SUMMARY OF COURSES Flashcards
appraiser
expected to perform valuation services
appraisal
opinion of value
Appraisal process-4 points
- written or oral opinion of value
- can be specific $ amount, range, or relationship
- does not establish value.
- Real, personal, intangible property
Real property
Real estate including fixtures+interests, rights, and benefits
Bundle of Rights (SLUGER)
SLUGER
- Sell
- lease
- use
- give away
- enter or leave
- refuse to do any
land is ___ and ____
immobile, durable
-each parcel is unique in location and composition
sq ft in an acre
43560
acres in a section
640
metes and bounds
metes-measurements of length
bounds are boundaries in relation to a marker
-earliest form, still primary for 21 states, used for odd shaped parcels
governmental survey rectangular
checkerboard, baseline (E-W), meridian (N-S)
sq miles in township
36 (sections)
no restrictions, owned by one entity, could be business (corporation, REIT, syndication)
ownership in severalty
specified undivided interest, no right of survivorship, default
tenancy in common
equal shares, right of survivor-ship, must be declared
joint tenancy
combining 2 or more parcels, under one ownership/use, may or may not be contiguous
assemblage
increased value from assemblage
plottage
governmental limitations (PETE)
Police power
Eminent domain
Taxation
Escheat
1 mill
.001
property reverting to state when owner dies intestate
escheat
effective tax rate
tax bill/property value
Private Limitations - DEALLER
Deed Restrictions Easement Adverse Possession Lease Liens Encroachment Reservation
continuous possession with eventual claim of title
adverse possession
take private property for public use through condemnation process
eminent domain
leased fee
lessor/owner leased fee interest
life estate
use occupy control, limited to lifetime of life tenant
The deed provides the greatest amount of warranty. A. Quitclaim. B. General warranty. C. Special warranty. D. Bargain and sale.
B. General Warranty
A property is leased to Jim Smyth. Which term describes Mr. Smyth’s interest in the property? A. Fee simple. B. Life estate. C. Leasehold. D. Leased fee.
C
Mr. Ibrahimovic received a tax bill for $1,888.60 on his primary residence. The total
mill levy in his tax area is 89.38. What is the value of his property?
265,452
What form of legal description provides lengths and directions? A. Recorded plat. B . Metes and bounds. C. Rectangular survey. D. Rectangular and metes and bounds.
B
ECONOMIC FACTORS- USED
Utility
Scarcity
Effective Purchasing Power
Desirability
economic forces PEGS
PHYSICAL/ENVIRONMENTAL
Economic
Governmental
Social
PHYSICAL/ENVIRONMENTAL FORCES
climate water topography soil natural hazards contamination location
Government Forces
public services
building/zoning codes
land use regulations
legislative action
cost
The sacrifice of money, goods, and services necessary to bring an item into
existence
-cost is a fact, not a value
price
amount paid, may or may not be justified, can be value, can be amount offered or asking
4 agents of production LLCE
Land
Labor
Capital
Entrepreneurial Coordination (management)
value in use
Value in use is the value of a particular property for a particular use. Its value is subjective to its owner, user, or as an integral part of a production operation.
value in exchange
Value in exchange (exchange value) is the value, in terms of money, of any commodity in a typical market. Based upon actions of buyers and sellers.
business value
going concern, The market value of all the tangible and
intangible assets of an established and operating business with an indefinite life
insurance value
Insurance value is a replacement value which depends on the physical characteristics of a home, as well as the price of labor and materials in the area. This value is heavily reliant on the cost approach, for replacement costs in the event of property destruction. In most areas, these costs increase with time.
investment value
Investment value is the specific value of an investment to a particular investor or class of investors based on individual investment requirements; distinguished from market value, which is impersonal and detached.
Value in use is generally associated with:
A. The market approach to value.
B. The value to a particular owner or occupant.
C. The market value paid to the end user of abundant properties.
D. Valuation of middle income residential properties.
B
current value based on future benefit (income, appreciation, functionality)
anticipation
agents of production in state of equilibirum
Balance
value is never constant, cause and effect, abrupt or gradual
Change
2 or more parties acting independently to secure the business of a third party
competition
correspondence in form, nature, character. To be in harmony
conformity
inferior property value enhanced by surrounding nicer properties
progression
superior property value is diminished by surrounding inferior properties
regression
alternatives that satisfy the same need, want, desire
substitution
residual return after other agents of production are paid
surplus productivity
tests fror HBU (highest best use)
physically possible
legally permissable
financially feasible
maximally profitable
“the party or parties who engage, by employment or
contract, an appraiser in a specific assignment.”
