Section 16 Key Terms & MC
A 9-year-old condominium was estimated by an appraiser to have a reproduction cost of $240,000. It has an effective age of 3 years and an economic life of 60 years. What is the accrued depreciation? 1) $12,000 2) $4,000 3) $36,000 4) $3,500
1
An appraiser found three comparable properties, but she believed that one of the properties was significantly more relevant to the true value of the subject property. In this case, what would the appraiser most likely do? 1) Assign weighted values to each of the three properties 2) Add and subtract for differences and take the average 3) Use the estimated reproduction cost because there aren't enough comps 4) Ignore the difference as a biased opinion
1
Carlyle managed an apartment building that has 10 units which rents at $1100 each per month. Last month he had combined vacancy and collection losses of $3,300. His insurance payment was $400, and the utility bills for the common area was $700. What was his effective gross income last month? 1) $7,700 2) $6,600 3) $9,900 4) $7,300
1
What is a liquidation sale? 1) A liquidation sale is associated with a rapid sale. 2) A liquidation sale is used to sell property piece by piece. 3) A liquidation sale is associated with an estate. 4) A liquidation sale is used to establish going-concern value.
1
What is combining two or more adjoining properties called? 1) Assemblage 2) Plottage 3) Accretion 4) Alluvium
1
A subject property has four bedrooms. A comparable property sold for $275,000 with only 3 bedrooms. The appraiser attributes a $5,000 to the 4th bedroom. How is the adjustment made? 1) Minus $5,000 to the comparable 2) Plus $5,000 to the comparable 3) Minus $5,000 to the subject property 4) Plus $5,000 to the subject property
2
What does effective age mean? 1) How long the property is expected to last 2) How old the building or house appears to be 3) The actual age of the property 4) The amount of time since it was last improved
2
When vacancy and collection losses are deducted from annual potential gross income and income from other sources is added, what is the result called? 1) PGI 2) Effective Gross Income 3) Net Operating Income 4) Reserve
2
Whose mission is it to develop, interpret, and amend the Uniform Standards of Professional Appraisal Practice, or USPAP? 1) The Appraisal Subcommittee (ASC) 2) The Appraisal Board (ASB) 3) The Financial Institutions Reform, Recover, and Enforcement Act (FIRREA) 4) The Appraisal Qualification Board (AQB)
2
You are appraising a 5-year old home. If the livable square footage is 3,500 with a cost of $95 to replace according to a cost-estimating service and the 400 square foot garage can be replaced at $60 a sq. foot, calculate the reproduction cost of the structure. 1) $365,500 2) $356,500 3) $332,500 4) $71,300
2
Donny's house didn't appraise as high as he expected. The appraisal report cited a railroad track running along the back of the property as having a negative effect on the value. This is an example of what? 1) Property Progression 2) Physical deterioration 3) External obsolescence 4) Functional obsolescence
3
Kevin knows that rental property in the area averages a Gross Income Multiplier (GIM) of 7.5. If the property is producing annual rental income of $55,000 plus additional income of $20,000, how much should he offer for the property? 1) $412,500 2) $150,000 3) $562,500 4) $262,500
3
The cost-depreciation approach is commonly used to find value for all of the following reasons except which one? 1) New construction 2) Verify values found through other approaches 3) To Calculate income 4) Special-purpose properties
3
Functional obsolescence matches which description? 1) A railroad running on a neighboring property that causes the home to shake when a train passes by 2) A homeowner that failed to keep the property maintained 3) Normal depreciation 4) A one-bathroom home
4
What is the value of a property with a Net Operating Income of $175,000 and a capitalization rate of 7.5%? 1) $23,333,333 2) $233,333 3) $13,125 4) $2,333,333
4 175,000/.075=$2,333,333
According to Florida Statutes 475, real estate licensees may perform appraisal for a commission as long as the appraisal follows USPAP standards, are not being performed for a federally related transaction, and the licensee is not referring to him or herself as an actual certified appraiser.
False
Appraisers commonly use the Comparative Market Analysis to determine value.
False
In real estate, the definition of highest and best use is always based on how the property is currently being used.
False
Liquidation value is when property is sold piece by piece rather than as a whole unit.
False
The Concept of Substitution means that a buyer will be willing to pay more for a property that has lower quality features substituted with higher quality features.
False
When figuring operating expenses to calculate net operating income, you can include the cost of the mortgage as an expense.
False
Cost is how much money is required to produce the item. Price is the amount actually paid for an item. And value is how much something is worth to the average buyer and seller at the time value is being determined.
True
Progression is the value of an inferior property being enhanced by association with superior properties whereas regression is the value of a superior property that is adversely affected by association with inferior properties
True
Rather than ordering a full appraisal, lenders may utilize an Automated Valuation Model which is a computer program that provides a quick synopsis of value.
True
The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) is a provision under Title XI that mandates states to license and certify appraisers.
True