(Book 2) Ch. 2 - Real Estate Appraisal

Which of the following externalities can have a negative effect on home values...? Proximity to a landfill Proximity to a power plant Proximity to a noisy highway All of the above

All of the above: Proximity to a landfill Proximity to a power plant Proximity to a noisy highway

John constructs a 6 bedroom stone house with a tennis court, indoor swimming pool, in a neighborhood of smaller 2-3 bedroom homes with narrow lots. The value of john's house is likely to be affected by what principle?

Conformity

The sales comparison approach is also referred to as the...?

Market data approach

How much experience is needed to become a real estate appraiser trainee...?

No experience is needed

The cost of replacing the subject improvement with one that is the exact replica, having the same quality of workmanship, design and layout, or cost to duplicate an asset is known as...?

Reproduction cost

How many hours of appraisal education is required to become a general certified real estate appraiser...?

300 hours

Annual net income is $31,500 and it's valued at $300,000, what its is capitalization rate?

31500/300000 = 0.105 10.5%

An appraisal may NOT be conducted by... Out of state appraiser registered temporarily in Texas Appraiser trainee A real estate broker A Texas licensed appraiser

A real estate broker

When appraising a property using the sales comparison approach, which of the following factors is used to adjust comparable properties to the subject property...? All of the above The terms and conditions of the sale The physical features of the house The day of the sale

All of the above

Reconciliation refers to which of the following in appraisal practice? Separating the value of the land from the total value of the property to compute depreciation The process by which an appraiser determines the highest and best use for a piece of land Averaging the results of thee 3 approaches of value to determine a final opinion of value Analyzing the results obtained by the 3 approaches of value to determine a final opinion of value

Analyzing the results obtained by the 3 approaches of value to determine a final opinion of value

An estimate of the value of property resulting from an analysis of facts about the property 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 referred to as a/an...?

Appraiser

Which of the following is the lowest real estate appraiser classification...? Appraiser trainee State licensed real estate appraiser Certified residential appraiser Certified general real estate appraiser

Appraiser trainee

A tax assessor produces which of the following types of value...? Assessed value Market value Investment value Book value

Assessed value

What is the Capitalization Rate Formula

Cap rate = Net income / Value of the property

Which of these would be done for a Sales Comparison Approach? Determine a dollar value for depreciation Estimate future expenses and operating costs Check sales prices of recently sold homes in the area Reconcile differing value indications

Check sales prices of recently sold homes in the area

In a sales comparison approach value, the probable sale price of a building may be estimated by...?

Considering sales of similar properties

This appraisal method consists of an analysis 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

Which of the following appraisal methods will most likely be used to determine the value of a church...? Income approach Market data approach Cost approach Sales comparison approach

Cost approach

What is the first step an appraiser takes when valuing a property using the cost approach...?

Determine the value of the land as if it were vacant

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

The desire for possession or ownership backed by the financial means to satisfy that need is referred to as...?

Effective demand

Which of these would be done for the Income Approach? Determine a dollar value for depreciation Estimate future expenses and operating costs Check sales prices of recently sold homes in the area Reconcile differing value indications

Estimate future expenses and operating costs

The most probable use to which a property is suited that results in its highest value or highest returns to the land is known as...?

Highest and best use

Which of the following appraisal methods will most likely be used to determine the value of a commercial building...? Sales comparison approach Market data approach Income approach Cost approach

Income Approach

An appraisers asked to determine the value of a retail shopping center. Which of approach to value will be given the most weight?

Income Approach Shopping center is an income producing property

.............. depreciation cannot be fixed at an economically feasible cost?

Incurable

The highest price in terms of money which a property will bring in a competitive and open market and under all conditions required for a fair sale is referred to as...?

Market Value

The most common objective of an appraisal is to develop an opinion of...?

Market value

The income approach determines value by applying a capitalization rate to the...?

Net operating income

The loss in value brought about by wear and tear, disintegration, and use and actions of the elements is known as...?

Physical Deterioration

Two adjacent lots #123 and #125 elm street are right next door to each other and each are worth approx. $60,000. If the owner combines them and sells them together, they would be worth $150,000. What principle does this illustrate? Contribution Externalities Plottage Substitution

Plottage

This appraisal method is typically used to determine the value of residential properties...?

Sales Comparison Approach

David is in the process of buying his first house. David's lender requires an appraisal to be done on the property. Which of the following appraisal methods will most likely be used to determine the value of David's house...?

Sales comparison approach

This appraisal method consists of comparing similar type properties, which have recently sold, to the subject property...?

Sales comparison approach

The supply of property in relation to effective demand is known as...?

Scarcity

Which of the following is NOT an element of value? Balance Scarcity Transferability Utility

Scarcity Elements of value include DUST (demand, utility, scarcity and transferability)

What is the first step in the appraisal process...?

State the problem

Market value is equal to...?

The most probable price a property will bring in the market

The relative ease with which ownership rights are transferred from one person to another is known as...?

Transferability

When using sales data to compare to the subject property, appraisers should use sales that are...? Current Comparable Close All of the above

All of the above: Current Comparable Close

After the needed data has been obtained and verified, what is the next step in the appraisal process...?

Determine the highest and best use

An investor is in the process of purchasing an office building. The bank providing the mortgage for the property requires an appraisal to be done. Which of the following appraisal methods will the appraiser most likely use to determine the value of the office building...? Cost approach Income approach Sales comparison approach Market data approach

Income approach

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

Principle of change

This principle affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property...?

Principle of substitution

One of the methods an appraiser uses to determine a building's replacement cost involves as estimate of raw materials needed to build the improvements plus the indirect costs and labor. This is called the...?

Quantity Survey Method

How many hours of appraisal education is required to become an appraiser trainee...?

75 hours

An appraiser must determine certain data before value can be computed by income approach. Which of the following is not required for this process? Annual gross income Accumulated depreciation Capitalization rate Annual net operating income

Accumulated depreciation

All appraisals must contain which of the following...? The opinion of value The purpose for which the appraisal was done The date on which the appraisal value was determined All of the above

All of the above

The loss of value of a property brought about by age, physical deterioration or functional or economic obsolescence is referred to as...?

Depreciation

Which of these 4 choices would be done for Cost Approach? Determine a dollar value for depreciation Estimate future expenses and operating costs Check sales prices of recently sold homes in the area Reconcile differing value indications

Determine a dollar value for depreciation

A comparative market analysis... has adjustments for differences a property features Is a comparison of recently sold properties that are similar to a parcel's real estate Is the same as an appraisal Should never be retained in a property's listing file due to confidentiality concerns

Is a comparison of recently sold properties that are similar to a parcel's real estate

What is the second step in the appraisal process...?

List the data needed

The price paid regardless of pressures, motives or intelligence is referred to as the...?

Market Price

A single value is derived from the three appraisal methods of determining value during the ............ process?

Reconciliation

In utilizing the income approach to value ... The capitalization rate or rate of return must be estimated Depreciation must be determined Sales of similar properties must be considered Reproduction or replacement costs must bee computed

The capitalization rate or rate of return must be estimated

Real estate appraisers used to appraise a property cannot be selected by the real estate brokers involved in the transaction...? True or False

True

A typical residential appraisal report is issued on a...?

Uniform residential appraisal report

The capacity to satisfy human needs and desires is referred to as...?

Utility

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

Value