Module D Measurements and Valuations

What is the total area of just one section in a township?

1 square mile

How many members are there in the South Carolina House of Representatives?

124

Per the 2010 U.S. Census, approximately how many South Carolina residents were represented by each House of Representative member?

37,301

How many steps must an appraiser take in applying the Sales Comparison Approach?

5

How wide is a range between consecutive meridians?

6 miles

how many acres in a section

640 acres

How many state residents in South Carolina are represented by each state Senator?

87,200

Substitution

According to this principle, a buyer will not pay more for a home than what he or she would pay for another home that is equally attractive and available

Comparable Method

Also known as the Sales Comparison Approach, this direct capitalization method is used for most property types, as long as there is sufficient evidence of previous sales.

Assemblage

As we previously mentioned, the extra value created by merging the two parcels is called plottage value.

What is the second step an appraiser would use when applying the Sales Comparison Approach?

Collecting and verifying data

recently sold

Comparable properties that have recently sold are probably the best predictor of the market value of the seller's property.

Which answer below is NOT used as it relates to the term "bounds" in a legal description?

Compass readings

What is not an economic characteristic of land?

Consumer impact

What is the first step in the appraisal process?

Define the problem

The term "metes" as used in legal descriptions for properties is a reference to ................

Direction and Distance

When an analysis of residential properties is made, what can one use to come up with a dollar adjustment for location of properties of similar value?

Discounting

Appraisers commonly use two analytical tools

Elements of comparison, Units of comparison

The ratio to convert annual income to market value is called .......

Gross Income Multiplier.

What is not a principal source data for generating sales comparison?

HOA records

What home feature would a licensee examine to see if a floor plan is

Interior home design

What home feature would a licensee examine to see if a floor plan is efficient, convenient, and attractive?

Interior home design

Which of the following is NOT an "unknown" sales variable?

Market norm

What types of studies are conducted to find the sales/listing data of comparable properties?

Market studies

Which lines in a Township System run east and west?

Parallels

What is the sequence of adjustments recommended by the Appraisal Institute

Property rights conveyed Financing terms Conditions of sales Market conditions Location

legal description is required for

Public recording Creating a valid deed of conveyance or lease Completing mortgage documents Executing and recording other legal documents provides a basis for court rulings on encroachments and easements.

What describes the ability of people in the market to exchange cash or its equivalent for goods and services?

Purchasing power

Pending sales

Sales normally remain in the pending stage for 30 to 60 days. A licensee should keep in mind that the information on pending sales is not as reliable as on sold homes because:

What forms can appraisal reports take?

Short- or Long-Form Narrative Reports Form Reports Letter or Oral Reports

Incurable Physical Deterioration

Short-lived components refer to the items whose remaining physical life is less than, or shorter than the overall property's total estimated remaining economic life. Long-lived components impact the entire property because they are not easily replaced. These components include such items as the property's foundation and footings. Appraisers tend to depreciate these components in one of the following ways

datums

Standard elevation reference point

Recorder Fees in South Carolina

State's Deed Recording Fees: $1.30 per every $500 of a property's value County's Deed Recording Fees: 55 cents per every $500 of a property's value

Which of the following is NOT an acceptable form for an appraiser's report?

Statement of Purpose

Anticipation

The benefits a buyer expects to receive over the period of time he or she has the property influences the decision to purchase it. The value of the property can increase or decrease depending on whether the anticipated change is a benefit or a disadvantage

Tier

The east-west area between two parallels or a township strip.

What should a licensee focus on when collecting information about the seller's property for analysis

The neighborhood The home site Existing property improvements

Range

The north-south area between consecutive meridians is called a range. A range is identified by its relationship to the principal meridian. All ranges are six miles wide.

What is not included when determining the square footage of a home?

The square footage of the home's living area does not include attached garages, unfinished basements, or porches. Most often, living area must be "under heat and air-conditioning."

Investment Method/Income Method

This direct capitalization method is used for most rent-producing (leased) commercial (and residential) property, if the property's future cash flow is also projected to come from leasing the property.

