Chapter 14- quiz

Annual rent collected for a 10 unit apartment complex is $60,000. The owner pays property tax of $7,000/year, insurance or $4,500, and $1,500/year water bills. The property is appraised at an 11% capitalization rate. What was the appraiser's estimate of value? a. $545,000 b. $517,000 c. $660,000 d. $427,272

$427,272

An apartment complex rents as follows: Three 1BR at $350 per month; 15 2BR at $440 per month; three 2BR at $495 per month. You determine a 10% vacancy rate and 3% credit losses per year. The annual property tax is $7,300; the insurance is $2,100. The owner takes $6,500 per year in depreciation. An investment broker suggests a 10^1/4% capitalization rate. What is your estimate of value?

$881,186

The county assessor says that the full cash value of a 12,00 square foot strip center you have listed is $825,000. Annual income is $12 per square foot per year, minus a 14% vacancy rate and a 3% credit loss. Owner's expenses are: $23000 property tax and $12,000/year insurance. What is the capitalization rate?

10.24%

Appraiser qualifications are required by

FIRREA

Under the principle of substitution,

Property cannot be worth more than the cost of acquiring an equally desirable replacement property

Market price is the closest to the

The amount of money given in exchange for the property (value in exchange)

By definition, what does an appraiser give in the course of his work?

an estimate

The principle of _________ affirms that value is created by expected benefits to be derived in the future?

anticipation

An appraiser is preparing an appraisal for the lender. The subject property is older and has a pool. The comparable property is newer and has no pool. How would the appraiser make the necessary adjustments?

comparable property down for age and up for pool

The period of time that an improvement contributes value to the land is considered to be its

economic life

Mr. Williams owned his home for 15 years. It originally had an estimated life of 40 years. He has maintained his home in excellent condition. He decided to sell his house. It was appraised to be only 6 years old. The appraiser's determination exemplifies the concept of: A. Physical age B. Effective age C. Chronological age D. Depreciation table

effective age

Poor layout of rooms would be included as an element of obsolescence in: A. Economic obsolescence B. Functional obsolescence C. Political obsolescence D. Social obsolescence

functional obsolescence

In appraisal terminology, "A factory too close to a home" is an example of

incurable obselence

What is the purpose of a date in an appraisal report?

it defines the market conditions under which the appraisal was made

In the cost approach, when figuring depreciation, which does NOT qualify as a depreciation item?

land

In checking for conformity of a home in a particular neighborhood, an appraiser would NOT consider

list price

On which of the following properties would you most likely use the income approach to appraising?

office building

The increase in value created by joining ownership of several smaller parcels of land into one large single ownership is called

plottage increment

After the appraiser has used all three appraisal approaches to estimate value, what process is used to arrive at one estimate of value?

reconciliation

When the cost approach is used to determine value, which of the following applies? a. replacement minus depreciation b. gross income minus expenses c. net income plus land value d. comparable properties in the area plus the land

replacement cost minus depreciation