Module 9: Market Value

Which of the following statements is true concerning the components that define market value?

Market value requires terms of cash, or terms equivalent to cash. Market value is based on cash, or cash equivalent terms.

Market Value is expressed as the ___________________ price.

Most probable

Market Value

A type of value, stated as an opinion, that presumes the transfer of a property, as of a certain date, under specific conditions set forth in the value definition that is identified by the appraiser as applicable in an appraisal

Estimating market value for federal financial institutions requires identification of the desires and priorities of

well-informed buyers and sellers.

Which of the following would be considered reasonable exposure of a residential property offered for sale in a competitive market?

whatever amount of time is typical exposure for similar properties in the market

Concessions

a financial payment, special benefit, or non-realty item included in the sale contract or rental agreement as an incentive to the sale or lease. Seller concessions might include personal property, cash rebates, mortgage buydowns, paying closing costs

Market value is

the amount of money a property should sell for on the open market.

What is the date of the value opinion?

Effective date

Once discount point

Equals 1% of the mortgage amount

Market value is based on what economic concept?

Exchange Value

Rita purchased a timeshare property that included a one-week expense-paid trip to the Cayman islands as an inducement to buy the property. The trip was valued at $3,000. if the property sold for $28,000, what is a reasonable cash equivalent price for the property?

$28,000 - $3,000 = $25,000

Non market financing terms may include:

Existing mortgage at a favorable interest rate, wraparound loans and loans with below-market or blended interest rate

The following are examples that might not meet the definition of market value due to exposure time issues:

1. Liquidation, forced sale (sheriff's auction) 2. Excessive or limited time on the market

Buyer and seller each should act:

1. Prudently 2. Knowledgeably 3. For self-interest 4. Unaffected by undue stimulus

Effective date can be expressed in three (3) ways"

1. Retrospective (past) 2. Current (present) 3. Prospective (future)

Discount points

A percentage of the loan amount that a lender charges a borrower for making a loan; may represent a payment for services rendered in issuing a loan or additional interest to the lender payable in advance.

Which of the following is NOT a part of the market value definition used by federal financial institutions?

A. the property sells in 90 to 120 days B. payment is made in cash or cash equivalent terms C. both parties are well informed D. buyer and seller are typically motivated A. the property sells in 90 to 120 days

An increase in demand will typically affect a commodity in what way?

An increase in price

A sale that takes place between unrelated parties is considered to be what kind of transaction?

Arms-length

The value according to tax rolls in ad valorem taxation is called

Assessed value

An agreement that is presumed to exist because of the parties' actions is called an implied contract. In contrast, an agreement that is put into words (spoken or written) is what type of contract?

Express contract

Which if the following is closest to the meaning of market value "opinion"?

Conclusion

The total dollar expenditure to develop an improvement is called

Cost

A portion of the purchase price given to bind the transaction is know as

Earnest money

warner is a tenant and pays a fixed rent, while his landlord pays all of the operating expenses and real estate taxes. what type of lease is this?

Gross

The value of an investment property to one particular investor is called

Investment value

Comparables

Properties used in an appraisal report that are substantially equivalent to the subject property.

Jill sold her property interest to her sister Joanna, involving land they jointly owned. Years later, Joanna decided to sell the land, but the buyer wanted assurance that Jill had no rights to the property. What type of deed would Jill provide in this situation?

Quitclaim deed

The fourth component of market value is__________________

Reasonable exposure

if demand is constant for a particular commodity, what factor of value would make the commodity more valuable?

Scarcity

As of a _________________ date. The appraiser's report will refer to this component as the effective date of the value opinion.

Specified

An appraiser is analyzing comparable sales to a subject property. She finds that one property was sold to a neighboring property owner before the listing became available on the open market. Which statement best describes how the appraiser should address this sale in the comparable sale analysis?

The appraiser may identify this sale as additional data the appraiser considered, but it may not meet the market value criterion of reasonable exposure.

A waterfront property sold and closed recently. The purchase price included a deluxe bass fishing boat, several jet skis, and a well-equipped ice fishing house. The property sold for $850,000. If an appraiser wishes to use this sale as a comparable, what should the appraiser consider?

The personal property is a seller concession that must be addressed in the appraiser's analysis to ensure cash equivalency. The sale price must be adjusted to reflect what the buyer would have paid for the property without the personal property.

Cash equivalency analysis

The procedure in which the sale prices of comparable properties sold with atypical financing are adjusted to reflect typical market terms.

Financing Terms

These are also categorized as concessions but are specific to financing the sale

An appraiser may estimate the market value of a property one year in the future so long as the date is specified.

True

Jenses has a sale contract on a propert, but it does not state the legal description, and it is not signed by the seller. The contract is_______

Void

Arms-length transaction

assumed a sale between unrelated parties under no duress

The type of deed that provides the greatest warrant against lawful claims is a

general warranty deed

Seller-paid points

common concession that appraisers adjust for when analyzing comparable sales. These discount points are intended to buy down the buyer's mortgage amount and lower the monthly payment. When paid by the seller the expense is typically added to the sale price in order to offset the dollar amount of the concession

Expense rates, rental rates, and capitalization rates are best expressed as

estimates

Marketing Time

is an opinion of the amount of time it make take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal

Combining the components, market value is the _____________ price, as of a _________ date, in cash, or in terms __________ to cash, or in other precisely revealed terms, for which the specified property rights should sell after __________ exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, _____________ and for self-interest, and assuming that neither is under _____ duress.

most probable, specified, equivalent, reasonable, knowledgeably, undue

A typical option contract to purchase real property binds which of the following?

only the seller

Seller concessions and non-market financing terms often induce the buyer to ________________

pay a higher price for a property

Exposure time

time a property was available for sale in the market and always presumes to occur prior to effective date of the appraisal