the cost to cure all curable items is estimated. This sum is then deducted
from replacement or reproduction cost new of the entire improvement. The
remaining sum (the incurable items) is then multiplied by the ratio of effective age to
life span, yielding the amount of incurable depreciation. The sum of curable and
incurable depreciation is the total depreciation for the property.
Modified Overall (Age-life) method
A different straight-line percentage is applied to each of the major component parts
of the structure. Depreciation is not categorized in this method.
Engineering Breakdown Method
This method is recommended for use in demonstration narrative appraisal reports
by most appraisal organizations.
Observed condition (Breakdown) Method
This method requires a detailed estimate of replacement cost new; it involves
considering the elements of diminished utility separately and measuring the amount
of each. The estimates are then added together; this sum is deducted from
replacement cost new.
Observed condition (Breakdown) Method
In this method curable items are considered and measured first, prior to an analysis of the incurable items; incurable items cannot be measured properly until all curable items have been accounted for.
Observed condition (Breakdown) Method
Depreciation, as applied in the appraisal process, is
solely a charge against, and a deduction
from, the RCN of an improvement
The loss of value attributable to incurable physical deterioration is measured by
the age-life method
The method reflecting the observed condition of the building or an individual item or component
the age-life method
The loss of value attributable to incurable functional obsolescence is
capitalizing an actual or estimated rent loss by use of a GRM.
The loss of value attributable to curable functional obsolescence when the functional defect involves a normal deficiency is measured by
the excess of cost to cure over and above the RCN of the item or component installed during the construction of the structure.
Functional obsolescence as a form of depreciation is usually the result of
diminished utility of the building or component, or of out-of-date design.
The loss of value attributable to economic obsolescence is measured by
capitalizing an actual or estimated rent loss by use of the GRM multiplied by the building-tototal-property-value ratio.
The loss of value attributable to curable functional obsolescence, when the defect involves the need for modernization or up-dating, is measured by
The RCN of the obsolete component LESS any physical deterioration already charged, PLUS he cost to install a modern, up-to-date component.
The principles of substitution, contribution, and change are basic to ( ? )
comparative sales analysis.
Comparability is greatest when both sale and subject properties are influenced by the same ( ? ) , ( ? ), ( ? ), and ( ? ).
physical, economic, legal, and social factors.
The four major types of adjustment are
time of sale, location, physical condition, and contributory value of components.
The physical condition adjustment accounts for ( ? ) ( ? ).
accrued depreciation.
Adjustments can be made on a ( ? ) or a ( ? ).
lump-sum / percentage basis
The amount of adjustment is allocated by ( ? ) rather than ( ? ).
contributory value / individual cost
The value estimates of comparables are / are not averaged to produce a final value
are not
The sale property needing the fewest adjustments to equate it with the subject property is often considered ( ? )
the strongest value indicator
Adjustments should be isolated and are always made to the
comparable properties
Adjustments should be isolated and are never made to the
subject property
( ? ) establishes a ratio between gross income (monthly or annual) and the sale price.
The gross rent multiplier (GRM)
( ? ) takes into account square footage not producing income (common areas).
Square feet of gross building area (GBA)
( ? ) does not take into account square footage not producing income (common areas).
Square feet of net rentable area
( ? ) are used to compute a value indicator for a given property based on the relationship between the gross income and sale price of similar properties.
Gross rent multipliers (GRM)
( ? ) of property sellers usually establish the upper limit of value and ( ? ) by buyers usually establish the lower limit of value.
Asking Prices / Offering Prices
The best sources of documentation of sales data are interviews with the ( ? ) and ( ? ).
Buyer and Seller
Comparable sale properties should be visually inspected to make an accurate analysis of the ( ? ) between them and the subject.
dissimilarities
The greatest degree of comparability is achieved when the properties involved in the comparison process are influenced to a similar extent by the following four factors:
1.Social 2.Economic 3.Legal (Government) 4.Physical
Four appropriate units of comparison for the valuation of single-family residential properties are:
1.Square Feet of Building 2.Building Unit 3.Rooms per Unit 4.Bedrooms per Unit
Four appropriate units of comparison for the valuation of apartment houses are:
- Apartment Unit 2. Apartment Room 3.Sq Ft of Building 4.Gross Rent Multiplier
The adjustment process applies the ( ? ) value of an item to the total property.
contributory
When plus or minus adjustments are expressed in terms of percentages, the adjustment for ( ? ) should be made before any other adjustments.
Time
The loss of value attributable to physical deterioration incurable is measured by:
the age-life method, reflecting the observed condition of the building
The adjustment process used in the sales comparison approach applies the principle of:
contribution.
The loss in value of a property as of the date of the appraisal is termed:
accrued depreciation.
The cost of constructing a building having the same utility as the original but using modern methods, materials, and design, is known as:
replacement cost.
Indexing a cost manual as of a base year up to current cost requires modification of the based price by applying a:
time-location factor.
Functional obsolescence is measured by the ( ? ) method.
age-life method
The three stages of neighborhood growth are:
Development, Equilibrium, Disintegration
The Tolerance Ratio for assessed values is:
32% to 36%
The Appeal Procedure for assessments in Nevada is:
Assessor, County Board of Equalization, State Board, Court
The maximum tax rate in the state of Nevada is:
$5.00
The minimum assessment for land in Nevada is:
$1.25/acre
The principle of value most associated with replacement cost is:
Substitution
