Unit 4 Ch 3 Section 2 Real Estate Valuation and Appraisal

Question 1

used to determine value for a variety of purposes including the transfer of property ownership, financing and credit, taxation, insurance, and condemnation.

Answer 1

Appraisals

Question 2

the worth of a property is determined by an (Blank)

Answer 2

Appraisal

Question 3

the act or process of developing an opinion of value of the property on a given date.

Answer 3

appraisal

Question 4

at the core of the appraisal process is the

Answer 4

determination of value, which is the relationship between the thing desired and the purchaser.

Question 5

two basic types of value are

Answer 5

market value and value in use

Question 6

the four elements which must be present for a property to have market value are

Answer 6

demand, utility, scarcity, and transferability

Question 7

value can be influenced by

Answer 7

physical factors, economic influences, political factors, and social trends.

Question 8

the appraisal process can be divided into how many steps?

Answer 8

six distinct steps

Question 9

the appraiser must indicate the purpose of the appraisal and identify and describe the property in question. What step in the appraisal process is this?

Answer 9

This is the first step in the appraisal process

Question 10

the appraiser must determine the problem to be solved, evaluate the assignment, and make the scope of work decisions. What step is this?

Answer 10

the second step in the process

Question 11

the appraiser must obtain and verify data which will help determine the property’s value. Once the required and appropriate data has been gathered, the appraiser will then be able to decide on the proper appraisal approach to be used. What step is this in the appraisal process?

Answer 11

this is the third and fourth step in the process

Question 12

the appraiser will make a final value estimate by reconciling and correlating all of the relevant data. What step is this in the appraisal process?

Answer 12

this is the fifth step in the appraisal process

Question 13

the appraiser will present his or her findings in the appraisal report, which step is this in the appraisal process?

Answer 13

the final step, number six.

Question 14

What are the three main approaches to value that an appraiser will use throughout the process?

Answer 14

the sales comparison approach, the cost approach, and the income approach.

Question 15

a valuation method used that compares one property to similar ones that recently sold in the area.

Answer 15

the sales comparison approach

Question 16

a valuation method that estimates the price a buyer should pay for a piece of property, works on the assumption that it does not make sense to pay more for a property than it will cost to build an equivalent property.

Answer 16

the cost approach

Question 17

a valuation method that uses the income the property generates to estimate fair value; its used by taking the net operating income (NOI) of the rent and dividing it by the capitalization rate.

Answer 17

the income approach

Question 18

calculated by dividing a property’s net operating income by the current market value.

Answer 18

capitalization rate

Question 19

Several professional associations have developed, and national standards and laws have been created to regulate the industry, The Appraisal Foundation (TAF) includes

Answer 19

the Appraiser Qualifications Board, the Appraisal Standards Board, and the Appraisal Practices Board.

Question 20

As of 1991, the Texas Appraiser Licensing and Certification Board (TALCB) has been responsible for

Answer 20

certifying real estate appraisers

Question 21

Land owned completely, without any limitations or conditions

Answer 21

fee simple absolute estate

Question 22

refers to its above-grade, finished living space- what’s also commonly referred to as square footage.

Answer 22

the gross living area (GLA)

Question 23

a tool that real estate agents use to estimate the value of a specific property by evaluating similar ones that have recently sold in the same area.

Answer 23

Comparative Market Analysis

Question 24

a real estate professionals’ opinion of a property’s value

Answer 24

Broker Price Opinion (BPO)

Question 25

the worth of a firm when the assets of the firm are sold, in other words, the estimated amount of money received when its assets are sold, and debts paid.

Answer 25

Liquidation Value

Question 26

a property’s determined valuation to calculate the appropriate tax rates. Considers sales of similar homes, square footage, current market conditions and home inspection findings in its final determinations.

Answer 26

Assessed Value

Question 27

blank is the value of a property that must be sold immediately

Answer 27

I dont know, guessed Liquidation but could be wrong, double check and edit. I was correct

Question 28

What helps decide which appraisal report is appropriate for communicating the results of the appraisal process?

