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BUSI 330 Foundations Of Real Estate Appraisal > Unit 2 > Flashcards

Unit 2 Flashcards

1
Q

If someone purchases an appraisal one behalf of someone else is the purchaser considered a client?

A

Yes

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2
Q

If someone purchases, an appraisal on behalf of someone else. Is the purchaser considered an intended user?

A

Yes

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3
Q

Who establishes the intended user?

A

The client tells the appraiser who they think the intended user are but ultimately the appraiser decides who the intended users are.

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4
Q

Is the appraiser responsible to someone who is not the intended user?

A

No the appraiser will put a risk statement to any users that are not stated as the intended user

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5
Q

If the appraiser knows, the report will be given to another person are they required to recognize them as an intended user?

A

No, for example, if used to give in to the other side in a litigation matter, the other side is not considered an intended user.

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6
Q

If the appraiser knows, the report will be given to another person are they required to recognize them as an intended user?

A

No, for example, if used to give in to the other side in a litigation matter, the other side is not considered an intended user.

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7
Q

What is the biggest factor in determining scope of work?

A

Intended use

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8
Q

What is the subject of an appraisal?

A

The interest in an asset or real estate.

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9
Q

What do assignment conditions include?

A

Assumptions extraordinary assumptions, hypothetical conditions, laws, regulations, jurisdictional exceptions, and other conditions that affect the scope of the work for the assignment.

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10
Q

What is an extraordinary assumption?

A

An extraordinary assumption is an assumption that directly relates to a specific assignment which if found to be false could materially alter the opinions or conclusions.

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11
Q

What is a hypothetical condition?

A

Hypothetical condition is a type of extraordinary condition.That is known to be untrue, but is treated as true. Example would be a praising a development that has not been started.

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12
Q

What is a jurisdictional exception?

A

It’s an exception that arises by a piece of legislation that expressly forbids the use of a professional standard, such as being required to appraise a parcel as an unencumbered regardless of incumbrances or rights of way. Another example would be expropriation laws that require the appraiser to ignore the effect of the project for which the land is taken when determining market value.

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13
Q

What are the requirements of a jurisdictional exception?

A

It needs to be identified at the beginning of the report.
It must disclose the part or parts of the valuation standard that are avoided by the law or regulation.
The affecting law or regulation must be cited.

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14
Q

What must the type of value information in the report include?

A

Specific type.
And cited definition as per standard or legal or some other cited definition.

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15
Q

Definition of market value

A

The most probable price as of a specified date in cash, orr in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming neither is under undue duress.

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16
Q

What is the IVS definition of market value?

A

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arms length transaction after proper marketing and where the parties had each acted knowledgeably prudently and without compulsion.

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17
Q

What is contributory value?

A
  1. A type of value that reflects the amount of property or component of a property contributes to the value of another asset or to the property as a whole.
  2. The change in the value of a property as a whole, whether positive or negative resulting from the additional deletion of a property component. Also called deprival value in some countries.
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18
Q

What does highest and best use mean if it is termed “in use”?

A

The highest investigation of the asset in use would provide a maximum value to the market participants principally through its use in combination with other assets as a group.

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19
Q

What does highest and best use mean if it is termed “in use”?

A

The highest investigation of the asset in use would provide a maximum value to the market participants principally through its use in combination with other assets as a group.

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20
Q

What does highest investigators refer to if it is termed “in exchange”?

A
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21
Q

What would highest best use refer to if it is termed “in exchange”?

A

The highest and best use of the asset is an exchange if the asset will provide maximum value to the market participants principally on a stand alone basis.

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22
Q

Define use value.

A

The value of a property, assuming a specific use which mayor may not be the property’s highest and best use.

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23
Q

What is the difference between use value and value in use?

A

Use value refers to the value as the property is being used or intended to be used. Value in use is identical to contribute or value.

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24
Q

What is the most common way to calculate value in use?

A

The value in use can be calculated by discounting back the rent savings available by owning the unit and the reversion at an appropriate rate.

25
Q

On what rate is investment value based?

A

Investment value is.
Based on the investor specified rate of return required to invest VS what the market would actually dictate.

26
Q

What does REIT stand for?

A

Real estate investment trust.

27
Q

How can insurable value be estimated?

A

By deducting non insurable items such as land value from market value.

