FINN 4413 Final Exam- Ch ?s

Scope of Work Rule

1. Identify the problem to be solved 2. Determine and perform the scope of work necessary to develop credible assignment results 3. Disclose the scope of work in the report

Ethics Rule

A USPAP rule that requires appraisers to avoid actions that could be considered misleading or fraudulent

Broker Price Opinion (BPO)

A broker's written opinion of the value of a particular property that may not be used in connection with the originating a federally related loan; not an appraisal.

Legal description

A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.

Metes and bounds description

A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the place of beginning.

Dominant tenement

A property that includes in its ownership the appurtenant right to use an easement over another person's property for a specific purpose.

b. a higher factor than found in the one-bedroom units

A rent survey reveals that buildings offering one-bedroom units have considerably lower vacancy factor than those with two-bedrooms, the appraisal should probably project: a. an average of the vacancy factors for all units surveyed b. a higher factor than found in the one-bedroom c. a lower factor than found in the one-bedroom units d. the same factor as found in the one-bedroom units

Range lines

A series of government survey lines running north and south at six-mile intervals starting with the principal meridian and forming the east and west boundaries of townships.

Township

A square normally 6 miles on a side. The Land Ordinance of 1785 divided much of the United States into a series of townships.

Leasehold estate

A tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest.

Township lines

All the lines in a rectangular survey system that run east and west, parallel to the base line six miles apart.

a. $800

An apartment owner spent $4,000 last year to replace five built-in stoves. In a 10-unit apartment house, what annual expense would be projected for replacement if all the units have stoves? Assume a 10-year life for all replacements? a. $800 b. $4,000 c. $16,000 d. $1,600

Record Keeping Rule

An appraiser must prepare a workfile for each appraisal or appraisal review assignment. A workfile must be in existence prior to the issuance of any report. A written summary of an oral report must be added to the workfile within a reasonable time after the issuance of the oral report

apprasial

An estimate of the current value of the property.

c. 10

An income property renting for $50,000 per year before expenses just sold for $500,000 cash. What was the gross income multiplier? a. 1/10 or 10% b. 5 c. 10 d. none of above

Life estate

An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.

Appraisal report

An opinion of a property's market value given to a lender or client with detailed market information.

d. all of the above

Assignment conditions include: a. hypothetical conditions b. extraordinary assumptions c. jurisdictional exceptions d. all of the above

a. provide unbiased and objective opinions of value

Besides assisting the public by advising them on questions of value, appraisal serve to: a. provide unbiased and objective opinions of value b. make market transactions conform to economics c. prove or disprove value estimates made by others d. none of the above

Subdivision map

Document showing division of land into two or more parcels, required before subdivision approval.

c. analysis of supporting data

Formal appraisals rely primarily on: a. A secret value formula b. intuition and experience c. analysis of supporting data d. facts and figures

zones, master plans, rent, control, subdivision requirements, zoning ordinances, etc.

Give six examples of government regulations based on the police power

Power of escheat

Governments right to acquire ownership of land when the landowner dies without an heir or a valid will

b. 36

How many sections are there in a township? a. 48 b. 36 c. 360 d. 100

b. excess rent

If market rent is less than contract rent, the difference is known are: a. overage rent b. excess rent c. percentage rent d. capital gain

b. the date agreed on in advance with the client

In appraisals, the effective date of value is: a. the date of the property inspection b. the date agreed on in advance with the client c. the day the appraisal is completed d. the date the appraisal is signed

c. by all consumers

Informal appraisals are performed: a. only by appraisers b. only by skilled real estate people c. by all consumers d. without the use of instinct

a. intuition and experience

Informal appraisals rely mostly on: a. intuition and experience b. facts and figures c. supporting data d. a value formula

Servient tenement

Land on which an easement exists in favor of an adjacent property (called dominant estate); also called a servient estate.

e. private feasibility studies

Legal transactions that often require appraisals include all of the following except: a. income tax casualty loss estimates b. property damage lawsuits c. eminent domain d. loan foreclosure e. private feasibility studies

method of annexation, adaptability, relationship of parties, intent, and agreements

List and define the five tests for a fixture

a. the potential gross rent

Market rent can be defined as: a. the potential gross rent b. the contract rent c. the average rent d. none of the above

Competency Rule

Need to be competent to appraise the property by the time you complete the appraisal report

b. "fee simple" ownership

One common appraisal assignment is to appraise the: a. value of the mining rights b. "fee simple" ownership c. value subject to an existing loan d. life estate

Trade fixtures

Personal property used in a business and can be removed by the lessee when the lease terminates.

Intangible property

Property recognized by law even though it has no physical existence.

Tangible property

Property that has physical existence and can be distinguished by the senses of touch and sight.

b. bank accounts for purchase of land

Real property includes all the following expect: a. the land and objects permanently affixed to the land b. bank accounts for purchase of land c. appurtenant rights d. that which is immovable by law

e. all of the above

Some of the important reasons for studying appraisal for: a. to improve your value estimation skills b. to help you pass real estate agent, broker, or appraiser examinations c. to help you understand other real estate courses d. to improve your ability to communicate with appraisers e. all of the above

b. define the appraisal problem

The appraisal process involved four steps, the first of which is to: a. choose an appropriate value approach b. define the appraisal problem c. view the property d. none of the above

Leased fee estate

The bundle of rights possessed by the landlord in a leased property, made up primarily of the right to receive rental payments during the lease term and ultimately to repossess the property at the end of the lease term.

