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Real Estate National > Unit 6 --Appraisals > Flashcards

Unit 6 --Appraisals Flashcards

1
Q

An estimate or opinion of market value supported by an analysis of relevant property data.

A

Appraisal

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2
Q

The Uniform Residential __________ _________ is the standard form typically used for residential appraisals.

A

Appraisal report

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3
Q

Appraisers have to be _________ or certified according to state law.

A

Licensed–and they may have further designations, such as a MAI (Member of the Appraisal Institute)

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4
Q

This is required for all federally related loans, such as conventional, FHA, and VA.

A

Appraisal

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5
Q

Appraisals are most often seeking to estimate market value for the ___________.

A

Lender

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6
Q

T or F: A competitive market analysis is the SAME as an appraisal.

A

False–CMA/BPO/BOV (Broker Opinion of Value), research on comparable properties that have recently sold, Broker may charge a fee to do one

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7
Q

The most probable price (in terms of cash or its equivalent) that a property should bring

A

Market Value

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8
Q

What someone has actually paid for a property is called what?

A

Market Price

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9
Q

T or F: DUST helps remember the essential elements of value

A

True

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10
Q

Transferability from dust in reference to elements of value…this means that title must be _________.

A

Marketable

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11
Q

When there is a finite supply and only land available in specific areas this is an example of __________.

A

Scarcity

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12
Q

To produce the best return on investment over time for a property it needs to have it’s ________.

A

Highest and Best Use–typically the current use, and can change over time

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13
Q

An __________ would show a property’s highest and best use.

A

Appraisal

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14
Q

Real Estate values are based on _____________.

A

Anticipation–future benefits determine current value

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15
Q

Price usually moves __________ of supply.

A

Opposite

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16
Q

The most important principal of value in appraisal is _____________.

A

Substitution–basis of the sales comparison approach and used in all 3 approaches, lowest price with highest value usually sells first

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17
Q

When values tend to move toward their surroundings it is the principle of ___________.

A

Conformity–value impacted when homes have different sizes or amenities in the same area

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18
Q

When the value of over-improved property declines it is called ________.

A

Regression

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19
Q

When the value of under-improved property increases it is called _______________.

A

Progression

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20
Q

Values are most _________ when properties are similar.

A

Stable

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21
Q

________________ determines the increasing and decreasing returns on the improvements.

A

Contribution–the value of an improvement is not what it cost to build,

22
Q

Increasing returns are improvements that add more __________ than they cost.

A

Value

23
Q

_________ is determined by what the market will pay, not the price of an improvement.

A

Value

24
Q

Sales comparison approach is also called the _______ _______ approach.

A

Market Data

25
Q

The most important method for valuing residential property and vacant land is the __________ approach.

A

Sales Comparison/market data

26
Q

Comparables and SF prices are the basis for the _____________ approach.

A

Sales Comparison

27
Q

The ________ property is never adjusted in when comparing comps.

A

Subject property

28
Q

Comparables with the least adjustments generally have a __________ indication of value.

A

Stronger

29
Q

Comps used should be houses sold between _________ months.

A

Within 6-12 months

30
Q

Lot size and the _________ are 2 very important measures when comparing comps.

A

Date and Sale

31
Q

Value of adjustments may be determined by doing a __________ ______ analysis.

A

Paired Sales Analysis–appraiser finds 2 properties that are nearly identical with the exception of the item being adjusted.

32
Q

The ________ approach is the most important method for new construction and unique properties or special purpose properties.

A

Cost approach–used when comps. or income is lacking

33
Q

__________ approach estimates cost to build as if built today.

A

Cost

34
Q

In cost approach, you add in value of land because it does not __________.

A

Depreciate

35
Q

Cost to build a replica is called _________ cost.

A

Reproduction

36
Q

Cost to build an improvement with same functionality/utility is the _________ cost.

A

Replacement

37
Q

Depreciation affects improvements, not ________.

A

Land

38
Q

Physical obsolescence is ________ and ________.

A

Wear and Tear–deferred maintenance that is typically curable

39
Q

Outdated electrical and plumbing fixtures are examples of ___________ obsolescence.

A

Functional-may or may NOT be curable

40
Q

When external factors outside one’s control from location or surrounds affects value it is ________ obsolescence.

A

Economic–usually NOT curable i.e. flight paths

41
Q

We use the _________ approach with properties that generate income, such as apartment buildings, shopping centers, or office buildings.

A

Income Approach–used because investors buy for the income the property produces

42
Q

Investors determine what they will pay based on the rate of return or _____________ rate.

A

Capitalization

43
Q

Capitalization is process of converting ________ income into present value.

A

Future

44
Q

Effective gross income - Operating expenses =

A

NOI–net operation income

45
Q

___________ = NOI - debt service

A

Cash Flow

46
Q

Income(NOI) = Cap Rate x _________

A

Value, I=RxV

47
Q

The ______ ________ ________ is used as a simplified alternative to capitalization that takes into account gross income but not vacancies, bad debts, or expenses–used for single family rentals.

A

Gross Rent Multiplier

48
Q

The appraiser ___________ the 3 approaches to vlue.

A

Reconciles–each approach is weighted and used to determine the subject property value–NOT AVERAGED

49
Q

Sales price and rental rates are used to determine the gross ________ ________.

A

Rent Multiplier

50
Q

First step in estimating value is to determine if the property contains all elements of ______.

A

Value–DUST, then the appropriate approach can be selected

Real Estate National (8 decks)

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