28
Q

What is the difference between disposition value and liquidation value according to the Real Estate Appraisal dictionary?

A

Disposition value states under compulsion to sell whereas liquidation value states under extreme compulsion to sell.

29
Q

What is the definition of an interest?

A

Rights that can benefit or burden the land. Think easements, leases, etc.

30
Q

Define fee, simple estate or interest.

A

An estate containing the full bundle of rights and only limited by the fork governmental powers.

31
Q

Define leased fee interest or estate

A

Ownership interest held by the lessor, including the right to specify rent and reversionary rights

32
Q

Define leasthold interest or estate

A

Rights held by the lessee

33
Q

What are the six rights held in a fee simple estate?

A

The right to sell an interest
The right to transfer an interest
The right to listen interest
The right to occupy the property
The right to mortgage the interest
The right to give away an interest

34
Q

What is the difference between estate and interest?

A

The difference between a state and interest is possession or the power to exclude others.Alessi can have possession rights and be able to exclude the owner.That would give him an estate.A mortgage company would not have this right and it would be an interest.

35
Q

Give an example of an economic interest.

A

The most common type of economic interest is Elise.

36
Q

Give an example of legal interests

A

Life estates, eastments, or leases.

37
Q

Define springing (or shifting) executory interest.

A

When an interest transfers certain rights of ownership to designated party under certain contractual conditions such as the occurrence of a specific event. Example: child turning twenty one.

38
Q

What is the legal name of a right of access easement attached to a property? (Think dominant/servient tenement)

A

Easement appurtenant

39
Q

What is an easement by prescription or implication?

A

We’re recognized by law, It’s an easement that exists by virtue of tradition such as a right away through a private parcel to get to a public piece of land.

40
Q

What is an easily created by proprietary estopple?

A

Based on a legal claim where
- someone is given clear assurance that they will acquire a right over the property.
- they are reasonably reliable upon the assurance.
- they add substantially to their detriment on the assurance; and
- it would be unconscionable to go back on the assurance.

41
Q

Can expropriation be used to create an easement?

A

Yes, expropriation can be used to create temporary easements during construction of a utility or a permanent easement, resulting in infrastructure.

42
Q

Define statutory right of way

A

Right of way created by statute rather than agreement

43
Q

What is a license?

A

Not regarded as an interest but gives rights of user access to perform some activity on the land. Think hunting license.

44
Q

Define plottage value

A

Value created by amalgamating or “assembling” two or more parcels

45
Q

Define physical interests

A

Dividing a parcel either horizontally by a subdivision or amalgamation or dividing a parcel vertically by sub-terranean land rights and air space.

46
Q

What are financial interests on an estate?

A

Mortgage and equity (share)

47
Q

Define ownership in severality.

A

This is the legal term for individual ownership

48
Q

Define ownership in severality.

A

This is the legal term for individual ownership

49
Q

What is tenency in the entirety?

A

Ownership is held by both spouses in which neither has a disposable interest in the property during the lifetime of the other except through joint action.

50
Q

Define tenency and common

A

Undivided interests

51
Q

What does REOC stand for?

A

Real estate operating company

52
Q

What is a substantial concern in condominiums in an overbuilt market?

A

If the condominium developer goes out of business before all units are sold, existing unit holders may be responsible for maintenance fees for the entire condo despite only owning a portion of it.

53
Q

How does a co-op work?

A

Individuals purchase a share in the co-op. They have rights and obligations under the co-op agreement such as payment of debt servicing and maintenance costs, and potentially other inputs (physical work). To leave the co-op, the share can be sold back to the co-op. Can be NPO or equity.

54
Q

What are the 2 types of titled interests in timeshares otherwise known as fee timesharing?

A

Designated period of time at designated resorts or floating period of time during a specific portion of the year at specific resorts.

55
Q

What are the 2 types of non titled interests in timeshares?

A

Right to use interest for a specific period of time at a specific resort or network of resorts; or “points” only interests that can be used at various resorts in a proprietary network or vacation club system.

56
Q

Define floor price

A

The minimum price at which the seller is willing to sell their property.

57
Q

Define stealing price.

A

The maximum price the purchaser is willing to pay for the property

58
Q

1

A
59
Q

Define justified investment price

A

A value that is justified for a single owner based on their specific investment needs and wants

BUSI 330 Foundations Of Real Estate Appraisal (3 decks)

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