Appraisal

A residence in a cooperative, unlike a condominium, is legally considered ______

Personal Property

The sales comparison grid in the URAR presents what type of information needed by an appraiser using the sales comparison approach?

Quantitative

What step in the appraisal process must be completed before the final appraisal value can be reported?

Reconciliation

Reproduction costs vs Replacement cost

Reproduction costs estimate how much it would cost to exactly reproduce an asset or property to exact specifications if damaged or lost, for insurance purposes. Reproduction cost is not the same concept as replacement cost, which is the cost of replacing an asset or property and not reproducing it

To determine property value with the cost approach, the appraiser subtracts the accrued depreciation from the ______ and then adds the site value.

Reproduction/replacement cost

Capital recapture

Return of investment, or _______ is the return of principal at the end of ownership.

Cost per front foot

Sales price/frontage measurement

Remaining Economic Life

Sam is looking at a residential structure and trying to determine how much longer from that point in time the house can be used as a residence. What's Sam measuring?

What's the correct order for the first two steps in the appraisal process?

State the problem, then identify the data needed.

Information shown in this area of the URAR contains the property address, taxes, borrower, seller, and occupant.

Subject

What numbers does the appraiser reconcile to determine the indicated value by the sales comparison approach for the subject property in the URAR?

The adjusted sales prices of the comparable properties

Potential Gross Income

The amount of rental income the property could produce with 100% occupancy and with all tenants paying full rent; also called scheduled gross income.

definition of land

The earth's surface, extending downward to the center of the earth and upward to infinity, including permanently attached natural objects

useful life

The length of service of a productive asset

Economic

The presence of neighborhood amenities, such as shopping and schools, is an example of which real estate value influencer

Philip owns land in a state where growing marijuana is illegal. He wants to set up a small marijuana growing operation and export to states where marijuana has been legalized. He asks his attorney about the possibility. "No," his attorney explains. "It's not possible. Although you own the property outright, the right of ______ only allows you to manage the property in ways that are legal in this jurisdiction.

The right of Control

Escheat

The state takes property upon an owners death if there is no will & no heirs exist.

using the direct capitalization method to calculate a value for an investment property

This method converts a single year's expected income into a market value.

Why does an appraiser convert the rent for a subject property to annual dollars per square foot?

To effectively compare rents from different buildings using a common unit of measurement

Why might an appraiser look at title reports

To verify that the owner has a clear title to the property

How are sections and townships related to one another, relative to the rectangular government survey system?

Townships are divided into sections

Which of the four methods used to find the reproduction cost of a structure is considered the second most accurate method?

Unit-in-place

Income Approach Formula

Value = capitalization rate ➗ net operating income

The index method

Way of estimating building reproduction cost by multiplying the original cost of the subject building by a factor that represents the percentage change in construction to the time of valuation requires knowing the original construction cost (without land) of building in question. Multiply that original cost by a number that takes into account the increase in construction costs since the building was built.

Appraisal of lease value

When conducting an appraisal of lease value, the appraised value is divided according to the parties' interests as attributed in the lease.

Why might the transfer of a joint tenant's or tenant in common's interest decrease the value of a property?

When the co-owners can't agree to sell the entire property, potential buyers must purchase as a co-owner to the existing owner(s).

The U.S. Green Building Council

Which organization issues the LEED certification

form reports

Which type of appraisal report makes use of pre-printed documents?

Area maps

a good source of general data, including information about the physical characteristics of a market area for an appraiser

Easement Appurtenant

a right of use that continues from owner to owner that involves a relationship between two parcels of land: a dominant parcel that benefits from a servient parcel

Using this common method of reconciliation, an appraiser assigns specific percentages to each approach to value used to arrive at a final estimate of value. This is known as reconciling appraisal values through ______.

a weighted average

Allocation Approach

an appraisal technique that involves gathering information about comparable site values of recent sales and creating a ratio between the land/site value and total value. This ratio is then applied to the property that is to be appraised.

Formal appraisal

another term for performing a valuation on a property

Net Operating Income (NOI)

applied to the capitalization rate when using an income capitalization method of appraisal.

rafters

beams that support a roof (a framing member)

NOI ÷ V = R is the formula used to calculate what?

capitalization rate

plat map

detailed map illustrating the geographic boundaries of individual lots (usually begins with a metes & bounds land description)

partition

divide into parts

Income Capitalization Approach

method of estimating the value of a property by applying a rate of return to the net income it produces (

MARIA

method, adaptability, relationships, intention and agreement. Used to help in determining if an object is a fixture and a part of the real property or if it is personal property.

