RE 250 into to real estate (Chapter 7)

A comparable property sold 15 months ago for $105,000. If the appropriate adjustment for market conditions is 0.25% per month (without compounding), what would be the adjusted price of the comparable property?

$108,937.50

A comparable property sold 4 months ago for $287,000. If the appropriate adjustment for market conditions is -0.50% per month (without compounding), what would be the adjusted price of the comparable property assuming all else is the same between the two properties?

$281,260.00

Generally, how many approaches to estimating market value are considered by the appraiser for use in a formal appraisal?

3

The rules for making adjustments to the sale prices of comparable properties 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

The organization with independent authority over the generally accepted standards of appraisal is the

Appraisal Foundation

"MLS" stands for

Blank 1: multiple Blank 2: listing Blank 3: service

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?

Cost approach

Real estate appraisers generally distinguish among the concepts of market value, investment value, and transaction value. Which of the following statements best describes the concept of market value?

It is an estimate of the most probable selling price of a property in a competitive market

Which of the following steps in the evaluation of an appraisal is the most important?

Make sure the comparables used are appropriate

______ adjustments focus primarily on the physical and locational differences between the subject and comparable properties.

Property

Most appraisals of single-family homes are

Summary Reports

Which of the following statements about market value are true?

The market price is the result of interacting forces of demand and supply. The fair market value is the most probable selling price

____ adjustments focus on the terms of the deal and the motivation or bargaining ability of the participants.

Transactional

True or false: Although most appraisal assignments involve the valuation of properties with improvement (buildings) on the land, appraisers often must separately value the land.

True

True or false: The final value number produced by reconciliation of the resulting estimates from two or more approaches to value is termed the final estimate of value.

True

True or false: The goal of market analysis is generally to develop an understanding of the factors that affect demand and and supply in a particular market and use that knowledge to forecast how values in that market are likely to change over time.

True

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

Real estate professionals have long supported strict standards of ethics and practice. Followed by all states and federal regulatory agencies, which of the following imposes ethical obligations and minimum standards that must be followed by all real estate professionals providing formal estimates of market value?

Uniform Standards of Professional Appraisal Practice (USPAP)

The concept of market value in formal appraisal practice includes

a competitive market most probable selling price buyer and seller acting prudently

Typically, reconciliation of final adjusted sale prices of the comparable properties involves the use of

a weighted average

While it is often sufficient to rely on informal methods of estimating the market value of real estate assets, the complexity and large dollar value of many real estate decisions dictate that formal estimates based on methodical collection and analysis of relevant market data should be utilized. The unbiased written estimate of the market value of a property is commonly referred to as a(n):

appraisal.

Potential sources of data from public records include

cities and counties local property tax assessors many agencies of the federal government

Which of the following approaches for calculating the market value of a property involves estimating the dollar value associated with replacing the property new, as well as determining the loss in value due to physical, functional, and external obsolescence?

cost approach

Conventional approaches to estimating the market value of real estate include the

cost approach. income approach. sales comparison approach.

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

Accrued depreciation is the difference between the current market value of a building and the total cost to reproduce it new. One reason for this difference is related to changes in tastes, preferences, technical innovations, or market standards. This is commonly referred to as:

functional obsolescence.

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

Which of the following approaches for calculating the market value of a property involves the projection of the property's future expected cash flows?

income approach

At the conclusion of the traditional sales comparison approach to valuation, the appraiser evaluates and reconciles the final adjusted sale prices into a single value for the subject property. This single value is commonly referred to as:

indicated value.

The text argues that successful market analysis and research

is a process

Valuation of real estate is complicated by the

lack of perfect substitutes immobility of real estate lack of observable transactions

The Appraisal Foundation

maintains the USPAP

The value that real estate appraisers generally estimate is market value, which is synonymous to

most probable selling price

The ____________ appraisal report is the longest and most formal report writing format

narrative

The text argues that the most significant errors in appraisal reports typically result from

poor selection of comparables

As the final step in 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 process in which an appraiser weighs the relative reliability of value indicators for the property being valued is more commonly referred to as:

reconciliation.

The cost approach to valuation assumes the market value of a new building is similar to the cost of constructing it today. Which of the following terms refers to the expenditure required to construct a building of equal utility using modern construction techniques, materials, and design that eliminates outdated aspects of the structure?

replacement cost

The most reliable approach to estimating land values is usually the

sales comparison approach

The economic principle of ______ implies that the value of the subject property is determined by the sale prices of comparable properties.

substitution

Each required transactional and property adjustment is made to

the adjusted sale price of the comparable after the prior adjustment

Most appraisal assignments entail estimating

the current market value of a property

Which of the following should be included in the identification of the appraisal problem?

the effective date of the valuation the intended use of the appraisal the type of value to be estimated

If you know the value of one share of common stock in Simon Property Group (SPG), you know the value of all SPG shares because

the share price is continuously revealed throughout the trading day one share is a prefect substitute for another SPG shares trade in a liquid public market

While there is no specific number of comparables that is required for every appraisal assignment, how many comparable sales are considered adequate as long as the properties are very similar to the subject property?

three

Generally, a current estimate of land value plus the reproduction or replacement cost of the building will set the ______ value of the property.

upper limit to the

The final estimate of market value is usually a ______ average of the indicated values from the different approaches.

weighted