Section 1-5
Which of the following is an example of a metes-and-bounds description?
Beginning at a stake and stones about 30 feet from the center of the brook that runs across the road southwesterly from the dwelling house of the late Jebediah Smith now occupied by the widow Callie Thorton and in the west line of the highway leading by the dwelling house now occupied by the widow Callie Thorton
Price range of market
Broker, title reports, property managers or owners, Federal Housing Administration, local board of REALTORS®
Direct Capitalization
Calculate the projected net operating income for a property over the next year, then apply a capitalization rate.
Method of annexation
Can the item be removed without damaging what it is attached to?
Tax structure and rates
City hall or county courthouse, assessor's office
Traffic patterns
City hall or county courthouse, city or county engineering commission, area planning commissions, or highway and road commissions
Utilities available
City hall or county courthouse, public utility companies
Zoning
City hall or courthouse, county or city engineering commission, area planning commissions
In the sales comparison approach, which of these are selected and evaluated both quantitatively and qualitatively against the subject property?
Comparables
When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?
Competition
Eminent domain is the governments' power to take private land for public use. What is it called when the government actually seizes someone's property?
Condemnation
To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed has the highest priority?
Conditions of sale
When a new, energy-efficient, seven-bedroom home is built in the middle of a neighborhood comprised of houses similar in age, size, and construction, this principle is called what?
Conformity
Township
Consists of 36 one-square-mile sections
Section
Consists of 640 acres
Q1
Constructed with exceptionally high-quality workmanship, materials, and finishes.
Q4
Constructed with mostly stock or builder grade-quality workmanship, materials, and finishes.
Q6
Constructed with simple or no plans, often using the lowest-quality building materials.
Which approach to value measures the cost to produce a property, including land acquisition and construction costs?
Cost approach
Cost approach
Cost data on construction of a like property and accrued depreciation data on the subject property
With the cost approach to value, what is the replacement cost?
Cost to build a functionally equivalent improvement
Reproduction cost
Cost to build an exact replica of the subject with the same materials and deficiencies
Each appraisal approach relies on something different to determine value. What does the cost approach measure?
Cost to rebuild the property
Insured value
Cost to replace or rebuild a property
Legal life estate
Created automatically by law when certain events occur
Conventional life estate
Created by a property owner, who grants or transfers the property to an individual for a lifetime
What acronym can be used to remember factors that influence real property value?
DUST
In the data source field, described on page 22 of the UAD, the appraiser must note the source of market data used to verify the accuracy of the data. Which two of the following types of information can be entered into these fields?
Days on market A multiple listing service identifier
Which factor influences property value and addresses questions such as, "What's the market like?" and "Are there more buyers than sellers, or vice versa?"
Demand
In the second step of the appraisal process, the appraiser identifies the data needed. What's another term used to describe this step?
Determine the scope of work
Appraisal Qualifications Board
Develops minimum appraiser licensing and certification requirements
Metes
Direction and distance of a line forming the boundary of a property
Gross income multiplier
Divide the sales price of a comparable property by its annual gross income. Use the result on the subject property to determine a value.
Gross rent multiplier
Divide the sales price of a comparable property by its gross rental income. Use the result on the subject property to determine a value.
Rectangular government survey
Divides land into six-mile-square townships, which are further divided
tranferability
Ease at which another can purchase the property
Township lines
East-west lines that do not run through the initial point
Sergei has just purchased his first house. He owns it; no one else does! No one tells him what he can do with the house—he decides. No one shares his house with him or holds any interest in the house (except his lender, of course). What ownership type is this?
Estate in severalty
Personal Property
Everything that is not real property
Appraisal Independence Requirements are protections that were instituted by ______.
Fannie Mae
A fee simple defeasible estate can be further divided into either a fee simple determinable or a fee simple subject to a condition subsequent. Which type gives the original owner of the property the right to reclaim possession of the property by taking action?
Fee simple subject to a condition subsequent
Employment level
Financial institutions, local chamber of commerce, government councils, labor organizations
After an appraiser has finished gathering the necessary data from comparables for the subject property, which element of comparison must be applied first?
Financing
Your resource contains several questions appraisers use to test comparability. With these in mind, select the five factors Steve will consider as he selects comparables.
Financing Terms Location Market Conditions Physical Characteristics Conditions of Sale
To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?
Financing terms and cash equivalency
Rico is an appraiser who is performing a valuation on a property. What's another term for what Rico is doing?
