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
To what properties does the licensee make adjustments when doing a CMA?
The licensee will always make the adjustments to the comparables, never to the perceived value of the seller’s property.
Which of the following problems would be an example of incurable depreciation?
Outmoded bathroom
Termite damage
Non-air conditioned office complex
Outdated boiler
Non-air conditioned office complex
The cost approach would be most reliable for which of these properties?
Renovated historic home
Apartment building
County court house
New shopping mall
New shopping mall
A property sold for $185,000 and is producing an annual net operating income of $16,650. What is the capitalization rate?
7%
8%
9%
11%
9%
When analyzing the data collected for a comparative market analysis, which of the following statements is most likely false?
Data on homes that sold more than six months ago is less reliable.
Homes with listing prices that are too high take longer to sell.
Asking price is a good indicator of selling price.
Research properties should match the subject property’s characteristics as closely as possible.
Asking price is a good indicator of selling price.
Tim and Sue have the smallest home in a sought-after neighborhood. The value of their home is increased because of the higher value of the other homes in the neighborhood. This is an example of what principle?
Regression
Substitution
Anticipation
Progression
Progression
The sales comparison approach is based on what principle of value?
Anticipation
Competition
Substitution
Highest and best use
Substitution
When doing research to recommend a reasonable listing price for a home, the most critical part of the research deals with analyzing which of these figures?
Asking prices for current homes.
Listing prices of homes that sold.
Listing prices of homes that expired unsold.
Selling prices of recently sold homes.
Selling prices of recently sold homes.
The highest price a buyer is willing to pay and the lowest price the seller will accept for a property is known as what?
Selling price
Cost
Market value
Exchange value
Market value
