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37 Cards in this Set
- Front
- Back
The rate necessary to attract an average investor to invest in the property being appraised is the __ rate. It reflects a return on the
funds invested. |
capitalization
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Net operating income...................
----------------------------- = Estim of __ Capitalization rate..................... |
value
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The process of bringing together the three indications of value derived
through the market, cost, and income approaches is the final step in the appraisal process. This process is called correlation (or, __). |
reconciliation
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The cost approach is appropriate for appraising newly constructed
buildings and special-purpose properties like __. |
libraries
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The __ approach usually sets
the highest limits on value—the thought being that the most a person will pay for real property is what it would cost to replace the property. |
cost
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Cost Approach Cons:
-does not always measure individual __ -difficult to state depreciation in __ -people won't pay this in a declining __ |
amenities
dollars market |
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Curable depreciation means that if repairs are undertaken, the expense incurred will be __ than the value added to the property.
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less
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Incurable depreciation means the cost to repair or remodel __ the value added to the property.
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exceeds
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"Economic obsolescence" is a loss in value resulting from
(a) government actions (like __); (b) misplaced improvements, such as a home built next to an all-night service station; (c) a drop in __ for real estate |
zoning
demand |
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"Functional obsolescence" is a loss in value caused by
(a) an unpopular floor __; (b) a lack of updated,modern appliances and equipment; (c) a poor architectural __. |
plan
style |
|
Gross monthly rent multipliers
(GMRM) = sales price / monthly income. Called GRM if __ income is used. |
annual
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To recheck the results of the market approach, the appraiser may use an appropriate GRM x estimated __ __.
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annual income
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__ mathematically computes the present value of the future income produced by real estate.
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Capitalization
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The Income Approach: a property is worth the present value of the future __ to be produced by the property.
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income
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Gross operating income = gross annual income - ( vacancy + uncollectable __ )
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rents
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Net operating income = gross operating income - __ expenses. Then, Estimated value of property = Net Operating Income / __ rate !
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operating
Capitalization |
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The market approach is based on the principle of __: "a buyer should not pay more for a home than the price it takes to acquire a comparable home."
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substitution
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The market approach is also known as the __ sales approach to value.
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comparison
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Cost Method: General rule...."The higher the capitalization rate, the __ the value of the property"
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lower
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Market Approach: Comps must use '__' sales. This a sale in which a property is sold using normal financing techniques and the buyer and the seller were fully informed and knowledgeable about the real estate market.
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market
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Market Approach: If buyer or seller was under any duress or strain, such as divorce, death in the family, or financial reversals, the appraiser would discard the sale as not being a good __ sale.
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comparable
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Market Approach: 3-5 comps are used.The appraiser takes sales
prices of the __ properties and adjusts these prices to reflect what the comparable properties would have sold for if they had the features or characteristics of the subject property. |
comparable
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Depreciation of real estate is caused by physical deterioration, functional obsolescence, and __ obsolescence.
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economic
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A run-down home in need of paint and repairs is an example of depreciation caused by __ deterioration.
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physical
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Value in use (__value) is the sentimental, emotional, subjective value a house has.
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utility
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The value sought most often is the
__ value. |
market
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For a property to have value, four elements are necessary: utility,
__ , demand, and __. |
scarcity; transferability
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If a new building has an estimated
life of 50 years, the straight-line/age-life method of __ depreciation would assume a rate of depreciation of 2 percent per year (100% / 50 year life = 2%). |
accrued
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The appraisal techniques include the cost approach, income approach, and __ approach
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market
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Don't just average the comps or methods! For any given property, one of the approaches is better and should be given more __.
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weight
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In the texbook problem, the market value EQUALS the comp which most closely __ the subject property (fewest number of adjustments); it's NOT an average of the 3 comps!
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resembles
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The Principle of Highest and __ Use: The best use of land is that which produces the greatest net return to the land.
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Best
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The most comprehensive type of appraisal report is the self contained (__) report.
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narrative
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For existing residential homes, the best appraisal approach is the __ approach.
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market
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The most comprehensive appraisal skill level is: "Certified - __".
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General
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The age assigned by the owner which reflects good or bad condition is called the __ age.
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effective
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Economic depreciation is the hardest kind to __.
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cure
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