Formal appraisal
Tony is an appraiser who's performing a valuation on a property. What's another term for what Tony is doing?
Formal appraisal
A form of depreciation or loss in value caused by defects in design defines which of the following terms?
Functional obsolescence
Homes in a new home development have been built with a floor plan that doesn't appeal to today's buyers. In a cost approach valuation of the houses, what sort of depreciation will the appraiser apply?
Functional obsolescence
Which of the following might involve old wiring or plumbing?
Functional obsolescence
Kobi, an appraiser, is appraising a single-family home used for a rental. If he wants to use the income approach, he will likely use ______.
GRM
General data
Geographic and economic features of the nation, region, city, and neighborhood
An investor is analyzing a property by looking at its ability to produce future income. The property is a 10-unit apartment building. Which of the following would be used to determine this value?
Gross income multiplier
Agreement of the parties
Have the parties agreed (in writing) on whether an item will stay or go?
Compared with condominiums, the monthly fees for a cooperative owner are typically ______.
Higher
When appraisers look past how a property is being used to determine a more optimal function, what are they determining?
Highest and best use
Functional obsolescence
House is overbuilt for the area
Physical deterioration
Improper maintenance of property
As you know, real estate includes everything in the definition of land, plus all things permanently attached to it, naturally or artificially. Artificial attachments include things such as fencing, buildings, and walkways. What's another name for these artificial attachments?
Improvements
Where on the Uniform Residential Appraisal Report is information about the building's exterior and interior materials and condition noted?
Improvements
C3 improvement
Improvements are well-maintained and feature limited physical depreciation due to normal wear and tear.
C2 improvement
Improvements feature no deferred maintenance, little or no physical depreciation and require no repairs
C4 improvement
Improvements feature some minor deferred maintenance and physical deterioration due to normal wear and tear.
C1 improvement
Improvements have been recently constructed and have not been previously occupied. There's no physical depreciation.
C6 improvement
Improvements have substantial damage or deferred maintenance with deficiencies or defects that are severe.
Freehold estate
Includes the right of ownership for an unspecified length of time
Leasehold Estate
Includes the right of use, but not ownership, for a specified period of time
income approach
Income and expense data from properties similar to the subject
Which approach to value is typically used for investment property of two- to four-family units?
Income approach
Which of the following approaches to value uses a capitalization rate?
Income approach
Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation?
Income generated
Each appraisal approach relies on something different to determine value. What does the income approach analyze?
Income the property could generate
What sort of an adjustment will an appraiser make for a difference between a comparable and the subject when the comparable's feature is less valuable?
Increase the sales price
Which of these describes an encroachment?
Intrusion of a structure or object on another's land
Janice, who has lived in an apartment for many years, is interested in moving to a cooperative. She submits an application to the cooperative's review board, but her application is rejected. The board ______.
Is not required to inform her why her application was rejected
Area planning commision
Is the neighborhood growing and why?
Observation
Is the neighborhood urban, suburban, or rural?
The first step in the appraisal process is to identify the problem. What is the importance of stating the problem up front? Select all that apply.
It informs the appraiser's approach. It helps the appraiser identify the type of data she may need.
How would you define an appraisal's use to your clients?
It's an unbiased opinion of property value that's based on researching a variety of factors, such as recent sales of comparable properties nearby. The value comes from a licensed appraiser and is valid for the date you receive it.
Thelma, Sidney, and Shirley meet at the Crusty Acres Retirement Center. Tired of unsalted oatmeal and an 8:30 curfew, they decide to ditch this joint, pool their resources, and buy a happenin' little condo uptown. Because they want to ensure that no one is displaced from the condo in the event of one owner's death, they decide to hold title in such a way that if any of them dies, the others own the deceased person's shares. How should they hold title?
Joint tenancy
Real estate
Land, plus all things permanently attached to it naturally or artificially
AIR sets certain criteria when selecting an appraiser. Which of these appraiser requirements does AIR specify? Select all that apply.
Licensed or certified in the state where the property is located. Knowledgeable about the local market. Qualified to appraise the property involved in the transaction. Able to access the data needed to perform an appraisal
Which of the following statements about a license is true?
Licenses may be revoked by the owner at any time, unless a termination date has been specified by contractual agreement
According to the Appraisal Foundation, which is the most important factor for appraisers to consider when selecting comparables?
