Valuation and market analysis #1 Flashcards
appraisel
a formal opinion in value that a real estate appraiser assigns, based on supportable evidence, for a specific purpose, party, property.
appraisers
estimate the value of a building or a piece of land
valuation
the process of forming an opinion of a property value
the appraiser used 7 steps but asked for 4 in the test to appraise a building or land which are
- state the problem
- identify data needed
- gather and analyze
- data determine the highest and best use
cost
the amount to recreate a property if it disappears over the face of the earth today
market price
is the amount a buyer pays for a property and the seller accepted
value
is a property worth and may not equal price or cost
market value
is the most probable price a property will sell for in an open market if neither the buyer nor seller is under duress
4 characteristics of value are…
the acronym for this is DUST
- Demand = how popular or desired property is
- Utility = The property function
- Scarcity = relates to market supply
- transferability = the ease with which another person can purchase the property.
Principal of conformity
a property value determined by how similar it is to the neighborhood or how well it conforms to its surrounding area
(like if it placed in another place with different houses it losses value than being on a place where all the houses are the same)
Principal of progression
the idea that the value of a house increases when more valuable houses are built in the area.
Principal of regression
that the value of the high-end real estate may be diminished by having lower-end properties in the same vicinity.
Principal fo assemblage
When two parcels (or more) of land are combined to be sold as one parcel together,
Principal of plottage
increase in value that occurs when two adjacent parcels are combined into a single one
Principal of anticipation
a method by an appraiser where the appraiser uses the income approach to determine the value of a property. The appraiser will estimate the present worth of future benefits for the property.
Principal of contribution
states how an additional improvement could affect the values of the overall properties
The principle of substitution
A prudent investor would pay no more for an income-producing property than it would cost to build or purchase a similar property.
the principal of competition
what else is available
the sales comparison approach
a real estate appraisal method that compares one property to comparables or other recently sold properties in the area with similar characteristics. .
cost approach
a real estate valuation method that estimates the price a buyer should pay for a piece of property is equal to the cost to build an equivalent building. In the cost approach, the property’s value is equal to the cost of land, plus total costs of construction, less depreciation.
External depreciation (aka economic obsolescence)
caused by factors outside of the property like the airport nearby causing noise etc.
Functional obsolescence
form of depreciation caused by defects in design
or loss in value
physical deterioration
occurs with wear and tear
comparative market analysis (CMAs)
help clients make price decisions
2 types of physical depresiation are….
curable and uncurable
The assessed value
is a property’s determined valuation to calculate the appropriate tax rates. An assessment considers sales of similar homes, as well as home inspection findings, in its final determinations. When it comes to selling a home, the assessed value is the most widely accepted dollar value of your home
market value
refers to the actual value of your property when placed at a sale on the open market. It’s determined by buyers and defined as the amount they are willing to pay for purchasing the home.
Who typically prepares a comparative market analysis? CMA
Who typically prepares a comparative market analysis?
Which department typically decides which development projects require a permit or approval?
building department
The primary purpose of the Real Estate Settlement Procedures Act is to ensure that buyers ______.
Know all settlement costs up front
What’s another term for a valuation that’s an unbiased opinion of value?
Formal appraiser
Maxine is purchasing a small craft shop, including the underlying real estate. She applies for a commercial loan from her federally insured bank to complete the purchase. Is Maxine’s transaction covered by the Real Estate Settlement Procedures Act?
No; commercial and business loans are exempt from RESPA requirements.
Which of the following statements is true regarding timeshare estates?
Timeshare estates can be sold or passed down to heirs.
Which of the following is a promise from the borrower to repay a certain sum of money to another party (the lender or holder of the note) under specified terms?
promissory note
What’s a quiet title action?
An action to locate and notify all who may have some claim on the title, and determine the validity of all claims
Over how many years is a residential income-producing property depreciated?
27.5 years
Marlon and Leah are interested in buying a home in a new homeowner opportunity area. The 100-year-old row house was renovated and is like new on the inside. The property taxes decreased by more than $5,000 last year. What’s the likely reason for this?
tax abadement
a tax abadament program
will lower the property taxes on a given property for a set amount of time. This is typically in response to some sort of improvement or rehabilitation, or for some new construction properties.
Identifying the purpose of the appraisal leads the appraiser to do what next
identifying data needed
What is the purpose of the interstate land sales full disclosure act?
To prevent the fraudulent sale of property across state lines
Compared to working without a buyer agency agreement, who works under a buyer agency____
Receipts a higher level of service
What’s the definition of a land contract
Sellers provide funds or credit to buyers in order to close the transaction. The buyer makes payments directly to the seller
Proposed Sony ordinances must undergo test to determine their validity. this test include which of the following question?
Ordinances must not be discriminatory
When a lower quality property is adjacent to a higher quality property, it can diminish the value of the higher quality property that what economic principle values is
Regression
What might did financial implications be if I buyer needed to use individual retirement account funds towards a down payment
First time home buyers can use up to $10,000 of their IRA funds penalty free for down payment and closing cost
Which type of commercial leads does the tenant pay some or all the expenses?
With the net lease net lease
System home buyers can access an additional amount up to $—- of their ira accounts over and above withdrawals equal to their contributions
10,000
What organization administers and enforces the brokers act through the licensing process?
The Maryland Real estate commission
Your meeting with prospective clients in person for the first time that what are you required by law to explain to them
The types of agency relationships they may have with a real estate professional
Which act gives companies the right to sue a competitor for making the deceptive ad claims
The lanham act
How do predatory lenders take advantage of consumers?
Making loans to consumers who can afford them
When perspecting and soliciting for new business, licenses should be familiar with which feather act question
Did you not call inflammation act, can spam act, and junk fax prevention act
How many approaches to value do your prices generally use question
They used 3 approaches the cells compression, close to reproduce, and income
What type of tendency can be automatically created if a tenant under at least stays beyond the leases terms, and the landlord continues to accept rent from the tenant?
Month to month tenancy
What happens when a married couple who owns a property as tenants by the entirety divorce?
Their ownership changes to tenants in common
Which of the following is an action that real estate licensees may take without practicing law illegally?
Use existing forms that an attorney has reviewed
Who generally rides a broker’s price opinion?
A real estate broker for a lender
Which of the following financing types involves the cell of personal property with real property
Package
When must informed consent for dual agency be obtained
At the time with the licensing and customer have entered into an agent client relationship
Which of the following is a potential drawback to a real property exchange?
Taxable gains
Eastman’s are a type of encompass that can affect the property that which of the following is true about Eastman’s
Eastman’s are often established by written agreement between the parties
What instruments are commonly used to secure the purchase of real property?
A mortgage and deed of trust
