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Appraiser Trainee Exam > Terms & Definitions > Flashcards

Terms & Definitions Flashcards

1
Q

The most common way appraisers estimate a property valuation by analyzing comparable properties

A

Sales Comparison Approach

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2
Q

This valuation approach is used more often when there aren’t as many/ as applicable comparable ales available

A

Cost Approach

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3
Q

This valuation approach is used to estimate how much a property is worth based on the cost to build.

A

Cost Approach

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4
Q

This valuation approach is used to estimate value based on the property’s generated income

A

Income Capitalization Method

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5
Q

This Income Capitalization technique is used for apartments and commercial properties. The appraiser calculates the net operating income (NOI) and subtracting expenses

A

Direct Capitalization

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6
Q

This income capitalization technique is used on single family rental properties and small multifamily rentals. The appraiser looks at the relationship between local rents and local home prices to determine how many times the monthly rent investors are paying as a purchase price.

A

Gross Rent Multiplier

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7
Q

This cost approach considers what a replica of a property would cost to be built and gives attention to the use of original materials

A

Reproduction costs

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8
Q

This cost approach considers what a new structure of a similar function would cost using newer materials and utilizing current construction methods and updated designs.

A

Replacement costs

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9
Q

The right of the government to use private property for public use, with payment of compensation.

A

Eminent Domain

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10
Q

The RIGHT of the government to take ownership of an estate

A

Escheat

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11
Q

A legal situation in which the title to a specific piece land remains with the landowner, but another person or organization is given the right to use that land for a distinct purpose.

A

Easement

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12
Q

The seizing of a private property by a government for a public purpose.

A

Condemnation

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13
Q

This gives an individual or entity a claim to a property until a debt is paid off. If the debt goes unpaid, they have the right to take it back.

A

Lien

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14
Q

Using a house/property as collateral until a mortgage is paid off

A

Mortgage Lien

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15
Q

This technique was developed in order to evaluate the highest and best use for a particular piece of land

A

Land Residual Technique

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16
Q

Using this technique, if the proposed use of the property is its highest and best use, the value of the building should equal the cost of construction. The value of building is based on the construction costs.

A

Land Residual Technique

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17
Q

This formula is associated with which technique?

Land value = cash flow generated by land / land capitalization rate

A

Land Residual Technique

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18
Q

This formula is associated with which technique?

Building Value = cash flow generated by building / building capitalization rate

A

Direct Capitalization

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19
Q

This technique is used to estimate the reproduction costs of a structure. The method involves estimating the cost of producing and stalling individual components.

A

Unit-In-Place Method

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20
Q

One who estimates officially the worth or value or quality of things

A

Appraiser

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21
Q

A valuation service performed by an individual acting as an appraiser

A

Appraisal Practice

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22
Q

Having adequate ability to perform an assignment and produce credible results

A

Competency

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23
Q

The first step of the valuation process

A

Identify the problem

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24
Q

The type and extent if research and analyses in an assignment

A

Scope of work

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25
Q

The right to undisturbed use and control of designated air space above a specific land area

A

Air Rights

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26
Q

Articles that was once personal property but has been attached to the land or building and has become part of the real estate

A

Fixtures

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27
Q

Any permanent structure on real property, or any work on the property which increases its value

A

Improvement

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28
Q

Divided or undivided rights in real estate that represent less than the whole interest

A

Partial Interests

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29
Q

Identifiable tangible objects that are considered by the general public as being “personal”

A

Personal Property

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30
Q

Interests, benefits, and rights inherit in the ownership of real estate

A

Real Property

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31
Q

Rights include land, water, or anything attached to the land, natural or man-made

A

Surface Rights

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32
Q

Rights include land, water, or anything attached to the land, natural or man-made

A

Trade Fixtures

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33
Q

Provision written into a deed that limits the use of land, usually remains in effect when title passes to next owner

A

Deed Restriction

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34
Q

The right to use another’s land for a stated purpose

A

Easement

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35
Q

Has both dominant and servient estates

A

Easement Appurtenant

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36
Q

Benefits a legal person or entity and not a particular tract of land

A

Easement in gross

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37
Q

Trespassing on the domain of another

A

Encroachment

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38
Q

Most complete form of ownership

A

Fee Simple

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39
Q

Ownership interest held by a landlord (lessor) with rights of used and occupancy conveyed by lease to others

A

Leased fee interest

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40
Q

Someone who grants a lease to someone else

A

Lessor

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41
Q

Someone who makes a payment or series of payments in return for the use of an asset

A

Lessee

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42
Q

Rights of use, control, and occupancy, limited to the lifetime of a party (or life tenant)

A

Life Estate

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43
Q

An ownership of a temporary right to hold land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor

A

Leasehold Estate

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44
Q

A claim or liability that affect or limits the title to a property

A

Encumbrance

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45
Q

System that refers to parcels’ lot and block numbers, which appear on recorded maps and plats of subdivided land

A

Lot and Block

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46
Q

System that refers to the parcel’s boundaries, formed by the POB, bounds, and metes

A

Metes and Bounds

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47
Q

This measurement includes direction and distance.