Location
Harmony is looking at the legal description on her purchase contract. It mentions that the plat of her property is recorded in Map Book 12, page 14, at the county courthouse. What type of legal description is this?
Lot and block
Which type of legal description do courts prefer?
Lot and block
Appraisal Subcommittee
Maintains oversight of state licensing requirements
Kent is an appraiser on his way to a property for a site visit. Which of the following will he do once he's on site?
Make a sketch to show the shape of the property
There are two categories of REITs, the names of which reflect an investment choice. What are they?
Mortgage REIT Equity REIT
In which four of these scenarios would an appraiser likely use the cost approach?
Movie theatre Winery and vineyard Newly constructed home $10 million property
Now let's see if you recall how to read a rectangular government survey description. In your resources, there's an image for a parcel of land in Kennedy Township. Which of the following accurately describes this parcel of land?
NW ¼ SE ¼ NE ¼ Section 1, Kennedy Township
Which one of the following statements about community property rights is true?
Nine states have community property rights.
Range lines
North-south lines that do not run through the initial point
American Society of Appraisers (ASA)
One of the oldest appraisal organizations in the world, ASA members represent a variety of appraisal specialties, including real, personal, tangible, and intangible property.
Prk
Park view
Easement appurtenant
Permanent right to use another's land for the benefit of a neighbor
Neighborhood boundaries
Personal observation, broker, city hall or courthouse, plat maps
Hazards and nuisances
Personal observation, neighbors
What does NAR have to say about the USPAP?
Persons who perform appraisals of real property shall be licensed or certified by their respective state regulatory agency and the appraisal shall be conducted in accordance with standards established in the Uniform Standards of Professional Appraisal Practice (USPAP).
To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed is applied last?
Physical characteristics
Which of the following occurs when the property is damaged or just has normal wear and tear?
Physical depreciation
Bounds
Physical features that define the boundaries of the land
What other name is the lot-and-block system known by?
Plat reference system
Which of the following is a key consideration and starting reference for a metes and bounds description?
Point of beginning
PwrLn
Power lines
Market value
Price a property will bring under normal conditions
Mortgage value
Price at which the lender will offer a loan
The fewer properties on the market, the greater the scarcity. What's the effect on prices?
Prices are pushed upward.
Your client, Skip, is an investor who's just opened a thriving new sporting goods store in a location outside the city. What principle of value indicates that his thriving business will attract others to engage in similar activity in the same area, driving down his profits?
Principle of competition
The subject property is going under contract for $375,000 and is located in a residential neighborhood. The gross living area is 2,600 square feet, and it's located on a half-acre lot. The house is a two stories and has a three-car attached garage. Assume that all other variables except for the ones mentioned below are similar to the subject property. Which property is most similar to the subject property?
Property A has a three-car attached garage.
Which of the following properties would require the fewest adjustments in comparison with a two-story, split-level subject property that has been well-maintained with limited depreciation due to normal wear and tear and was built 10 years ago?
Property D is a one-and-a-half-story home built 15 years ago.
Which of the following is a piece of specific data an appraiser may gather?
Property lot size
Now that we've reviewed what police power is, let's look at our first public form of landownership restriction: taxation. In what way does taxation limit private landownership?
Property owners are required to pay property taxes and if they don't pay, the unpaid taxes become a lien against the property.
lot and block
Provides plat references
By what other name is the rectangular government survey system known?
Public Land Survey System (PLSS)
Dwellings with this URAR quality rating are of basic quality and lower cost. Some of them may not be suitable for year-round occupancy, and electrical, plumbing, and other mechanical systems and equipment may be minimal or nonexistent.
Q6
The more a home fits in with the others in the neighborhood, the more value it has on the market. With this in mind, which two of these styles would be comparable to one another?
Ranch +Split-Level
Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this?
Rectangular government survey
Which legal description method is regulated by the U.S. Department of the Interior's Bureau of Land Management?
Rectangular government survey
Scarcity
Reflection of market supply, which relates to demand
Replacement cost
Reflects the cost to build a functionally equivalent improvement
Demand
Relates to how popular or desirable a property is
Which of the following is a normal part of an appraiser's job?
Report writing
Investment value
Return on investment that a property may provide
Disposition
Right to determine how, when, and whether the property is to be sold and transferred
Easement in gross
Right to use the land (not necessarily an adjoining property)
In which field of the sales comparison grid would you find an indication of an arm's length sale?
