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61 Cards in this Set
- Front
- Back
As the value of property increases, typically the value of the dollar |
Decreases -in other words, if the prices go up, your dollar buys less |
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If an appraiser finds indications of soil problems he would normally recommend |
Soil inspection as a condition of the appraisal and appraisal is only valid for the date the appraiser sites in the report |
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Economic obsolescence involves depreciation based on what factors |
Outside the property (i.e. the city widens a street decreasing the size of the property) |
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What is the most detailed and complete report and appraisal would issue |
Narrative form |
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The best method for estimating the value of a house to be built on vacant land |
Cost approach |
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An appraiser calculates the accured depreciation of improvements, land is not depreciated |
Cost approach
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Determine the cost of new construction is the most difficult but most accurate method. It details all raw materials and installation cost |
Quantity survey method |
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Method determining the replacement cost is the easiest at least accurate method, if the original cost of the construction is known. The appraiser multiplies the original cost of the subject property by a factor that represents the percentage change in construction cost between the time the construction was built and the present
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Index method |
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If the original cost of the structure is not known what method is easiest but least accurate method
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Square-foot method |
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Capitalization of net income technique used to estimate the value of land, not the building value
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Land residual technique
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Another appraisal method where the appraisal estimates the land value of improved property by deducting the value of any site improvements |
Abstraction |
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The present highest and best use when a change in highest and best use is in the foreseeable future. (Example - a Goldmine where the gold is running out
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Interim use
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An unbiased estimate or opinion of the property value given date
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Appraisal
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What is created to identify the range of values for particular property of identifying current listed properties (the competition) recently sold and closed properties and expired listings
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(CMA) comparative market analysis
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Present worth of rights to future benefits that come from property ownership
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Value |
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The price a property would bring it freely offered on the open market, with both a willing buyer and a willing seller
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Fairmarket value
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Multiple offers in a short market time indicates a
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Sellers market
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To have an oversupply of inventory is a
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Buyers market
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The price at which the property changes hands between a willing buyer and seller
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Market price
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Market value is sometimes called the
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Objective value, since it may be determined by actual data
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Is the usefulness of the property to its owner
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Utility value
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Is a likely price that a property would bring in a forced sale (forclosure or tax sale)
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Liquidation value
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What are the four elements to create value
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Demand, utility, scarcity, and transferability (DUST)
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Also called external characteristics, these characteristics include quality of conveyances such as availability of schools, shopping, public transportation, churches, and similarity of land-use
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Physical characteristics
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What may be the most important factor influencing value, as far as highest and best use
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Location
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Includes building codes, zoning laws, public health measures, fire regulations, rent controls, and pending legislation
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Political forces
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Increasing supply or decreasing demand will reduce the price in the market
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Principle of supply and demand
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Is how much of a product is desired by buyers
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Demand
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Is how much of the product the market can offer
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Supply
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Values set by the cost of getting an equally desirable substitute
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Principle of substitution
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Probable future benefits to be derived from a property will increase the value
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Principle of anticipation
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An appraiser must be aware of trends that affect the value of real estate
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Principle of change
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When land uses are compatible and homes are similar in design size, the maximum value is realized
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Principle of conformity |
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A lesser value property will be worth more because of the presence of greater value properties nearby
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Principle of progression
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A greater value property will be worth less because of the presence of lower value properties nearby
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Principle of regression
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One that is not the highest and best use for the site on which is placed by reason of excess size or cost
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Overimprovement
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The worth of an improvement and what it adds to the entire property's market value, regardless of actual cost of improvement
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Principles of contribution
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When contrasting, opposing, or interacting elements are in balance in a neighborhood or area, value is created
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Principle of balance
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Summary appraisal report
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Uniform residential appraisal report most commonly used
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What is the most comprehensive and detailed appraisal
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Self-contained appraisal report
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The use of report is limited to the client
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Restricted use appraisal report
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What approach uses the principle of substitution to compare recent sales and listings of similar properties in the area
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Sales comparison or market data approach
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What approach is used primarily for residential properties
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Sales comparison
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Properties similar to the subject property that have sold within the previous six months
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Comparables
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What approach is land and improvements valued separately
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Cost approach
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What approach takes that reproduction or replacement cost of the improvements my secure depreciation plus the land value
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Cost approach
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What approach used primarily for new buildings, special-purpose buildings, or properties with few or no comparables
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Cost approach |
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What are the three appraisal approaches
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Sales comparison approach, cost approach, and income approach
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Difference between the cost to replace the property and the properties current appraised value
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Accrued depreciation
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What method is the most common method used to calculate accured depreciation
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Straight-line (age-life)
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Estimates the present worth of future benefits by capitalizing the income stream of the property
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Income approach
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When actually paid by tenant for use on the premises and may or may not be the same as economic rent
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Contract rent
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When the property with command in an open market
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Economic rent
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All of income a property should produce
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Scheduled gross income
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Ordinary and necessary costs to the operating income producing property, does not include mortgage interest or IRS depreciation
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Operating expenses
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Income available after paying operating expenses, but before paying debt
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Net operating income
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Is the conversion of income stream into an indication of value
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Capitalization
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Annual rate of return produced by income producing property or the desired rate of return by an investor
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Capitalization rate (CAP)
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Is a number that, when multiplied by the income, is an indicator of value
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Multiplier (the values based on income without expenses being deducted)
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When multiplied by the monthly gross rental income, will give an indication of the properties market value
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Gross rent multiplier (GRM)
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When multiplied by the annual gross income from all sources, given indication of the properties market value. The gross income could include parking, laundry, or fees for other services offered
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Gross income multiplier (GIM)
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