A

Metes

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48
Q

This measurement includes the angular direction between each point

A

Bounds

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49
Q

This type of ownership owns the real estate and offers shares to prospective tenants

A

Cooperative Ownership

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50
Q

Property is held by two or more people and has four types…

  1. tenancy in common
  2. join tenancy
  3. tenancy by the entirety
  4. community property
A

Co-Ownership

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51
Q

2 or more people own a property, assumed to be equally divided among the two

A

Tenancy in common

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52
Q

Ownership for married individuals. Each spouse has equal interest in property

A

Tenancy by the entirety

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53
Q

Right of survivorship; ownership is passed to surviving tenant

A

Joint Tenancy

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54
Q

Sole ownership by individual or entity where owner has no restrictions on how the property is sold to another party

A

Ownership is severalty

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55
Q

A building development built for complementary use

A

PUD

Planned Unit Development

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56
Q

Corporation or trust that combines capital from many investors to provide financing for all forms of real estate.

A

Real Estate Investment Trust (REIT)

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57
Q

Private or public partnership that pools funds for acquiring and developing real estate projects

A

Syndication Partnership

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58
Q

Real estate is transferred to another person to manage for benefit of a third party

A

Trust

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59
Q

3 types of trusts

A

Living
Testamentary
Land

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60
Q

This trust is created by agreement while property owner is alive

A

Living trust

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61
Q

This trust is established by will of property owner after their death

A

Testamentary Trust

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62
Q

Real estate is only asset of this trust

A

Land trust

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63
Q

Property taxation based on the value of a property

A

Ad Valorem Tax

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64
Q

Generally, liens follow priority order based on when they were created

A

Priority Lien

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65
Q

Lien that binds all assets of individual debtor(their property) to the lien

A

General Lien

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66
Q

Lien that is levied or attached to a specific piece of property

A

Specific Lien

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67
Q

Inherent power of gov’t to regulate property in order to protect public health, safety and general welfare

A

Police Power

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68
Q

Local laws that implement comprehensive plan and provide regulation and control of land and structures within a district

A

Zoning Ordinance

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69
Q

Legally binding agreement between two or more parties that represents their promise to do or not do a particular thing

A

Contract

70
Q

A good faith deposit made by a purchaser as a consideration component of a binding contract

A

Earnest Money

71
Q

A written, legal instrument that conveys an estate or interest in real property to someone else

A

Deed

72
Q

This addresses potential issues a claim might get from a particular party, used to clear a defect in the title. Weakest form of a deed.

A

Quitclaim Deed

73
Q

This binds the grantor a deed and heirs to defend to defend the title conveyed to the grantee and their heirs against lawful claims of all persons. The most powerful type of deed.

A

General Warranty Deed.

74
Q

The lessor pays some or all of the operating expenses

A

Gross Lease

75
Q

The tenant pays all operating expenses

A

Net Lease

76
Q

A purchaser of real estate agrees to pay a portion of the purchase price when the contract is signed

A

Land Contract

77
Q

Written document signed by a buyer and seller who agree to the transfer of ownership interests in real estate

A

Sales contract

78
Q

Total dollar expenditure to develop an improvement

A

Cost

79
Q

A person’s wish for an item to satisfy their needs or their wants beyond essential things

A

Desire

80
Q

The ability of a person or group to participate in a market with cash or its equivalent

A

Effective Purchasing Power

81
Q

Monetary relationship between properties and those who buy, sell, or use those properties

A

Value

82
Q

A sale between unrelated parties under no duress

A

Arm’s length transaction

83
Q

The date of the value opinion

A

Effective Datw

84
Q

The time the property was available for sale in the market

A

Exposure Time

85
Q

A financial payment, special benefit, or non-realty item included in the sale contract or rental agreement as an incentive

A

Concessions

86
Q

Agents of Production

A

a. land
b. labor
c. capital
d. entrepreneurial coordination

87
Q

Forces that influence value

A
  1. gov’t and legal
  2. economic
  3. social
  4. environmental and geographic
88
Q

Result of the cause and effect relationship among forces that influence real property value

A

Principle of Change

89
Q

Perception that value is created by expectation of benefits to be derived in the future

A

Principle of anticipation

90
Q

Principle that real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium

A

Principle of Balance

91
Q

The interaction of supply and demand

A

Competition

92
Q

Principle that real property value is created and sustained when the characteristics of a property conform to the demands of its market