Sale or financing concessions
What information is needed to complete both a CMA and an appraisal?
Sale prices for comparable properties
sales comparision
Sales data on comparable properties
You're acting as a listing agent for a seller who's moving to a different state and needs to unload a property quickly. You list the property for $180,000, but sell within the week at $167,000. The appraisal shows that your listing price was an accurate value of the house. What is $167,000 in this scenario?
Sales price
Information shown in this area of the Uniform Residential Appraisal Report includes the property's dimensions, area, shape, specific zoning classification, zoning description, and zoning compliance.
Site
What's the first step an appraiser will perform when conducting an appraisal?
State the problem.
Specific data
Subject site and improvements, including a physical description
The three approaches are based on certain principles of value. On which value principle is the sales comparison approach based?
Substituion
The economic principle of ______ says that when there are two houses in the same neighborhood with the same size, appeal, and utility, the lower-priced one will tend to sell first.
Substitution
Where's an appraiser most likely to find accurate information about property taxes in a market area?
Tax assessor records
Jack, Jerry, and Joe are brothers. Their parents die, leaving them the family home. Each holds an undivided interest in the entire property, and there is no right of survivorship. If one of them dies, that brother's share will go to whomever he has stipulated in his will. What ownership type describes Jack, Jerry, and Joe's situation?
Tenancy in common
Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively?
Termination of co-ownership by partition
If some information about the subject property in the sales comparison grid appears to be incorrect, in what three places would you look to verify information about the subject property?
The Subject, Contract, Site, and Improvements sections on page one of the URAR The sales contract for the transaction Your own observation of the property
Salvage value
The amount for which improvements can be sold
Enters a zero
The appraiser considers a difference and determines that no adjustment should be made.
Which statement best describes the most common approach used to reconcile the three appraisal approaches?
The appraiser may weigh one or two approaches more heavily than the others, as appropriate for the property type.
You're acting as the buyer's agent in a transaction. The lender requested an appraisal, which was performed. How is an appraisal typically paid for in this situation?
The appraiser's fee will appear as a buyer cost paid at closing.
Which of the following is an arm's length transaction?
The buyer and seller are unknown to one another.
As you'll see on the sample URAR, Steve rated the condition of the floors as C2 and the condition of the walls as C3. Based on these ratings, what must be true about the walls compared to the floors?
The condition of the floors (C2) shows less physical depreciation than the condition of the walls (C3).
Your client's next obvious question would be: "What's an opinion of value?"
The estimate of value of one specific property as of one specific date for one specific party
Steve continues his observation of the exterior and notes the materials of the exterior walls, the roof surface, gutters and downspouts, window types, storm sash and screens. He gives each feature a rating of C3. Which of the following statements best describes this rating?
The exterior walls are well-maintained and feature limited physical depreciation due normal wear and tear.
If you're reading the Uniform Residential Appraisal Report and see the condition of the exterior walls rated a "C4," and the condition of the roof rated a "C2," which of the following must be true?
The exterior walls show more physical depreciation than the roof does.
What is reconciliation?
The final estimate of value based on results of the appraiser's approaches to value
He circles the building to get a closer look at the foundation. He notes "Concrete/C4" for the foundation walls. Which of the following statements best describes the condition of the foundation walls Steve is rating?
The foundation walls feature some minor deferred maintenance and physical deterioration due to normal wear and tear.
Grant and Amy live very happily in a PUD. They both work and enjoy living in a community that has everything their family needs in a relatively small area. Which three of the following are included in Grant and Amy's PUD ownership?
The home in which they live The property on which their home is built Shared common area
The Appraisal Institute (AI)
The largest professional real estate appraisal organization, AI offers designations to those who meet education, examination, and experience requirements in areas related to commercial, industrial, agriculture, residential, and land valuation
Principal meridian
The north-south line that runs through the initial point
How is the grid that's used in the rectangular government survey system laid out?
The numbers start in the northeastern corner and follow a zigzag pattern.
Fee simple defeasible
The property holder owns the property subject to a condition. If the condition is breached, the property will go back to the original owner.
Fee simple absolute
The property owner is granted all rights to the property by law.
Which two of these items would you tell your client are included in an appraisal?
The property's probable monetary value on the open market The appraiser's opinion of the property's condition
Value in use
The property's worth to the person using it
Which of these best describes the purpose of FIRREA Title XI?
The public's and federal government's financial interests are protected during a real estate transaction by ensuring that real estate appraisals are performed with professional integrity.