Progression and Regression

This principle holds that a property is affected by the surrounding properties

Conformity

This principle says that a property is at its highest value when it conforms with and fits into its surroundings

Which answer below is NOT a core reason for the more modern day land ownership system?

Title companies

characteristics of value

Utility and desirability create supply of and demand for a commodity, while scarcity and purchasing power limit them.

When does economic life begin?

When the improvements are constructed

Rectangular survey system, or government survey method

a system of describing land by referring to meridians and baselines

Lot and block method, or recorded plat method

a system used to locate and identify land, particularly for lots in densely populated metropolitan areas, suburban areas, and areas beyond the suburbs. method most frequently used in metropolitan areas.

Metes and bounds

a system which uses physical features of the local geography, along with directions and distances, to define and describe the boundaries of a parcel of land. always identifies an enclosed area by starting at an origination point, called point of beginning, must return to the POB in order to be valid. South Carolina uses this description to describe properties within the rectangular survey system

Depreciation

an also be defined as a loss of utility (usefulness) and consequently, value, from any cause or for any reason; or as an effect caused by deterioration and/or obsolescence.

Quantity Survey method

an appraiser adds the total costs (both direct and indirect costs, which include the site preparation, all phases of construction, the fixtures, and other expenses) to build or install all of a new building's component parts. generally provides the most accurate cost estimate because all of the buildings components are analyzed

Square foot or cubic foot method

appraiser multiplies the cost per square foot (or cubic foot) of a recently built comparable structure by the number of square feet in the subject property.

Super adequacies

are usually components added by the homeowners that are suited for their unique living style/needs but that have little value/usefulness to others a large percentage of super adequacies are incurable

Comparable data focuses on ........

black and white facts and numbers.

The Income Approach is especially common for commercial real estate appraisals and.......

business appraisals.

Abstraction Method

by using market data to discover some indication about a property's depreciation amount.

Demand inflation

caused by a seller's market (too many purchasers wanting too few available goods)

Cost inflation

caused by an increased cost to produce or offer commodities

Economic Base

concerns the industries that provide income and employment.

breakdown method

divides depreciation into its three separate components: physical deterioration, functional obsolescence, and external obsolescence.

A value opinion must be appropriately supported with .......

general and specific data.

matched pairs

he appraiser must choose two sales in the market. One sale must contain the item for which the adjustment is being sought. The other must not contain that adjustment item. If that single item is the only difference between the two sales, then the theory says that the difference in the sales prices of the two items can be directly attributed to the absence or presence of that item

Curable Physical Deterioration

include the typical maintenance tasks that any prudent homeowner should have completed by the appraisal date to ensure he receives the maximum profit when he sells his home. Remember that although almost all physically deteriorated components can be cured (corrected) at a price, for a physically deteriorated element to classify as "curable," the cure or fix must contribute more money to the home's value than the cure costs.

Subdivision Survey

includes a topographic survey of a parcel of land which will be divided into two or more smaller tracts, lots or estate division. This can also be used for site design of lots, streets and drainage. It is for construction and recording

The commonly accepted definition of Market Value derives from

interactions of participants in the market.

The commonly accepted definition of Market Value derives from .......

interactions of participants in the market.

Location Survey

is a boundary survey with the additional location of all the interior improvements. Missing corner markers are replaced. The surveyor will prepare a map showing the boundaries and improvements. This type of survey may be required for obtaining a loan.

Evaluation

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

Cost Approach

is based on the assumption that the cost of acquiring a site, improving the site to make it suitable for building, and producing the building, provides a good indication of what a property is worth.

Sales Comparison Approach

is based on the principle of substitution, which says that a buyer will not pay more for the subject property than he or she would pay for a property that is similar in characteristics and amenities. Most reliable of the three methods for appraising residential property.

External obsolescence

is caused by changes external to the property, such as the decline of value in a neighborhood, or other negative environmental forces.