The client definition
“The type and extent of research and analyses in an appraisal or
appraisal review assignment”.
Scope of Work
_______ is the
analysis of conclusions from the three approaches to arrive at a final value opinion
Reconciliation
The report must be written in a manner that is not ________
misleading.
“Improved land or a lot in a finished state so that it is ready
to be used for a specific purpose.”
a site
_________ is defined as:
“Land that is not needed to serve or support the existing use. The
highest and best use of the excess land may or may not be the same
as the highest and best use of the improved.
Excess land
_________ is defined as:
“Land that is not currently needed to support the existing use but
cannot be separated from the property and sold off for another use.
Surplus land does not have an independent highest and best use
and may or may not contribute value to the improved parcel.”
Surplus land
The ______ technique involves determination of the contributory value of the
improvements as part of the total sales price of an improved property. The
balance of the sales price is attributed to the land.
extraction
Using the_______ technique, a portion of the total property value is assigned to
the land. It establishes relationships based on the economic principles of
balance and conformity.
allocation
“The procedure in which a discount rate is applied to a set of
projected income streams and a reversion.
DCF
When adjusting for the elements of comparison using the paired sales technique, the
appraiser should first adjust for ______adjustments, and then ______adjust for adjustments
transactional, property
“The conversion of income into value.”
Capitalization
_____________ is the period over which improvements contribute to property value
Total Economic Life
__________ is the total time a building might last or is expected to last as opposed to its
economic life.
Physical life
“One cause of depreciation; an impairment of desirability and usefulness
caused by new inventions, changes in design, improved processes for
production, or external factors that make a property less desirable
valuable for a continued use; may be either functional or external.
obsolescence
“Items of physical deterioration or functional obsolescence that are
economically feasible to cure.
curable
______________ is that which is not economically feasible or practical to correct; where the cost to remedy the problem would outweigh the value
benefit to the property after its correction.
incurable depreciation
“The amount of money it will take to remedy a cause of depreciation.”
cost to cure
___________ cost is the cost of producing an exact replica of a building or improvement.
reproduction
________ cost is the cost to produce a building or improvement
having the same utility.
replacement
Which of the following is not a direct cost?
a. Lumber
b. Labor
c. Building permits
d. Equipment rental
C
The __________method is the most comprehensive method of estimating
cost, which breaks out materials and labor for each building component.
quantity survey
The __________method is the most common method of estimating cost used in mass
appraisal.
comparative unit
Physical curable deterioration is generally measured by the
cost to cure
Super-adequacy is known as what type of depreciation?
a. Functional
b. Physical
c. External
d. Desegmentation
A
An ordinary-looking home can have a hidden issue that can make the property complex.
True
False
TRUE
Complex properties are always identified by the appraiser and/or the client before the assignment is accepted.
True
False
False
Ramon owns a home. He grants his Aunt Marie, the right to live in and occupy the home as long Ramon’s father is still alive. This right is best described as a
Fee simple estate
Equitable interest
Life estate
Life estate pur autre vie
Life estate pur autre vie
Life estate is defined as “total rights of use, occupancy, and control, limited to the lifetime of a designated party”. This is a special type of life estate situation, known as a life estate pur autre vie because the life estate is based not on Marie’s life, but on the life of another person. Ch 1, Ownership Interests Can Make a Property Complex
As it refers to the sales comparison approach, what is meant by “bracketing”?
ONE COMPARABLE SUPERIOR AND INFERIOR TO SUBJECT
On the URAR appraisal form, which approach or approaches is/are required?
Cost Approach
Sales comparison and cost approaches
Sales comparison, cost, and income approaches
Sales comparison approach
Sales comparison approach
An appraiser is valuing a property located next door to an automobile salvage yard. He has no sales of properties adjacent to salvage yards, so he uses recent sales of properties in the same general area, and makes an adjustment for the subject’s view. What is this technique called?
Discount factor
Contingent valuation method
Qualitative analysis
Going back in time
Discount factor
An appraiser is valuing a property with water frontage. She has no sales of waterfront properties, so she uses sales of non-waterfront properties in the subject’s area and makes an adjustment for the water frontage. What is this technique called?
Quantity survey
Market survey
Qualitative analysis
Bonus factor
Bonus factor
Appraiser Al is valuing a property that is subject to a life estate. According to the actuarial table, the 92-year-old life tenant has a death probability of 0.228968, and a life expectancy of 3.15. Which statement is TRUE?
