SU # 62__Residential Appraising Flashcards
Explain the difference between market value and market price.
Market value is an opinion of the value of a property based on analyzing data collected about the property. The market price of a property is the actual sales price and can in some circumstances be greater or lesser than market value.
What does the term anticipation mean as it relates to property value?
The benefits a buyer expects to receive over the period of time he or she holds the property.
Grace and Paul spent $75,000 on a complete remodel of their kitchen. What does this mean to the value of their home?
It depends on what the market recognizes as the change in value the improved kitchen makes. A remodeled kitchen might add $50,000, $75,000 or even $100,000 to the value of a home.
Explain the principle of substitution.
Substitution says a buyer will not pay more for a home than what he or she would pay for another home that is equally desirable and available.
When collecting information about the seller’s property for analysis, what should a licensee focus on?
The neighborhood
The home site
Existing property improvements
What important information can a licensee glean from sales price, original price and number of days on the market when looking at sold properties?
This data gives information about how competitive the home was in the marketplace at the time.
Of what value are expired listings to a CMA and what would be a particularly good example of one?
Expired data may show the seller that the asking prices of these homes were significantly higher than the selling prices of the homes on the recently-sold list.
A particularly good example to share with a seller would be that of an expired listing that had been re-listed and is now on the sold properties list.
What terms besides selling price should be important considerations that influence a home sale?
Possession date
Contingent sale
Financing terms
The sales comparison approach is thought to be the most reliable appraisal approach for what kind of property?
The sales comparison approach is thought to be the most reliable for appraisals of single-family homes.
What’s the difference between reproduction cost and replacement cost?
Reproduction cost is the cost at today’s prices of producing an exact duplicate of the current building, including its improvements and its flaws. Replacement cost is the construction cost at today’s prices of producing a similar or equivalent structure.
John is using the cost approach to appraise Greg’s property. John has the following figures: land value $25,000, building value $137,500, total depreciation, $33,000. Using these figures, what will John estimate as the total value of the property?
$129,500 ($137,500 - $33,000 + $25,000)
The income approach is based on which two principles of value?
Anticipation and substitution
How would you go about collecting information on a seller’s property in preparation for doing a CMA?
Tour the home, taking notes about the home’s features and faults. After getting answers to all questions, leave the home and drive through the local neighborhood, sizing up the features and benefits as well as any noticeable shortcomings. While driving through the neighborhood, look for homes that are currently for sale or have sold signs in the yard.
Where will you find homes that are comparable to the seller’s home you’re wanting to list?
You will find homes in the same neighborhood by looking through your own files, checking with fellow agents and checking out the listings on your local MLS database.
After collecting and organizing all the information on the seller’s property and some number of comparable properties, what will be your next steps to complete the CMA?
Estimate the values for the differential features
Adjust the comparables
Estimate a price range
Present the data to the seller