Income approach to evaluating property

net operating income / the capitalization rate

Quantity Survey Method

of the four methods used to find the reproduction cost of a structure requires the appraiser to know every facet of building construction

Observed condition

of the four methods used to measure depreciation does the appraiser estimate the property's loss in value for both curable and incurable items of depreciation

enjoyment

real property ownership right that protects the owner from harassment or interference

Riparian

relating to or situated on the banks of a river.

littoral

relating to or situated on the shore of the sea or a lake.

C1 to C6 rating scale

scale do appraisers use to indicate the quality of workmanship, materials, and finish of the subject property and comparable properties (C1 = "like new" C6 = "major repairs needed"

the sales comparison

shows what the market is doing.

Four methods used to find the reproduction cost of a structure

square footage, unit-in-place, quantity survey, and index method

Evaporator

takes heat from the air and brings it to the refrigerant

Insured value

the cost of replacing a building in the case of total loss

Accrued Depreciation

the loss in value from reproduction or replacement cost new due to all causes except depletion, as of the date of appraisal

Where's the load carried when a roof truss system is in place?

the outer walls

The Right of Exclusion

the right to keep others from entering or using the property

Dollar adjustment and percentage adjustment

the two types of adjustments an appraiser can make in the sales comparison approach

Entrepreneurial profit

type of cost included in the quantity survey method relates to the cost associated with the developer's function

age-life method

"see, straight-line method."

An appraiser is using the land residual technique to determine an investment property's value. The building is valued at $500,000, and the building cap rate is 10%. The total NOI is $150,000 per year. What's the amount of NOI the land must earn?

$100000

An appraiser calculates the market rent for an eight-unit apartment building as $1,000 per room per year. Each unit has three rooms. The property owner lives in one of the units. There are no other sources of income. What is the potential gross income for this property?

($1000 x 3)(8) = $24000

USPAP

(Uniform Standards of Professional Appraisal Practice)

Joint Tenancy

A form of concurrent ownership, which occurs when two or more persons own a single estate in land, with right of survivorship. Must have equal shares, right to partition.

survey

A professional, on-site measurement of the lot lines and dimensions of a property

living trust

A trust created by a property owner during his/ her life time for the purpose of providing financial care for the family or self. (Transfer ownership before death and avoid probate)

Testamentary Trust

A trust that is created by will and therefore does not take effect until the death of the testator.

To determine property value with the cost approach, the appraiser subtracts the ______ from the reproduction/replacement cost and then adds the site value.

Accrued depreciation

Research and data analysis

An appraiser's workday is likely to involve these activities

Which method of yield capitalization simplifies the discounting process through the use of published financial tables?

Annuity capitalization

Which of the following groups is responsible for developing the minimum federal licensing and certification requirements for real property appraisers?

Appraisal Qualifications Board

What are improvements with regard to property?

Artificial attachments to land that include items such as fencing, buildings, and walkways

Why do both real estate professionals (in their CMAs) and appraisers (in the sales comparison approach) use comparables?

Because of the principle of substitution

Lenders like to see the subject property "bracketed" in the appraisal. This means ______.

Comparables that are both superior and inferior units of comparison are used

Which type of cost included in the quantity survey method has to do with the cost of construction materials and the labor involved in the actual construction?

Direct Costs

How is gross rent multiplier calculated?

Divide comparable property sales price by comparable property rent.

market extraction method, an appraiser calculates the depreciation rate for a comparable property by ______

Dividing the dollar amount of depreciation by the reproduction cost

gross adjustment percentage calculated in the sales comparison approach

Dividing the total dollar adjustment by the comparable's sale price.

NOI = Effective Gross Income minus total expenses

Effective Gross Income = Gross income minus vacancy estimate

The statistical mode is determined by which of these methods?

Find the value in the data set that occurs most often

What could discolored soil, soft spots, or mounds on the land indicate?

Former waste disposal site

______ means that a building is unusable for today's needs. Some of these will be curable defects and some will be incurable.

Functional obsolescence

What's the name of the nationwide codes that provide standards for residential construction across the country?

I-Codes®

External Obsolescence

Incurable depreciation caused by factors not on the subject property, such as environmental, social, or economic factors.

To determine the total reproduction cost new of a subject building using the quantity survey method, the appraiser takes the sum total of the direct costs and adds that to both the ______ and the entrepreneurial profit.

Indirect costs sum total

one of the drawbacks of using the allocation method?

It doesn't account for differences between properties.

If an appraiser were using three comparables, which factor would weigh most heavily?

Location

A wall that runs through the center of a home and is thicker than normal would indicate which type of construction?

Manufactured

Vapor Barrier

Material used to prevent the passage of vapor or moisture into a structure or another material, thus preventing condensation within them.