There is a 2.28% chance that the life tenant will die this year.
The life tenant can be expected to live a little over 3 years.
Al has a death probability of approximately 23% this year.
All of these statements are true.
The life tenant can be expected to live a little over 3 years.
Bertha is appraising a single-family home that is situated on a commercially-zoned lot, for a residential mortgage lender. Based on the facts of the situation, what is the lender likely to ask her?
If the property owner has applied for a zoning change
If the improvement can be rebuilt if destroyed
To provide an estimate of legal fees necessary to receive a non-conforming use certificate
To verify with the zoning officer that a zoning change is imminent
If the improvement can be rebuilt if destroyed
With a nonconforming use, the highest and best use as though vacant will be different than the highest and best use as improved. If the existing use does not conform to current zoning, the lender will want to know if the improvements can be rebuilt after a fire or other natural disaster. Ch 3, Legally Permissible
is is the earliest system and was employed in the 13 original colonies in the East and Southeast United States.
Metes and bounds
Bounds are best described as
Distances
Boundaries
Bearings
Benchmarks
Distances
A distinct piece of land; a piece of land that forms a part of a district, community, city block, etc.
A piece of land in one ownership, whether platted or unplatted.
lot
A parcel of land; an area of real estate that is frequently divided into smaller parcels.
Tract -
How many links are in a chain?
16.5
66
100
660
100
How many feet are in a chain?
16.5
66
660
5,280
66
In the Government Survey System, each township is divided into ____ sections.
16
32
36
40
36
1 POLE=____FT
16.5
Properties in a Special Flood Hazard area are those designated by FEMA as being in _________.
Zone A only
Zones A and V
Zone C only
Zones C and V
Zones A and V
The right to perform a specific action on a property owned by another
affirmative easement
A property that is served or benefitted by an easement. The opposite of the servient estate, which granted the easement. Also known as the dominant tenement and the servient tenement, respectively.
dominant estate
An easement preventing a property owner from certain, otherwise permitted, uses of his or her land, e.g., agreeing not to do something such as building a wall or fence blocking an adjoining property’s view.
Negative easement
Conservation easements Historic preservation easements Facade easements Scenic easements These are examples of
Negative easement
A method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed.
allocation method
he basic principle underlying the cost approach is the principle of _________.
Competition
Substitution
Highest and best use
Anticipation
Substitution
The cost to construct a building “embodying all the deficiencies, superadequacies, and obsolescence of the subject building” is the ____________ cost.
Replication
Replacement
Improvement
Reproduction
Reproduction
Roof covering, carpeting and water heaters are examples of _____________ items.
Physical, curable
Deferred maintenance
Short-lived
Long-lived
Short-lived
When applying age-life ratios we utilize the _______ lives of those components.
Economic
Actual
Effective
Useful
Useful
The house you are appraising has a total cost new of $214,552. It is 15 years old and has an estimated remaining economic life of 45 years. The cost to cure deferred maintenance items is $825. Short lived items of depreciation have been identified totaling $8,600. What is the amount of long-lived depreciation attributable to the building?
$46,902.23
$51,281.75
$55,873.91
$58,717.32
$51,281.75
Deferred maintenance is considered to be __________; the short-lived and long-lived components are __________.
Incurable, incurable
Curable, curable
Incurable, curable
Curable, incurable
Curable, incurable
A method of estimating land value in which the net operating income attributable to the land is capitalized to produce an indication of the land’s contribution to the total property is the definition of the _____________ method of site valuation.
Allocation
Land residual
Extraction
Subdivision development
Land residual
A large sample is ______ or more.
5
10
20
30
30
“The number of values in a calculation of a statistic that are free to vary” is the definition of
average deviation
average absolute deviation
degrees of freedom
standard error
degrees of freedom
r2 measures how well the _____________ fits the _______.
regression line, cost new
regression coefficient, mean
regression line, data
dispersion, variance
regression line, data
“A numerical range around a sample mean accompanied with a statement of how confident one is that the true population mean lies within the interval” is the definition of
confidence zone
probability zone
confidence interval
coefficient of determination
confidence interval
If interest rates on bank interest-bearing accounts are too low, investors will invest their money elsewhere. This demonstrates the concept of
intermediation
disintermediation
rate creep
inflation spread
disintermediation
What is presumed as fact otherwise uncertain information?
Extraordinary Assumptions
What is a condition that is contrary to what is known, but is used for the purpose of analysis
Hypothetical Condition
