chapter 7

which of the following are not considered representative sales; thus unusable as a comparable sale for a market value estimate?

- a sale forced by a local property tax jurisdiction - a voluntary sale in lieu of foreclosure - a sale to a family member

valuation of real estate is complicated by the

- immobility of real estate - lack of perfect substitutes - lack of observable transactions

the highest and best use of a property must be

- legally permissible - physically possible - financially feasible

which of the following statements about property value are true?

- the fair market value is the most probable selling price - the owner's specific bundle of rights affects fair market value

USPAP standards require that, when using the sales comparison approach, appraisers use how many comparables?

USPAP has no requirement regarding the number of comparable sales

a good comparable property is a property that the typical buyer would consider

a close substitute for the subject

an adjustment for differences in economic characteristics is not usually required when valuing

a personal residence

typically, reconciliation of final adjusted sale prices involves the calculation of

a weighted average

both the buyer and seller of a home that recently sold knew the house needed a new roof. the buyer replaced the roof immediately after purchasing the home. an appraiser using this sale as a comparable should

adjust the comparable sale price upward by the cost of the new roof

adjustments made to the sale price of comparable properties for expenditures made after purchase are

always positive

the organization with independent authority over the generally accepted standards of appraisal is the

appraisal foundation

if an important characteristics of the comparable property, the sale price of the _____ property must be adjusted ______.

comparable, downward

repeat-sale analysis is the process of

comparing the sale prices of properties that have sold twice

which approach would probably be most relied upon in the valuation of a relatively new church?

cost approach

which approach would probably be most relied upon in the valuation of relatively new church?

cost approach

if a comparable property sale included some valuable personal property, the sale price of the comparable is usually adjusted _____ by the _____ of the personal property

downward, current market value

true or false a location adjustment is not required when the comparable property has a superior location than the subject.

false

true or false the fact that the last sale of a house was made by the seller to avoid default and foreclosure likely had no effect on the sale price.

false

true or false the income capitalization approach is the most important method for appraising single-family residences.

false

true or false the required adjustment for difference in legal estates is typically a relatively simple adjustment.

false

unless the characteristics of the comparable property are _____ to the subject property, adjustments must be made to the sale price of the comparable property.

identical

form reports are generally requested by

lenders

"MLS" stands for _____ _____ _____

multiple listing services

to the extent the comparable property is physically lacking in some respect to the subject, the sale price of the comparable

must be adjusted upward

the sale of a single-family, detached home that is currently rented to a music studio should not be used as a comparable property if the subject is a single-family, detached home

occupied by the owner

as the final step to arriving at the indicated value of the subject property based on the sales comparison approach, the appraiser must

reconcile the final adjusted sale prices of the comparable properties

the economic principle of _____ implies that the value of the subject property is determined by the sale prices of comparable properties.

substitution

required sale price adjustments are divided by USPAP into two major categories including

transactional and property adjustments

true or false a comparable property having different legal estate than the subject property should generally not be used as a comparable.

true

true or false according to USPAP, the appraiser should consider the use of all three appraisal approaches, even though all three may not be appropriate.

true

true or false the final value number produced by reconciliation of the resulting numbers from two or more approaches to value is termed the final estimate of value.

true

generally, estimated land value plus reproduction or replacement cost will set the _____ value of the property.

upper limit to the

each approach to valuation has its strengths and weaknesses. in arriving at a final opinion of value, the appraiser should

weight the strengths and weaknesses of each approach, as well as the reliability of the data collected for each approach

the final estimate of market value is usually a _____ average of the indicated values from the different approaches.

weighted

the rules for making sales adjustments include which of the following?

- adjust the sale price of the comparable toward the subject property - make transactional adjustments in the proper order - use market-related adjustments

typical sources of construction cost estimates include

- construction cost estimating firms - builders - R.S. Means

the required number of comparable sales

- decreases if those comparables already selected are very similar to the subject property - increases as the reliability of comparable sale information decreases

it is often necessary to value the site independent of the improvements to the site. which of the following approach requires a separate site valuation?

- highest and best use analysis - cost approach

from the appraiser's point of view, replacement cost estimates are preferred over reproduction cost estimates because

- it is often impossible to build an exact replica of the subject property - they are less time consuming to obtain

in order for the sale price of a property to be considered a good comparable for the subject,

- it must be a property that typical buyers would consider a substitute - it must be an arms-length transaction

the concept of market value in formal appraisal practice includes

- most probable selling price - competitive market - buyer and seller acting prudently

in the cost approach to valuation, which factors of depreciation are considered?

- physical deterioration - functional obsolescence - external obsolescence

conventional approaches to estimating the market value of real estate include the

- the income approach - the sales comparison approach - cost approach

which of the following may be greater than market value for a given property that recently sold?

- transaction price - investment value to buyer

a house sold for $650,485 five months ago. a very comparable house sold yesterday for $670,000. the monthly rate of increase for in property prices is ______ percent.

0.60

if all three approaches to value are used by the appraiser, the appraiser must reconcile _____ indicated values.

3

to complete the sales comparison approach, the appraiser _____ the adjusted sale prices of the comparable properties to obtain an indicated value for the subject.

reconciles

the estimated cost to build an equally functional structure using modern methods is generally referred to as the

replacement cost

the most reliable approach to estimating vacant land values is usually the

sales comparison approach

most appraisals of single-family homes are

summary reports

each required transactional and property adjustment is made to

the adjusted sale price of the comparable after the prior adjustment

a comparable sale price should be adjusted for the terms of sale when

there was favorable seller-provided financing

reproduction cost is defined as the cost

to build an exact replica of the subject property

_____ adjustments focus on the terms of the deal and the motivation or bargaining ability of the participants.

transactional