Valuation and Market Analysis 8%

Question 1

appraisals

Answer 1

A formal estimate or opinion as to the exact value of a home. A lender will not approve a loan unless it knows the exact value of the property. It serves as the basis for calculating the LTV ratio.

Question 2

Sales or Market Comparison Approach

Answer 2

the subject property is compared to similar properties that have recently sold

Question 3

cost approach

Answer 3

calculates the cost of rebuilding the subject property using present day construction techniques, materials, and costs. this establishes a replacement cost which is then adjusted by subtracting the cost of any necessary repairs, differed maintenance, or depreciation that may be affecting the subject property

Question 4

steps of the cost approach

Answer 4

1. determine value of land 2. calculate cost of construction, 3. estimate depreciation, 4. deduct depreciation, 5. add back value of land

Question 5

income analysis approach

Answer 5

used to estimate the value of income-producing properties such as apartments buildings, commercial and office buildings, and shopping centers. an income property is purchased for the purpose of generating a profit by leasing it at high rate

Question 6

comparative market analysis

Answer 6

a simplified version of the market data approach often prepared by real estate agents to quickly estimate the value of a property. lacks value adjustments contained in a market data appraisal report, and provides a value range rather than an exact figure

Question 7

competitive market analysis

Answer 7

a shorter version of a comparative market analysis where a real estate agent compares the subject property only to currently listed properties rather than including references to recently sold and expired properties