Functional obsolescence

is caused by changes within the property, such as a poor floor plan, mechanical inadequacy or over-adequacy, or functional inadequacy or over-adequacy due to the property's size, style, age, or other "internal" factor that limits its use or functionality.

legal description of real property

is one which accurately locates and identifies the boundaries of the subject parcel to a degree acceptable by courts of law in the state where the property is located

Township

is the area enclosed by the intersection of two consecutive meridians and two consecutive parallels is a square with six miles on each side. Its area is therefore 36 square miles.

Insured Value

is the face amount a casualty or hazard insurance policy will pay in case a property is rendered unusable

Obsolescence

is the loss of utility in an asset (in this case, real estate). It is therefore a key consideration in the value of a property because it directly affects the property's usefulness. If a property stops being useful, it loses its value to people. There are two types of obsolescence:

Public Land Survey System

is the method traditionally used over the largest part of the United States to survey and classify land parcels before naming an owner, particularly in rural or undeveloped land. originally proposed by Thomas Jefferson. The government wished both to issue land to soldiers in reward for their services, as well as to sell land to raise money for the country. Land Ordinance of 1785 was the start

Planning

is the most general and far-reaching of influences on value. It determines such community features as where future roads will be built, where schools, parks and hospitals will be located, which areas will be available for commercial and industrial development and which for residential, where affordable housing will be encouraged, how many people will be allowed to live in an area, how much will need to be provided in the way of sewer, water, and other services.

Replacement Value

is the value based on the cost of constructing a functional equivalent of the subject property's improvements, assuming current construction costs.

Assessed Value

is the value of a property used by a taxing authority as the basis for ad valorem taxation. Remember that local governments levy this type of tax on real property within their jurisdiction to help fund and maintain public services and projects. Ad valorem appraisals are increasingly performed by the county assessor's office as estimates of current market value.

Condemned Value

is the value set by a county or municipal authority for a property which may be taken by eminent domain

Contractor's Method (or Cost Method)

is used only to value properties that are not sold or purchased on the market.

What are the two most important areas for a licensee to focus on when choosing comparables

location and physical characteristics

Important factors for comparables

location, physical characteristics, date of the sale, financing terms (When a buyer uses a conventional loan to purchase a property, this is termed a cash equivalent sale), and sale conditions

before performing a market analysis, the real estate licensee must disclose to the requesting party that the market analysis

may not be used for the purposes of obtaining financing in a federally-related transaction.

Accounts Method/Profits Method

method is used in the practice of trading properties such as restaurants, nursing homes, or hotels - where there is little existing or available rate-specific evidence.

The Age Life method

of estimating depreciation is based primarily on observation.

A sale should not be used as a comparable if it is older than......

one year.

Development Method

only used to value bare land, or to value properties that are immediately ready for development or redevelopment.

Deficiencies

refer to those components that simply do not meet the current expectations of the market. For example, a home without a dishwasher

Parallels

run east and west. The base parallel or base line is the designated line for identifying townships.

Meridians

run north and south. The principal meridian is the single designated meridian for identifying townships in the principal meridian's geographical "jurisdiction."

Boundary Survey

shows the location of all improvements in relation to the property lines, includes an area of the overall property and shows any existing encroachments

Topographic Survey

survey locates improvements and topographic features such as elevations of the land, embankments, contours, water courses, roads, ditches, utilities, etc.

Unit-in-place method

the appraiser multiplies the construction cost (including the construction materials, labor, overhead, and the builder's profit) per square foot (or other appropriate measure) by the number of square feet (or other appropriate measure) of that component part in the subject building. cost estimates are made using the "standard" costs for each building components as it is installed

Site Planning Survey

uses a boundary and topographic survey as a base to design future improvements.

Construction Survey

uses surveying techniques to stake out buildings, roads, walls, utilities, etc. This includes horizontal and vertical grading, slope staking, and final as-built surveys

Book Value

value of the property as carried on the accounts of the owner. The value is generally equal to the acquisition price plus capital improvements minus accumulated depreciation.

ALTA/ACSM Survey

very detailed survey often required by lending institutions and is strictly geared towards companies purchasing commercial property. Standards created by the American Land Title Association (ALTA) and the American Congress of Surveying and Mapping (ACSM)