What will an appraiser use sales data on comparable properties for?
The sales comparison approach
The appraiser must provide a data source used to obtain data on each comparable sale. For example, "MRIS#AA123456789;DOM220" gives the abbreviation for an MLS organization with the listing identifier and indicates the "days on market." What are two reasons why it's important to include such information in the sales comparison grid?
The sales comparison approach depends on accurate sales price data that can be verified. The source of data is required by the UAD specifications.
When Edmund died, he left several properties to his heirs. He owned a grocery store and a campground outright, and a strip mall that was held in a living trust. Which of the properties, if any, did NOT have to go through the probate process after his death?
The strip mall
Adds to the sales price
The subject property has a valuable feature not found in the comparable.
Subtracts from the sales price
The subject property is missing a valuable feature found in the comparable.
Going-concern
The value of the property as a functioning business
Which of the following is true about air rights?
They allow the owner to use the open space above buildings.
Joint tenancy and tenancy by the entirety are very similar. There's one factor that makes Madge and Steve tenants by the entirety instead of joint tenants. What is it?
They are spouses.
Whereas with tenancy in common, only the unity of possession is required, joint tenancy requires several unities. Which of these unities are required for joint tenancy? Select all that apply.
Time Title Interest Possession
Do you know what legislation established congressional oversight of appraiser qualifications and appraisal standards?
Title XI of FIRREA
Aaron, who's in the process of selling his home, is furious. Two of the houses that have recently been built as part of a new subdivision that abuts his property are several feet over his property line. What issues may be caused by this encroachment?
Title problems for Aaron, which may impact the sale of his home Inability of the buyer of Aaron's home to secure a loan, if there's an issue with the title Additional costs for the developer to have the two homes moved Costly redesign and development delays for the subdivision developer
Why does an appraiser need an understanding of business and economics?
To appropriately include information about the status of the economy when arriving at a value for a subject property
Why does an appraiser need to be good at analysis? (We're talking the logical kind of analysis, not the psychological kind you may use with clients.
To process multiple types of data about a property in order to arrive at a single value To determine the scope of work and plan an appropriate process for valuing the subject property
What is the purpose of the appraiser independence requirements?
To protect parties, such as investors and homebuyers
You'll become familiar with the data requirements for each section of this form as you work through this course. For now, let's review the purpose of this form. What's the purpose of the Uniform Residential Appraisal Report?
To provide the lender with an accurate opinion of the property's market value
Why might an appraiser look at title reports?
To verify that the owner has a clear title to the property
A living trust differs from a testamentary trust in that a living trust is established to convey property as well as to ______.
Transfer ownership before death and avoid probate
All trusts have three parties: the trustor, the beneficiary, and the ______.
Trustee
Which of the following provides the lender with an accurate opinion of a property's market value?
Uniform Residential Appraisal Report
USPAP is a vital part of the modern real estate appraisal practice. What does USPAP stand for?
Uniform Standards of Professional Appraisal Practice
What standards do appraisers follow?
Uniform Standards of Professional Appraisal Practice
Soren is an appraiser. As such, what guidelines must he follow?
Uniform Standards of Professional Appraisal Practice (USPAP)
Metes and bounds
Uses monuments, compass headings, and directions
Easement by necessity
Usually involves access to a road
There are a lot more sellers than buyers in the current market. How does this demand influence value?
Value is pushed downward.
Each appraisal approach relies on something to help determine a property's value. What does the sales comparison approach rely upon?
Value of similar properties in the market
Intention of person placing it
Was the item intended to be temporary or permanent?
Wtr
Water view
Tax assessor recxords
What are the property values for other properties in the neighborhood?
Q3
Workmanship exceeds acceptable standards, and many materials and finishes have been upgraded from "stock" standards.
Julian and Clara want to leave their real estate holdings to their children. If at all possible, they'd like those holdings to avoid the probate process after they're deceased. Their attorney recommends a land trust. Is there a type of trust they could establish that would avoid probate?
Yes, a living trust would avoid probate.
certified residential Real Property Appraiser
can appraise any residential property, regardless of value or complexity, and vacant land that will be developed as residential property.
What two types of data does an appraiser gather?
general and specific
Glfvw
golf course view
C5 improvement
improvements feature obvious deferred maintenance and are in need of significant repairs
Which approach to finding value would licensed appraiser Christina probably weigh most heavily when appraising a three-unit rental property?
income
Easement
right acquired by one party to use another party's land for a special purpose.
