chapter 7
which of the following are not considered representative sales; thus unusable as a comparable sale for a market value estimate?
- a sale forced by a local property tax jurisdiction - a voluntary sale in lieu of foreclosure - a sale to a family member
valuation of real estate is complicated by the
- immobility of real estate - lack of perfect substitutes - lack of observable transactions
the highest and best use of a property must be
- legally permissible - physically possible - financially feasible
which of the following statements about property value are true?
- the fair market value is the most probable selling price - the owner's specific bundle of rights affects fair market value
USPAP standards require that, when using the sales comparison approach, appraisers use how many comparables?
USPAP has no requirement regarding the number of comparable sales
a good comparable property is a property that the typical buyer would consider
a close substitute for the subject
an adjustment for differences in economic characteristics is not usually required when valuing
a personal residence
typically, reconciliation of final adjusted sale prices involves the calculation of
a weighted average
both the buyer and seller of a home that recently sold knew the house needed a new roof. the buyer replaced the roof immediately after purchasing the home. an appraiser using this sale as a comparable should
adjust the comparable sale price upward by the cost of the new roof
adjustments made to the sale price of comparable properties for expenditures made after purchase are
always positive
the organization with independent authority over the generally accepted standards of appraisal is the
appraisal foundation
if an important characteristics of the comparable property, the sale price of the _____ property must be adjusted ______.
comparable, downward
repeat-sale analysis is the process of
comparing the sale prices of properties that have sold twice
which approach would probably be most relied upon in the valuation of a relatively new church?
cost approach
which approach would probably be most relied upon in the valuation of relatively new church?
cost approach
if a comparable property sale included some valuable personal property, the sale price of the comparable is usually adjusted _____ by the _____ of the personal property
downward, current market value
true or false a location adjustment is not required when the comparable property has a superior location than the subject.
false
true or false the fact that the last sale of a house was made by the seller to avoid default and foreclosure likely had no effect on the sale price.
false
true or false the income capitalization approach is the most important method for appraising single-family residences.
false
true or false the required adjustment for difference in legal estates is typically a relatively simple adjustment.
false
unless the characteristics of the comparable property are _____ to the subject property, adjustments must be made to the sale price of the comparable property.
identical
form reports are generally requested by
lenders
"MLS" stands for _____ _____ _____
multiple listing services
to the extent the comparable property is physically lacking in some respect to the subject, the sale price of the comparable
must be adjusted upward
the sale of a single-family, detached home that is currently rented to a music studio should not be used as a comparable property if the subject is a single-family, detached home
occupied by the owner
as the final step to arriving at the indicated value of the subject property based on the sales comparison approach, the appraiser must
reconcile the final adjusted sale prices of the comparable properties
the economic principle of _____ implies that the value of the subject property is determined by the sale prices of comparable properties.
substitution
required sale price adjustments are divided by USPAP into two major categories including
transactional and property adjustments
true or false a comparable property having different legal estate than the subject property should generally not be used as a comparable.
true
true or false according to USPAP, the appraiser should consider the use of all three appraisal approaches, even though all three may not be appropriate.
true
true or false the final value number produced by reconciliation of the resulting numbers from two or more approaches to value is termed the final estimate of value.
true
generally, estimated land value plus reproduction or replacement cost will set the _____ value of the property.
upper limit to the
each approach to valuation has its strengths and weaknesses. in arriving at a final opinion of value, the appraiser should
weight the strengths and weaknesses of each approach, as well as the reliability of the data collected for each approach
the final estimate of market value is usually a _____ average of the indicated values from the different approaches.
weighted
the rules for making sales adjustments include which of the following?
- adjust the sale price of the comparable toward the subject property - make transactional adjustments in the proper order - use market-related adjustments
typical sources of construction cost estimates include
- construction cost estimating firms - builders - R.S. Means
the required number of comparable sales
- decreases if those comparables already selected are very similar to the subject property - increases as the reliability of comparable sale information decreases
it is often necessary to value the site independent of the improvements to the site. which of the following approach requires a separate site valuation?
- highest and best use analysis - cost approach
from the appraiser's point of view, replacement cost estimates are preferred over reproduction cost estimates because
- it is often impossible to build an exact replica of the subject property - they are less time consuming to obtain
in order for the sale price of a property to be considered a good comparable for the subject,
- it must be a property that typical buyers would consider a substitute - it must be an arms-length transaction
the concept of market value in formal appraisal practice includes
- most probable selling price - competitive market - buyer and seller acting prudently
in the cost approach to valuation, which factors of depreciation are considered?
- physical deterioration - functional obsolescence - external obsolescence
conventional approaches to estimating the market value of real estate include the
- the income approach - the sales comparison approach - cost approach
which of the following may be greater than market value for a given property that recently sold?
- transaction price - investment value to buyer
a house sold for $650,485 five months ago. a very comparable house sold yesterday for $670,000. the monthly rate of increase for in property prices is ______ percent.
0.60
if all three approaches to value are used by the appraiser, the appraiser must reconcile _____ indicated values.
3
to complete the sales comparison approach, the appraiser _____ the adjusted sale prices of the comparable properties to obtain an indicated value for the subject.
reconciles
the estimated cost to build an equally functional structure using modern methods is generally referred to as the
replacement cost
the most reliable approach to estimating vacant land values is usually the
sales comparison approach
most appraisals of single-family homes are
summary reports
each required transactional and property adjustment is made to
the adjusted sale price of the comparable after the prior adjustment
a comparable sale price should be adjusted for the terms of sale when
there was favorable seller-provided financing
reproduction cost is defined as the cost
to build an exact replica of the subject property
_____ adjustments focus on the terms of the deal and the motivation or bargaining ability of the participants.
transactional