Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Real Estate Principles & Practices Prep Updated for 20th Edition > Unit 16 Real Estate Appraisal > Flashcards

Unit 16 Real Estate Appraisal Flashcards

1
Q

What is an appraisal?

A

An opinion of value based on supportable evidence and approval methods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a Competitive Market Analysis?

A

A report prepared by a licensee which shows a range of prices to help the seller maximize their return at the time of sale.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a Broker Price Opinion?

A

An opinion prepared by a licensee that is less-expensive alternative to an appraisal typically for a lender.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the 4 characteristics value?

A 
The monetary worth based on 4 characteristics:
Demand
Utility
Scarcity
Transferability
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is market value?

A

A reasonable opinion of a property’s worth.

The most likely sales price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a market price?

A

The actual selling price of a property.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the basic principles of value?

A 
Anticipation 
Change
Competition
Conformity
Contribution 
Highest & Best Use
Plottage
Regression & Progression
Substitution 
Supply & Demand
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is plottage?

A

The individual value of two adjacent properties may be greater if they are combined than if each is sold separately.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the law of increasing returns?

A

Money spent on improvements produces an increase in income or value.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the law of diminishing returns?

A

At a point where additional improvements do not increase income or value.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are 3 approaches of appraisal?

A

1-Sales Comparison Approach
2-Income Approach
3-Cost Approach

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the Sales Comparison Approach?

A

Aka, Market Data Approach. Determining value by comparing the subject property to recently sold comparable properties. Based on Substitution price is adjusted to reflected impact of difference.

Considered most reliable for SFH

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the Cost Approach?

A

Determining value by the principle of substitution. 5 Steps
1-Value of vacant land
2-Current cost of Constructing Building
3-Accrued Depreciation
4-Subtract Accrued Depreciation from Current Cost
5-Add Land Value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is depreciation?

A

Loss of value for any cause.
1-Physical
2-Functional
3-External

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is physical deterioration?

A

Actual deterioration of the building. Curable means worth fixing, incurable the cost isn’t worth the investment based on value.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is functional obsolescence?

A

The building has outlived its usefulness to the market. examp 4 bd 1 bth

17
Q

What is external obsolescence?

A

Caused by negative factors not on the subject property, ie environmental, social, or economic, they are incurable.

18
Q

What is net operating income?

A

Aka NOI, Gross Income-Expenses = Net Income

19
Q

What is a capitalization rate?

A

Rate of return, NOI/Price.

20
Q

What does capitalization mean?

A

The present value of future income.

21
Q

What is a gross rent multiplier?

A

Appraisal value for 1-4 unit properties.

Sales Price/Monthly Gross Rent = GRM

22
Q

What is gross income multiplier?

A

Appraisal value for commercial units 5 or more units.

Sales Price/Annual Gross Income = GIM

23
Q

What is reconciliation?

A

The act of analyzing and weighing the findings from the 3 approaches.

24
Q

What is PIW?

A

Property Inspection Waiver loans in Fannie Mae that eligible to use previous appraisal for current use.

25
Q

What is USPAP?

A

Uniform Standards for Professional Appraisal Practice, established by the appraisals standard board.

26
Q

What is AIR?

A

Appraisal Independence Requirements, Fannie Mae Initiated act to keep appraisals more independent.

27
Q

What is the appraisal process?

A 
1-Define the Problem
2-Determine the Scope of Work
3-Approaches - General Data, Specific, Data for Each Approach
4-Form Opinion by each of 3 Approaches
5-Reconcile Value for Final Opinion
6-Report Opinion
28
Q

What is the process of the Income Approach?

A 
Gross
Income
Vacancy
Expenses
Net Operating Income

GIVEN

Real Estate Principles & Practices Prep Updated for 20th Edition (23 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions