Chapter 8

What is the minimum number comparables an appraiser will use when using the sales comparison approach...?

3

When trying to estimate market value, how far back should sales be researched...?

3 months - 1 year

What is the difference between an appraisal and a comparative market analysis (CMA)...?

A CMA does NOT make adjustments based on data from sold properties

Why is a comparative market analysis (CMA) NOT considered an appraisal...?

A CMA does NOT yield a defensible estimate of value

What property types use the income approach to determine value...?

Commercial properties

A property evaluation that determines property value by comparing similar properties sold within the last year is known as what...?

Comparative Market Analysis

An appraisal is NOT used in what analysis...?

Comparative Market Analysis

A loss of utility and thus value caused by physical deterioration, functional obsolescence or economic obsolescence or any combination thereof is known as what...?

Depreciation

Which of the following is NOT used in conducting a residential market analysis...?

Desired return on capital for investors

The cost of labor and materials is also referred to as what...?

Direct Cost

Hard costs are also known as what...?

Direct costs

A loss in value caused by influences external to the property, such as increasing industrial activity near a residential neighborhood, is known as what...?

Economic Obsolescence

Andrew hires an appraiser to better understand the supply and demand in a particular market. What will the appraiser produce for Andrew...?

Evaluation

Which of the following is used when analyzing the highest and best use of a property...?

Evaluation

An appraisal technique whereby the value of an income producing property is estimated by capitalizing its net operating income using an appropriate capitalization rate is known as what...?

Income Approach

A property sold as part of a bankruptcy proceeding is most likely equal to what value...?

Liquidation Value

Which of the following will most likely yield the lowest price for a property...?

Liquidation Value

Which of the following is an example of a hard cost...?

Materials

The estimate worth of a particular asset which is established for the purposes of obtaining financing secured against that asset is known as what...?

Mortgage Value

The market value of a property is determined using what price...?

Most probable price

The sales comparison approach is based on what principle...?

Principle of Substitution

Which of the following property types will most likely use a value-in-use value when conducting an appraisal...?

School

Which of the following is NOT a test used to determine the highest and best use for a property...?

The use must be allowed by a variance

What would be the highest and best use for a vacant property...?

The use that demands the highest return to the site

Which of the following is NOT the role of a salesperson...?

They must be able to accurately value a property

Which of the following is NOT an indicator that a market is depreciating...?

Time on market decreases

Which of the following is NOT an indicator that a market is appreciating...?

Time on market increases

Which of the following typically conduct comparative market analysis...?

All of the above Brokers Developers Appraisers

Which of the following uses will demand a value-in-use approach when conducting an appraisal...?

All of the above Church School Warehouse

Which of the following are reviewed when conducting a residential market analysis...?

All of the above Expired listings Recently sold properties Contracts of sale

An appraisal is used in determining the value of what...?

All of the above Investment Value Liquidation Value Insurable Value

Which of the following is a test used to determine the highest and best use of a property...?

All of the above Legally permissible Economically feasible Appropriate use for the site

Which of the following is an approach used by appraisers to determine the value of a property...?

All of the above Sales Comparison Approach Cost Approach Income Approach

Which of the following is the role of a salesperson...?

All of the above They must be able to answer client's questions. The must be able to verify the data presented to the client. They must be able to adjust to market conditions.

Which of the following is an indicator that a market is depreciating...?

All of the above Time on the market increases Offering prices decrease Supply increases

Which of the following is an indicator of an appreciating market...?

All of the above Offering prices increase Time on market decreases Properties move faster

What is first in the order of adjustments when utilizing the sales comparison approach...?

Analyze any rights conveyed

An estimate of a property's value by an appraiser who is usually presumed to be an expert in his work is known as what...?

Appraisal

Which of the following is an example of a soft cost...?

Architectural fees

A valuation placed upon property by a public officer or a board, as a basis for taxation is known as what...?

Assessed Value

The total dollar expenditure for labor, materials, legal services, architectural design, financing, taxes during construction, interest, contractor's overhead and profit, and entrepreneurial overhead and profit is known as what...?

Cost

Which of the following may NOT change drastically in a market trending upward...?

Cost

Which of the following may remain static despite a changing market...?

Cost

A method of estimating the value of real property by calculating a current construction cost, subtracting accrued depreciation and adding a land value obtained from the market is known as what...?

Cost Approach

Which of the following is NOT analyzed during the appraisal process...?

Credit history of the buyer

A study of the nature, quality, or utility of certain property interests in which a value estimate is not necessarily required is known as what...?

Evaluation

What must an appraiser do before two properties can be compared...?

Find a common unit of comparison

The loss of value caused by super adequacy, inadequacy or changes in the art inherent in the property itself is known as what...?

Functional Obsolescence

Direct costs are also known as what...?

Hard costs

An evaluation is used to determine which of the following...?

Highest and Best Use

Which of the following is NOT a method for determining value...?

Highest and best use approach

Which of the following typically do NOT conduct a comparative market analysis...?

Homeowners

How will someone know if the current building on a property is the highest and best use for the site...?

If modifications to the building do not make economic sense

A property's net operating income must be determined before a property can be valued using this appraisal method...?

Income Approach

Costs that support a construction project, such as legal or architectural fees are referred to as what...?

Indirect Cost

The value of an asset or asset group that is covered by an insurance policy is referred to as what...?

Insured Value

A commercial property will most likely yield what type of value by an appraiser...?

Investment Value

Mark, and his investor group, are looking to purchase an office building. To help in their analysis, they hire an appraiser to determine the value of the property. What value will the appraisal report most likely yield...?

Investment Value

The specific value of an investment to a particular investor or class of investors based on individual investment requirements is known as what...?

Investment Value

The price that a property sold during a foreclosure auction is most likely equal to what value...?

Liquidation Value

The actual selling price of a property is referred to as what...?

Market Price

This refers to the most probable price that a property should bring if exposed for sale in the open market for a reasonable period of time, with both the buyer and seller aware of current market conditions, neither being under duress...?

Market Value

What must be determined first before a property can be valued using the income approach...?

Net Operating Income

The loss of desirability and usefulness caused by new inventions, changes in design, and improved processes for production, or from the influence of external factors, is known as what...?

Obsolescence

Steve is looking to buy a home in a particular market. How will Steve know if the market is appreciating...?

Offering prices in the market will show an increasing trend

James owns a vacant property. By law, he can build the following building types, which generate a return on investment as listed: 1) Office building - 13.5% return 2) Mixed Use building - 10.5% return 3) Hotel - 12.8% return 4) Retail - 6.2% return Which use is the highest and best use for the property...?

Office building

A plot of land created by assembling smaller ownerships into one ownership is known as what...?

Plottage

The amount a purchaser agrees to pay and a seller agrees to accept in an arms length transaction is also known as...?

Price

The amount a purchaser agrees to pay and a seller agrees to accept in an arms length transaction is known as...?

Price

Which of the following is an example of a common unit of comparison...?

Price per sq.ft.

What is required in order to determine the market value of a property...?

Reasonable exposure and marketing time

What is the formula used to determine value using the cost approach...?

Replacement Cost - Depreciation

This is a valuation method which compares a subject property's characteristics with those of comparable properties which have recently sold in similar transactions...?

Sales Comparison Approach

Which of the following should NOT be considered when trying to determine the market value of a property...?

Sales prices from over 1 year ago

Reproduction cost is equal to what...?

The cost of rebuilding the subject property in its current condition

If offers are consistently coming in less than the listing price, what may be happening in the market...?

The market is trending downward

If offers are quickly being made on current asking prices, what might be happening in the market...?

The market is trending upwards

The cash equivalency price of a property compares an all-cash purchase price and what...?

The price of the property being purchased with a mortgage

Emily is a real estate salesperson in Albany. How will Emily know if the residential market in Albany is depreciating...?

Time on the market is increasing

A site is always valued as if it is...?

Unimproved

The process of estimating market value, investment value, insurable value, or other properly defined value of an identified interest or interests in a specific parcel or parcels of real property as of a given date is known as what...?

Valuation

Due to the fact that real estate operates in an inefficient market, price does NOT equal what...?

Value

The net present value (NPV) of a cash flow or other benefits that a property generates for a specific owner under a specific use is referred to as what...?

Value-in-Use

Donald hires an appraiser to better understand the value of his warehouse. What value would the appraiser use in his conclusion...?

Value-in-use

When does the price of a property exceed the cost of construction...?

When demand is high

When may the cost of construction exceed the price of a property...?

When demand is low

When can land have a negative value...?

When encumbered with an environmental hazard