A

Principle of Conformity

93
Q

Concept that value of a particular component is measured in terms of the amount it adds to the value of the whole property or how much it would decrease the value if it did not exist

A

Contribution

94
Q

A principle that economies outside a property have a positive effect on its value

A

Externalities

95
Q

Reasonable, probable, and legal use of vacant land or improved property that is physically possible, appropriately supported, financially feasible, and results in the highest value

A

Highest and best use

96
Q

Use of property based on the assumption that the parcel of land is vacant or can be made vacant

A

Highest and best use as though vacant

97
Q

The cost of opportunities not chosen, like the cost of not buying a cheaper property

A

Opportunity Cost

98
Q

Principle of conformity that states that value of an inferior property is enhanced by association with better properties of the same type

A

Progression

99
Q

Principle of conformity that states that the value of a superior property is adversely affected by association with an inferior property of the same type

A

Regression

100
Q

When several similar commodities, goods, or services are available, the cheapest one will attract the most demand

A

Substitution

101
Q

The price of a real property varies directly, but not necessarily proportionately, with demand and inversely, but not nec. proportionately, with supply

A

Supply and demand

102
Q

The central bank of the U.S. acting to provide the U.S. with a safe, flexible, and stable financial system

A

Federal Reserve

103
Q

The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price

A

Liquidity

104
Q

Where the interaction of supply and demand takes place

A

Market

105
Q

Interaction of buyers and sellers who trade short-term instruments

A

Money Market

106
Q

Interest earned on the original investment amount and on previously earned interest

A

Compound Interest

107
Q

Interest in each period is calculated based on the original deposit or investment, and it doesn’t compound

A

Simple Interest

108
Q

A neighborhood characterized by homogenous land use, i.e. apartment, commercial, industrial, agricultural

A

District

109
Q

The area associated with a subject property that contains its direct competition

A

Market Area

110
Q

A group of complementary land uses; a congruous grouping of inhabitants, buildings, or businesses

A

Neighborhood

111
Q

The act or process of developing and communicating an opinion about another appraiser’s work

A

Appraisal Review

112
Q

An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which could alter the appraiser’s opinion if found to be false.

A

Extraordinary Assumption

113
Q

A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used in for the purpose of analysis

A

Hypothetical Condition

114
Q

The use of an appraiser’s reported appraisal, appraisal review, or appraisal consulting assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment

A

Intended Use

115
Q

The client and any other party as identified, by name or type, as users of the appraisal, appraisal review, or appraisal consulting report

A

Intended User

116
Q

Services pertaining to aspects of property value

A

Valuation Services

117
Q

Estimated length of time a property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.

A

Exposure Time

118
Q

Information that covers the forces that affect property values, but are not directly related to a particular piece of property. Covers economic, governmental, social, and physical factors, and can be local or national

A

General Data

119
Q

An assignment condition established by applicable law or regulation, which precludes an appraiser from complying with a part of USPAP

A

Jurisdictional Exception

120
Q

A listing service whereby local member brokers agreed to share listings and commissions on property sold jointly

A

Multiple Listing Services (MLS)

121
Q

Analyzing the values derived from the different appraisal approaches to arrive at the final opinion of value.

A

Reconcilation

122
Q

Information that is relevant to the subject property. Two types of specific data are subject property data and comparable data

A

Specific Data

123
Q

The documentation necessary to support the appraiser’s analysis, opinions, and conclusions

A

Workfile

124
Q

A legal description for land, referencing principal meridians and base lines designated throughout the country

A

Government Survey System

125
Q

Residential space that is finished, livable, and above grade.

A

Gross Living Area

126
Q

Any dwelling unit built on a permanent chassis and attach to a permanent foundation system .

A

Manufactured Housing

127
Q

Atypical motivations of the parties of a transaction

A

Conditions of a sale

128
Q

An amount paid to a lender when a loan is made to make up the difference between the current market interest rate any rate a lender gives a borrower on a note.

A

Discount point

129
Q

What tenants are actually paying rent, as stated in terms of the lease.

A

Contract rent

130
Q

Potential gross income, less vacancy and collection losses.