Mutual obligation

The consent by both parties to a contract to pay, yield, or give up something in return for the benefits received.

c. the worth, usefulness, or utility

The general term value means: a. the function of a object b. the average use of an object to all people c. the worth, usefulness, or utility d. a good buy

Appraisal standards

The generally agreed upon practices for professional appraisers.

b. an estimate or opinion of value

The goal of an appraisal is: a. a fixing of value b. an estimate or opinion of value c. a statement of value d. a value determination

Power of eminent domain

The government's right to take property for a public purpose on payment of just compensation to the property owner.

Power of taxation

The inherent power of the state to raise income or revenue to defray necessary governmental expenses for a public purpose

c. those the appraiser intends to rely on it

The intended user of an appraisal report includes: a. only the client b. all parties likely to receive a copy c. those the appraiser intends to rely on it d. all parties not explicitly excluded

Remainder estate

The ownership interest subsequent to a life estate which, upon the death of the life estate owner, becomes a fee simple absolute interest.

Highest and best use

The possible use of a property that would produce the greatest net income and thereby develop the highest value.

c. the rents are too low

The property being appraised has 100% occupancy rate. What conclusion would you probably draw if the typical occupancy rate in the area were only 95%? a. advertising is superior b. the rents are too high c. the rents are too low d. management is better

Bundle of rights

The rights of an owner to possess, control, enjoy, sell, lease, mortgage, and dispose of the property.

c. taxation, escheat, police power, and eminent domain

The sovereign holds four specific rights relative to all private real estate: a. appurtenances, and eminent domain, police power, and escheat b. police power, taxation, ordinances, and bundle of rights c. taxation, escheat, police power, and eminent domain d. none of the above

Recorded map

The system of description used for subdivided land. The properties within a subdivision are assigned lot numbers on a plat map, which is then recorded. The location and dimensions of a particular lot can be determined by consulting the recorded plat

a. metes and bounds; recorded lot, block and tract; and government survey

The three common types of legal descriptions are: a. metes and bounds; recorded lot, block and tract; and government survey b. government survey, private survey, and county survey c. metes and bounds, acreage blocks; and government survey d. legal; informal; and house member

a. formal and informal

The two types of real estate appraisals are: a. formal and informal b. informal intuitive c. structural and formal d. none of the above

Competent parties

Those who are legally capable of entering into contracts.

Sections

To divide the hair by parting into uniform working areas for control.

b. $10,000 Explanation: 10,000*.07 = 700

Tom Smith has a savings account that just paid a $700 annual dividend. If the declared interest rate was 7%, which of the following represents the amount of the deposit? a. $1,000 b. $10,000 c. $7,000 d. none of these

Legal Transactions

Transactions occurring in a legal setting, requiring an appraisal

b. fee simple

Types of use restrictions includes all the following except: a. government b. fee simple c. private d. market

c. the appraiser is allowed by law or regulation not to comply

USPAP standards must be adhered to by state-licensed and certified appraisers when performing and reporting appraisals of real estate except when: a. the appraisal is federally related b. the client requires such standards not be followed c. the appraiser is allowed by law or regulation not to comply d. appraising commercial property

Uniform Standards of Professional Appraisal Practice

USPAP. set of guidelines to follow when providing appraisal services. Only applies to appraisals, not CMAs or BPOs.

Jurisdictional Exception Rule

Use when any part of USPAP is contrary to the law or public policy of any jurisdiction

a. real property and personal property

What are the two categories of tangible property? a. real property and personal property b. intangible property and real property c. real estate and intangible property d. none of the above

square of 6 miles per side, 36 sections

What is the shape, size, and area of a standard township?

one square mile; 640 acres

What is the shape, size, and area, or a standard section?

b. property taxes

Which of the following is an example of a specific expense item rather than a basic expense category? a. reserve of replacement b. property taxes c. variable expenses d. fixed charges or expenses

b. in writing

Which of the following is not necessarily required or a valid contract? a. competent parties b. in writing c. mutual agreement d. mutual obligation

c. free rent

Which of the following might be a classified as a tangible rather than an intangible amenity? a. pride of ownership b. a sense of security c. free rent d. work satisfaction

d. all of the above

Which of the following property features is/are important in the analysis of the gross income multiplier from comparable sales? a. expense ratio b. services included in the rent c. location d. all of the above

Contract

a binding agreement between two or more persons that is enforceable by law

Formal Appraisal

an appraisal conducted at a set time during the year and based on performance dimensions and measures that were specified in advance

Property

anything of value that is owned or controlled

Informal appraisal

conducted on an unscheduled basis and consists of less rigorous indications of employee performance

Principal meridian line

imaginary line running North-South; starts at the Sault Ste. Marie, runs perpendicular to Base Line

Personal property

movable items such as automobiles

Real property

physical property such as land and buildings

Real estate

property consisting of land or buildings

Consideration

something of value exchanged for something else of value

Police power

state power to enact laws promoting health, safety, and morals

Property taxation

tax based on the value of privately owned real estate, major sources of revenue for local and county governments. The taxes paid on a house for example, make the asset decrease in value (HP). The property taxes are a limitation on the rights of the property from which is not paid; you can and will lose your real estate due to the fact that it becomes a lien.

Market value

the price at which property would sell

Eminent Domain

the right of government to take private property for public use

Easement

the right to use land for a specific and limited purpose