Valuation and Appraisal Flashcards
The four parts of an appraisal are:
Date
Description of the property
Estimate of value,
Signature of the appraiser
The nature of value incorporates the acronym DUST. The letters stand for:
Demand
Utility
Scarcity
Transferability
T/F. The appraiser uses the information accumulated to find an “average” value.
False
Which appraisal report has the most comprehensive records and backup information included (such as maps, photographs, etc.)?
Narrative
Which appraisal report is less formal, with a simple statement of value, usually less than a page long?
Letter
Which appraisal report is in the form of a “checklist” and most often used for institutional lenders?
Short
Of value in use and value in exchange, which is subjective?
Use
A neighborhood where all homes are similar in design and value illustrates the principle of:
Conformity
If most homes are approximately $60,000 in value and one is $100,000, the $100,000 home is an example of the principle of:
Regression
In an area of $100,000 homes, the $90,000 home is an example of:
Progression
Amenities are:
Pleasure items
A view would be considered a:
Intangible Amenity
A hot tub would be a:
Tangible Amenity
Define Assemblage
Joining two or more contiguous parcels of land together.
If putting two or more contiguous parcels of land together increases the value, that is:
Plottage
Which of these qualify as a “service” property?
a. Church
b. Home
c. Vacant lot
A. Church
The shared or common wall between two twin homes is called a _____ ____.
Party Wall
Name the 3 appraisal approaches:
Market Data (Comparison)
Cost Replacement
Income
Which is most expensive?
a. Cost Reproduction
b. Cost Replacement
a.Cost Reproduction
T/F The total square feet in a home is measured by inside dimensions.
False
The Gross Rent Multiplier (GRM) is found by dividing the purchase price by the gross rents.
True
The boundary of the lot that runs parallel to the street is called?
Front feet
How close to the street are you allowed to construct a building is referred to as the ___ ____ ____.
Set back line
Which is considered by the appraiser to be longer:
a. Economic life
b. Physical life
c. Appraised life
d. Amortized life
b. Physical Life
The last step (before the report) in the appraisal process is to _________ ___ _____.
Reconcile the data
What you paid for the property is the:
a. Price
b. Cost
Cost
- What you sell it for is the:
a. Price
b. Cost
Price
The first principle of appraising is:
Highest and Best Use
To determine highest and best use, the appraiser asks:
Is it legal?
Is it economically feasible?
What will bring the highest return now and in the future?
The appraisal principle that states: “No prudent buyer will pay more than he has to in order to get what he wants,” is:
Substitution
“An improvement must add its cost to the value of the property,” is the principal of:
Contribution
The opposite of plottage is:
Subdivision
A five-bedroom home with one bathroom is an example of _______________ obsolescence.
Functional
A home in an area where property taxes have been markedly increased is an example of external, obsolescence or
Economic
T/F. To qualify as a “service” property, it must be used by the public and also be non-profit.
True
T/F. To appraise a church, the most effective approach would be the cost approach
True.
The only approach that gives a separate value on the land is the _______________ approach.
Cost
What appraisal method would be used for a warehouse?
The cubic foot
The formula which takes several comparable properties and makes adjustments to make them look as much as possible like the subject property is the __________ ______ Approach, also known as Comparison Approach.
Market Data
To determine value using the capitalization approach, the NOI (net operating income) is divided by the ____ ____
Sale Price
T/F The higher the cap rate the lower the risk.
False
The higher the cap rate the lower the purchased cost.
True
The property being appraised is called the _________________ property.
Subject
A “quick and dirty” estimate, or “rule of thumb” for arriving at a value for investment property is the:
Gross Rent Multiplier
Gross Rent Multiplier Formula:
Sale Price/Annual Gross Rent