A

Effective Gross Income

131
Q

A factor that takes into account income derived from all sources of a property

A

Gross Income Multiplier (GIM)

132
Q

A factor derived from comparable rental data, which is then used to develop an opinion of value of the subject property

A

Gross Rent Multiplier (GRM)

133
Q

Income after expenses

A

Net Operating Income (NOI)

134
Q

Day-to-day costs of operating a property, such as repairs and maintenance, but no including debt service or depreciation

A

Operating Expenses

135
Q

Used to interpret a property’s single year net operating income to the property’s value using direct capitalization

A

Capitalization rate

136
Q

The income that could be produced by a property in an ideal situation, with no vacancy or collection losses

A

Potential Gross Income

137
Q

The total accumulated depreciation

A

Accrued Depreciation

138
Q

A calculation that takes the effective age of a property and divides it by the total economic life

A

Age-Life Depreciation

139
Q

A method for determining the cost of a building that uses the cost of recently built comparable buildings as a basis for estimating the cost of replacing the subject property

A

Comparative Unit Method

140
Q

An appraisal method used to develop opinions regarding the value of real estate by estimating the cost new or replacing or reproducing the structure on the land minus depreciation and plus the value of the site

A

Cost Approach

141
Q

Cost in a project that are not variable, such as labor and materials. Also called hard costs

A

Direct Costs

142
Q

Considers a structure’s physical condition, how acceptably functional a structure is, and the external factors that influence a structure

A

Effective Age

143
Q

A dollar value attributable for the expertise and efforts provided in the connection of the development, such as the entrepreneur’s expertise, skills, and involvement with development of the project

A

Entrepreneurial Incentive

144
Q

When something outside the control of a property makes it less desirable. External obsolescence can be locational or economic

A

External Obsolescence

145
Q

When a building is less desirable because of something inherent in the design of the structure

A

Functional Obsolescence

146
Q

A method for determining the cost of a building by taking its original cost and multiplying that number by an index factor based on how long ago the building was constructed

A

Index Method

147
Q

Costs in a project that are variable, also called soft costs

A

Indirect Costs

148
Q

A method that specifies that number or quantity of each type of part or material used to build a structure

A

Quantity Survey Method

149
Q

The period of usefulness that a building has remaining as of the effective date of the appraisal

A

Remaining Economic Life

150
Q

A feature of an improvement that is more that is necessary for the operation of the improvement

A

Super-Adequacy

151
Q

A method that estimates the cost of construction by calculating the unit cost of all component parts of a structure and adding these costs together.

A

Unit-in-place method

152
Q

A site valuation method that separates the value of the land from the structures that sit on it by taking a ratio of the land or site value to the total property value based on a typical property in the area

A

Allocation Method

153
Q

A site valuation method that takes an estimated value of improvements and subtracts it from the total sales price to derive a figure for the land value

A

Extraction Method

154
Q

A method of valuing land based on the rent it generates in a given year divided by an appropriate capitalization rate

A

Ground Rent Capitalization Method

155
Q

An income method of site valuation that assigns a certain part of the income produced by a property to the building or other improvement, and then attributes the remaining income to the land

A

Land Residual Method

156
Q

A method of valuing land that could be developed, by taking the total projected market value of the finished project and subtracting all costs of development and entrepreneurial profit and incentive

A

Subdivision Development Method

157
Q

A method of determining a recommended listing price by comparing the subject property to other homes that have sold, are presently for sales, or did not sell in a given area. Also called Comparative Market Analysis

A

Competitive Market Analysis (CMA)

158
Q

Total floor area of a building measuring from the exterior of the walls – includes the superstructure (floor area) and the substructure (basement area)

A

Gross Building Area

159
Q

Residential space that is finished, heated, and above grade. This excludes garages, finished basements, and storage areas. Finished attics CAN count

A

Gross Living Area

160
Q

A standard appraisal report form used by lenders and appraisers; developed and approved by secondary mortgage market participants Frannie Mae and Freddie Mac

A

Uniform Residential Appraisal Report (URAR)

161
Q

Defines all fields required for an appraisal submission for specific appraisal forms and standardizes definitions and responses for a key subset of fields to enhance data quality and promote consistency

A

Uniform Appraisal Dataset (UAD)

162
Q

The value of the appraisal is supposed to be in the past

A

Retrospective Appraisal

163
Q

The value of the appraisal is supposed to be in the future

A

Prospective Appraisal

164
Q

4 Components of Highest and Best Use

A

Most profitable, Legally permitted, financially feasible, physically possible

165
Q

How many sq feet in an acre?

A

43,560 sq ft

166
Q

How many feet in a chain?

A

66 feet/ 4 rods

167
Q

Most commonly used approach in residential appraising
Good method for non-income producing properties
Based on historical data

A

Sales Comparison Approach

168
Q

A factor derived from comparable rental data, which is then used to develop an opinion of value of the subject property. This is conveyed in terms of a MONTHLY basis

A

Gross Rent Multiplier

169
Q

NOI/Value = Rate

A

Capitalization Rate

170
Q

3 forces that cause depreciation

A

Physical deterioration, functional obsolescence, external obsolescence

171
Q

5 Methods for valuing a site

A 
Sales comparison method
Allocation method
Extraction Method
Land Residual Method
Ground Rent Cap Rate Method

Appraiser Trainee Exam (3 decks)

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