chapter 10

The depreciation for a residential property is how many years...?

27.5

Capitalization Rate is equal to...?

NOI / purchase price

Which of the following is a means by which the Federal Reserve controls the money supply...?

Reserve requirement Discount rate Bond market

the supply of willing and able buyers in the marketplace or lack thereof is referred to as...?

demand

Properties listed above market value typically take the longest to sell...?

true

The ability to give satisfaction and/or excite desire for possession is known as...?

utility

A written statement, independently and impartially prepared by a qualified appraiser setting forth an opinion in a federally related transaction as to the market value of an adequately described property as of a specific date is known as a/an...?

appraisal

One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal processes is known as a/an...?

appraiser

The rate of interest which is considered a reasonable return on the investment, and used in the process of determining value based upon net income is known as...?

capitalization rate

The ability to deduct expenses on improvements made to income producing property is referred to as...?

depreciation

The minimum interest rate set by the Federal Reserve for lending to other banks is known as the...?

discount rate

The rate at which member banks charge each other for borrowing short-term money is known as the...?

federal funds rate

When a property is "over improved" relative to other surrounding properties in the area that are of lesser value, it is referred as the...?

law of regression

An improvement which is not the highest and best use for the site on which it is placed by reason of excess size and cost is referred to as...?

over improvement

The loss in value due to the actual wearing out of the improvements is known as...?

physical obsolescence

This refers to an improvement which, because of its deficiency in size or cost, is not the highest and best use of the site...?

under improvement

the present worth of future benefits arising out of ownership to typical users/investors is referred to as...?

value

This is one of the three methods in the appraisal process in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land...?

cost approach

A loss in value due to factors away from the subject property but adversely affecting the value of the subject property is known as...?

economic obsolescence

A loss of value due to adverse factors from within the structure which affect the utility of the structure, value and marketability is known as...?

functional obsolescence

This is an appraisal phrase meaning that use which, at the time of an appraisal, is most likely to produce the greatest net return to the land and/or buildings over a given period of time...?

highest and best use

This is one of the three methods of the appraisal process generally applied to income producing property, and involves a three-step process - (1) find net annual income, (2) set an appropriate capitalization rate or "present worth" factor, and (3) capitalize the income dividing the net income by the capitalization rate...?

income approach

This affirms that value is created by anticipated benefits to be derived in the future...?

principle of anticipation

This holds that it is the future, not the past, which is of prime importance in estimating value...?

principle of change

This holds that the maximum of value is realized when a reasonable degree of homogeneity of improvements is present...?

principle of conformity

When a component part of a property is valued in proportion to its contribution to the value of the whole, it is referred to as this principle...?

principle of contribution

This affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution....?

principle of substitution

In appraising, this is a valuation principle stating that market value is affected by the intersection of supply and demand forces in the market as of the appraisal date...?

principle of supply and demand

The economic life of a building minus its effective age is known as...?

remaining economic life

This is one of the three major valuation methods, which compares a subject property's characteristics with those of comparable properties which have recently sold in similar transactions...?

sales comparison approach