Answer 28

My guess is the intended use, double check and edit. I was correct.

Question 29

Members of the Appraisal Institute hold which of the following designations?

Answer 29

1. member appraisal institute 2. senior residential appraiser 3. senior real estate analyst 4. all choices apply ; I have no idea, for fun purposes my stab at it will be all choices apply, I was correct.

Question 30

In the sales comparison approach, any aspect of a real estate transaction or any characteristic of the property that may affect the property’s sale price is a(n):

Answer 30

1. principle of competition 2. element of comparison 3. element of correlation 4. principle of progression Not 100% certain here but I think the correct answer is the element of comparison, I was correct.

Question 31

a categorization of property characteristics that cause real estate prices to vary

Answer 31

Elements of Comparison

Question 32

the idea that the value of a house increases when more valuable houses are built in the area

Answer 32

the principle of progression

Question 33

An appraiser valuating a property looks at the blank, rather than the contract rent, in order to discover the fair income of the property.

Answer 33

1. appraised rent 2. economic rent 3. express agreement 4. Vacancy factor Taking a fun guess, I think its appraised rent, I was wrong here, its actually economic rent. An appraiser valuating a property looks at the economic rent, rather than the contract rent, in order to discover the fair income of the property.

Question 34

Market value of improved real property is least affected by:

Answer 34

1. an open market 2. its exchange value 3. its objective value 4. the original cost of materials Taking a fun guess here, I think I need to go back and read more, Open market. I was incorrect, its actually #4, Market value has very little to do with original cost. Neither cost nor appreciation is considered an essential element of value.

Question 35

In the capitalization approach to appraisal, the most difficult step to determine is:

Answer 35

1. gross income 2. effective net income 3. net income 4. the capitalization rate

Fun guess here, I think its effective net income or the NOI ( Net operating income) which wasnt listed; I was incorrect, its actually the capitalization rate, choosing a capitalization rate is the hardest part for appraisers using the income approach.

Question 36

Effective July 1, 1991, the authority to certify real estate appraisers was transferred from the TREC (Texas Real Estate Comission) to the:

Answer 36

TALCB or the Texas Appraiser Licensing and Certification Board

Question 37

the value of high-end real estate may be diminished by having lower-end properties in the same vicinity. What term is used here?

Answer 37

regression

Question 38

In determining the value of an unimproved parcel of land, the first thing to establish is:

Answer 38

1. listing price 2. purchase price 3. highest and best use 4. the original cost of the land

Completely guessing here, I’ll go with the #3, I was correcto mundo!

Question 39

to calculate a gross rent multiplier accurately, what does the appraiser need from comparable properties?

Answer 39

1. net income and selling price 2. Original cost and the debt service 3. Annual rent and the selling price 4. Operating expenses and the capitalization rate Fun guess here, I think its #4, I was incorrect, its actually #3 the annual rent and the selling price. Gross rent is income (calculated annually or monthly) received before any expenses are deducted. Calculate a gross rent multiplier to compare properties to see if they are priced right or are above or below market value. If you know that most rental properties are selling for around eight times the gross annual multiplier (eight times gross), simply divide the listed price by the gross income to arrive at the multiplier.

Question 40

a post-contract attachment that modifies, alters, or totally changes some of the terms of a previously established contract.

Answer 40

contract addendum

Question 41

all of the following are sources of property data for an appraiser, except

Answer 41

1. the internet 2. a visitor’s observation 3. government publications 4. newspapers and magazines

a visitors observation, I was correct here.

Question 42

When analyzing comparables, what will an appraiser do to “equalize” each comparable sale to the subject property?

Answer 42

apply adjustments; After analyzing and verifying the comps, appraisers narrow down the number of sales, listings, and pending sales to those most similar to the subject. The next step is to apply adjustments to the comps. Appraisers apply adjustments to the sales prices of comparable properties in an effort to equalize the comparable sale to the subject property.