Valuation & Market Analysis

Question 1

A tangible or intangible feature that enhances and adds value to real estate.

Answer 1

Amenity

Question 2

A transaction that occurred under typical conditions in the marketplace where each of the parties were acting in their own best interests.

Answer 2

Arm’s Length Transaction

Question 3

The combining of two or more parcels of land into one larger parcel.

Answer 3

Assemblage

Question 4

A condition that exists in the real estate market when there are slightly more homes available than buyers.

Answer 4

Balance

Question 5

A way to convert a property’s income figure into an estimated value.

Answer 5

Capitalization

Question 6

A situation in the housing market when there are many homes available for sale, but few buyers.

Answer 6

Buyer’s Market

Question 7

Recently sold properties with similar characteristics (size, room count, design, utility, etc.) that are in close proximity to the property being appraised.

Answer 7

Comparables

Question 8

The need or desire for a specific good or service by others.

Answer 8

Demand

Question 9

A “rule” that says a particular item or feature of a home is only worth what it actually adds in value to that piece of property.

Answer 9

Contribution

Question 10

When a building is less desirable because of something inherent in the design of the structure.

Answer 10

Functional Obsolescence

Question 11

Law that says beyond a certain point, the added value of an additional feature, addition, repair, etc. is less than the actual cost of the item.

Answer 11

Diminishing Returns

Question 12

When something outside the control of a property makes it less desirable.

Answer 12

External Obsolescence

Question 13

A number derived from comparable rental property in an area, which then used to estimate the value of a piece of real estate. The GMRM is only used for one to four unit residential properties. COMPARE: Gross Income Multiplier, which is a variation used for commercial properties that uses annual income.

Answer 13

Gross Rent Multiplier (GRM)

Question 14

The actual dirt or soil on the ground. From a legal standpoint, also refers to everything under the ground to the center of the earth, and everything over the land into the air (within limits to allow for air traffic).

Answer 14

Land

Question 15

A variation of the GMRM which is used for commercial properties, but uses annual income figures.

Answer 15

Gross Income Multiplier (GIM)

Question 16

An increase in value by successful assemblage, usually due to a change in use.

Answer 16

Plottage

Question 17

Actual wear and tear on something due to age, the elements or other forces.

Answer 17

Physical Deterioration

Question 18

The price that a piece of real estate sold for in an actual transaction.

Answer 18

Market Price

Question 19

A principle that says the value of a home is held down by the other homes in an area. (Usually said about the “best” home in the “worst” area.)

Answer 19

Regression

Question 20

The appraisal process of analyzing the values derived from the different appraisal approaches to arrive at a final value estimate or opinion.

Answer 20

Reconciliation

Question 21

A principle that says the value of a home is helped up by the other homes in an area. (Usually said about the “worst” home in the “best” area.)

Answer 21

Progression

Question 22

Method for determining the cost of a building that relies on cost manuals (and is sometimes called the cost manuals method).

Answer 22

Square Foot Method

Question 23

A situation in the housing market when a large number of buyers are looking for housing in an area of limited availability.

Answer 23

Seller’s Market

Question 24

A physical characteristic of real property that says there is a limited supply of real estate; the perceived supply of a good or service relative to the demand for the item.

Answer 24

Scarcity

Question 25

Competitive Market Analysis - A method of determining the approximate market value of a home by comparing the subject property to other homes that have sold, are presently for sale, or did not sell in a given area.

Answer 25

CMA

Question 26

Law of economics that says for all products, goods and services when supply exceeds demand, prices will fall and when demand exceeds supply, prices will rise.

Answer 26

Supply and Demand

Question 27

A “rule” that says an informed buyer will not pay more for a home than a comparable substitute.

Answer 27

Substitution

Question 28

Uniform Residential Appraisal Report - A standard appraisal report form used by lenders and appraisers because it has been developed and approved by secondary mortgage market players Fannie Mae and Freddie Mac.

Answer 28

URAR