Valuation process and pricing properties
Which of the following is defined as what it would take to recreate a property if it disappeared off the face of the earth today?
Cost
Which of the following appraisal terms means "the combination of more than one parcel purchased separately"?
Plottage
Ellen has only been licensed for two weeks, but she's already toured the home of potential clients, the Birds. What should she do to next to secure the listing?
Prepare a CMA
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 characteristics of value include which of the following?
scarcity
What does DUST stand for?
Demand Utility Scarcity Transferability
Demographics impact the housing market. Which of the following is a true statement?
An increase in the number of retirees in a given population would negatively impact the demand for large, single-family homes.
What is another word for plottage?
Assemblage
Clark works for Acme Bank and asks for your assistance. He wants you to look at a property that's about to go into foreclosure and provide him with a report on its current marketability and an approximate market value. What's Clark most likely asking you to provide?
BPO
What's the best advice when challenging an appraisal?
Be specific and concise about why the value opinion is different in your mind.
Which type of analysis is a broad estimate of price in case the lender must take over the property and sell it to an investor or on the market?
Broker's Price Opinion
You're preparing a CMA for a new listing. Which of the following will you use to estimate market value?
Comparable sales
Which type of analysis starts with a visit to the property, a search on the MLS, and a comparison of comparable sales, and hopefully ends in a listing for a real estate licensee?
Comparative Market Analysis
If, after seeing your carefully prepared comparative market analysis, a seller doesn't agree with the price range you prepared in your listing presentation, your best practice would be to ______.
Decline the listing if the seller's price and your price analysis are too far apart
An agent is working with seller clients who are very emotionally attached to their home. They want to list the property at $330,000, but the CMA indicates a price range of $255,000 to $275,000. What is the best course of action?
Explain the importance of fair market value and offer to walk them through the process.
Which of the following is an accounting of the costs to develop, financing costs, taxes, and whether the community will accept this development in this location?
Feasibility study
Kobi, an appraiser, is appraising a single-family home used for a rental. If he wants to use the income approach, which of the following will come into play?
GRM
You need to perform a sales comparison for your clients. Comparable A's adjusted sales price is $277,000. Comparable B's adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients' home?
Give more weight to the list price on the comparable that's most similar to the property.
Which of the following approaches to value uses a capitalization rate?
Income approach
Which of the following is the cost of replacing a building in the case of total loss?
Insured value
In addition to physical possibility, financial feasibility, and maximum profitability, which one of the following is a considerations when determining highest and best use?
Legal permissibility
Which type of listing can help a real estate professional determine how quickly a home in a given price range received an accepted offer?
Pending
Getting the best price is always a factor for a seller, but the ______ at which it would actually sell must be another consideration.
Market price
Which of the following is the price a lender believes the property will bring at a foreclosure sale?
Mortgage value
What happens when an appraiser determines a property's value to be less than the pre-approved loan amount?
Most buyers will have an appraisal contingency, so they can back out and receive a refund of their earnest money.
The best way to start comparative market analysis data collection is to use properties that sold within which timeframe?
No later than three to six months ago
When market conditions indicate top-of-the-market pricing, is it always in your client's best interest to price it there?
No, it still has to appraise.
Under which approach to value is personal property included in an appraisal?
None
How are the probable use of a property and its highest and best use related?
Probable and highest and best use may be different
What is the primary focus of highest and best use?
Profit maximisation
When pricing a home for the market, what should a licensee try to get sellers to do?
Put themselves in the buyers' shoes
Many market conditions impact housing prices. Which of the following is a true statement?
Reduced consumer confidence makes new buyers wary of purchasing and homeowners hesitant to trade up.
A fire destroyed Meredith's house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn't fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?
The amount it would cost to completely replace her home
What is reconciliation?
The final estimate of value based on results of the appraiser's approaches to value
Marcy's offer on a home was accepted! Which party will be contacting her about arranging an appraisal?
The lender
Claire, a seller, accepted an offer on her home. However, it just appraised for less than the sales price. Which of the following is true?
The lender will only approve a loan based on the property's appraised value.
In pricing a property, what might expired listings tell the real estate professional?
The price at which a property won't sell
Which of the following is a potential consequence of overpricing a property?
The property won't appraise high enough and you could lose the contract if you do get an offer.
Which factor that influences value considers the property's function?
Utility - Utility looks at the property's use or function.
Your buyer is purchasing a flipped property. Under what circumstances would the buyer's lender require a second appraisal?
When the buyer pays 10% more and the seller bought the property within the last 90 days
Which of the following statements is true about the listing presentation?
You should go into the presentation fully prepared with a comparative market analysis, listing agreement, MLS listings of comparable properties, and your plan for marketing the sellers' property.
When licensees follow through on what prospects have asked, arrive for meetings on time, and come prepared, what trait are they exhibiting?
competence
When a real estate professional goes beyond a broad brushstroke approach to a CMA and takes the time to research not only recent sales, but competition and expired listings, what trait are they exhibiting?
diligence
When presenting a CMA, if you take the time to explain the CMA process, help the prospective sellers understand what's behind the numbers, and ultimately leave the decision of the list price up to them, what characteristic have you demonstrated?
effective communication
This could happen if a factory were put in next door that changed and impacted property value.
external obsolescence
For most residential properties, the highest and best use of the property is relatively obvious. What is it?
in current use
What's the price at which a willing buyer and a willing seller would strike a deal given normal market conditions?
market value
Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted?
price
Which of the following can be defined as what a property is worth?
value
Which of the following terms means the price a property is worth to its owner as currently enjoyed?
value in use