The GRM for Sunny Hills is 147. If a three-bedroom, one-bath house in Sunny Hills rents for $820 monthly and sold for $125,000, what is the suggested value of a house that leases for $1,000 monthly based on the GRM?
$147,000 The value of the home that rents for $820 monthly isn't relevant to your calculation, which is 147 x $1,000 = $147,000. Remember that GRM is just an estimate of value.
To be able to make valid computations of adjustments, the elements of comparison must be applied in a particular order. Which element must be applied first?
1. financing terms and cash equivalency, 2. conditions of sale, 3. market conditions, 4. location, and 5. physical characteristics.
We mentioned earlier that one section is a square mile or 640 acres. Using the same parcel of land as the previous question, determine how many acres it is.
10 acres
A strip mall valued at $850,000 has a $67,500 annual net operating income. What is the capitalization rate for the strip mall?
7.9%
Appraiser trainee
75 hours- education required to obtain that license.
Now let's review some of the benefits associated with holding real estate in a land trust. Which four of the following items are benefits of a land trust?
A beneficiary interest in the land can be conveyed without having to go through the formality of a deed. A land trust is a grantor trust that is revocable. Asset transfers into trusts are protected by the Garn-St. Germain Depository Institutions Act. The identity of the trust owner is not made public.
What is a REIT?
A company that owns and usually operates income-producing real estate and provides investment opportunities to shareholders in these properties
Tenancy at sufferance
A hold-over tenant (someone who didn't leave when their lease expired) has this kind of possession.
Estate for years
A lease that ends on a specific date, survives the death of either party, and is inheritable.
Tenancy at will
A lease without an established time period that may be terminated at will by either party and is not inheritable.
When stating the problem, which of the following does the appraiser need to identify the subject property?
A legal description and mailing address
What is a principal meridian?
A north-south line used as a reference point in the rectangular government survey system
What is a section?
A one-square-mile square formed in the use of the rectangular government survey system
Under which circumstance can the state use its power of escheat?
A property owner dies without a will in place, and no heirs or creditors can be found.
What rating scale do appraisers use to indicate the condition of the subject property and comparable properties?
A range from C1 for "like new" to C6 for "major repairs needed"
What would you expect to find in the condition field for a comparable property in the sales comparison grid of the URAR?
A rating from the C1‒C6 scale
What type of property is Aileen appraising if she's using the income approach?
A short-term lake rental
What type of property is Valerie appraising if she's using the sales comparison approach?
A single-family residence built six years ago
Easement by prescription
Acquired through years of use
External depreciation
Airport noise
What type of property is Gerald appraising if he's using the cost approach?
An industrial warehouse
The value principle of ______ is the basis of the income approach to appraisal.
Anticipation
At what point during ownership may a property owner place a restriction on a deed?
Any time
Yield capitalization
Apply an expected rate of return to income from the entire holding period to find the current property value.
As you know, most real estate purchases are financed, and lenders rely upon an accurate property value estimate that will ultimately serve as collateral for the loan. Which valuation method does the lender rely upon?
Appraisal
Which of the following groups is responsible for developing the minimum federal licensing and certification requirements for real property appraisers?
Appraisal Qualifications Board
Which of the following is a true statement about how adjustments are made in the sales comparison approach?
Appraisers adjust upward when a comparable is missing a feature found in the subject property.
Population trends
Area planning commissions, US Census Bureau data, local chamber of commerce, government councils
Site value
Assumes the land is vacant and bases opinion on highest and best use
Licensed residential real property appraiser
150 hours-education required to obtain that license.
Certified residential real property appraiser
200 hours- education required to obtain that license.
Certified general real property appraiser
300 hours-education required to obtain that license.
Let's test your memory of land descriptions a little more. Related to the metes and bounds method of legal land description, what is a monument?
A permanent physical marker that's either man-made or natural
Not all of your clients are going to know what a real estate appraisal is. Let's assume you're meeting with a client who poses the question, "What's an appraisal?" How would you respond?
A professional appraiser's opinion of value
Liquidation value
Amount a property will bring in a quick sale
Say you've listed a property in a rural area. Homes are scattered, sometimes miles apart. On top of that, the homes come in all shapes and sizes: low-cost manufactured, new energy-efficient custom, old farmhouses, dome homes ... you name it. In other words, it's a situation where you and the appraiser will have a hard time finding comparables. So here's the question: Which two of these are reasons that comparables matter?
An appraiser needs comparables as part of the analysis used to determine any property's value. Comparables help you determine an appropriate listing or purchase price.
Another type of fixture that both licensees and appraisers deal with is trade fixtures. Do you recall what a trade fixture is?
Any item that a tenant attaches to a rental building or space that is used for business purposes
Let's begin with the basics. What is a fixture?
Any natural items that are permanently attached to the land Any man-made items that are permanently attached to the land
What are improvements with regard to property?
Artificial attachments to land that include items such as fencing, buildings, and walkways
Which of the following actions toward an appraiser would be considered improper?
Asking an appraiser to remove information about adverse property conditions from an appraisal report
LaTonya's aunt left her a bungalow on the outskirts of the city. For many years, it was the place for family holiday gatherings, and LaTonya's sister was even married there. That's why her family is so upset to learn that she plans to sell the bungalow as soon as she gets it cleaned out. Which real property right allows her to sell the property?
Disposition
You'll recall that the definition of real property includes interests, benefits, and rights. Can you identify what the rights are? Which five of these rights associated are with real property?
Enjoyment Disposition Possession Control Exclusion
What does the I in the acronym MARIA stand for, when determining whether an item is a fixture?
Intention in placing item on land
What type of value may consumers be interested in if they are looking for the potential rate of return?
Investment value
In a federally related transaction, the lender is required to hire an appraiser who ______.
Is state-licensed or state-certified
Adaptability for use
Is the item being used as personal property or real property—has it been adapted / customized?
What are the three most common systems used to describe land in the U.S.?
Lot and block Metes and bounds Rectangular government survey
The MARIA acronym helps to identify the five tests of a fixture. Which of the following tests refers to how and whether the item is attached to the property?
Method of annexation
What are the five tests to determine if an item is a fixture and part of the real estate?
Method of annexation Agreement of the parties Relationship of the parties Adaptability of item for land's use Intention of person placing it
When it comes to a property's highest and best use, which of the following applies?
Profitability
Appraisal Practices Board
Provides appraisers with guidance on appraisal issues
Even though Vlad is eager to explain how different an appraiser is from you, the real estate professional, there are some areas where you share skills and knowledge. Which two of these areas are ones that both an appraiser and a real estate professional should be knowledgeable about?
Real estate market Mortgage market
Real Property
Real estate, plus the interests, benefits, and rights automatically included with real estate ownership
Control
Right to determine interest in the property for others
Possession
Right to occupy the property
Enjoyment
Right to possess the land without harassment or interference
Exclusion
Right to refuse other interests in your property
Which two of these loan transactions must comply with AIR?
Single-family residence, conventional loan Four-unit residence, conventional loan
Window coverings, light fixtures, and mounted TVs are often items that confuse buyers and sellers when differentiating between real and personal property. Identify the three items that are personal property and would move with the seller.
Sofa Rug +Table TV + electronics
Utility
Speaks to the property's function
Melanie is an experienced real estate licensee, and she's had several encounters with Rick, an appraiser who she feels isn't performing his work according to the standards required by USPAP. She's finally ready to lodge a complaint when his shoddy work causes one of her transactions to fall through. Who's responsible for requiring Rick, a licensed appraiser, to follow professional standards?
State regulators
A lot-and-block system survey is a two-step process.
Step 1: A rectangular or metes-and-bounds description is referenced Step 2: The land is divided into lots with numerical designations of the parcels
Land
The earth's surface extending downward to the center of the earth and upward to infinity, including permanently attached natural objects
Base line
The east-west line that runs through the initial point
In a metes-and-bounds description, you may recall that the point of beginning is extremely important. Why is the point of beginning so important?
The entire description is based off of the point of beginning.
Relationship of the parties
When a dispute occurs, courts tend to favor tenants and buyers over landlords and sellers.
National Association of Real Estate Appraisers (NAREA)
With members in all 50 states, NAREA provides standards, guidelines, and ethics to be followed by its members.
Appraisal Standards Board
Writes the Uniform Standards of Professional Appraisal Practice (USPAP)
certified general Real Property Appraiser
can appraise any residential or non-residential property, regardless of value or complexity.
licensed residential Real Property Appraiser
can appraise one- to four-unit residential properties that are valued up to $1 million and are not complex in nature.
