1. Property Valuation

Question 1

A principle of property value that looks at the maximum amount it would cost to buy an alternate property that is the same as the subject property, either by a comparable replacement or an exact reproduction.

Answer 1

Subsitution

Question 2

A principle of property value that estimates value based on looking ahead at the value, positive or negative, on a property due to possibility of future changes to either the property or its surroundings.

Answer 2

Anticipation

Question 3

A principle of property value which determines the use that will produce the greatest current value, or the most profitable return on investment.

Answer 3

Highest and best use

Question 4

A principle of property value which refers to the mix of land uses that maximizes value for all of the properties involved,

Answer 4

Balance

Question 5

A principle of property value which simply applies this common economic principle to real estate.

Answer 5

Supply and demand

Question 6

A principle of property value if a particular property is yielding high profits, similar ones are likely to follow and try and get in on the action.

Answer 6

Competition

Question 7

A principle of property value which where all properties in a given area are likely to benefit from being similar to others.

Answer 7

Conformity

Question 8

When a smaller property benefits by receiving increased value from being among larger more valuable ones.

Answer 8

Progression

Question 9

The negative impact on the value of a large and/or more expensive property when it is in an area of smaller or lower-priced propertyes.

Answer 9

Regression

Question 10

A principle of property value which makes a cost/benefit analysis of the actual increase in property value based on the cost of an improvement.

Answer 10

Contribution (increasing/diminishing returns)

Question 11

A principle of property value where a loss of value results from any cause.

Answer 11

Depreciation

Question 12

A principle of property value which applies to physical factors such as normal wear and tear, as well as poor/deferred maintenance or prolonged neglect.

Answer 12

Deterioration

Question 13

A principle of property value which applies to outdated functionality or non-property influences.

Answer 13

Obselescence

Question 14

Any downturn from the original condition of the property (e.g. old roof, weathered paint, broken windows)

Answer 14

Physical deterioration

Question 15

Physical deterioration that includes economically feasible repairs

Answer 15

Curable physical deterioration

Question 16

Physical deterioration that includes excessive, cost-prohibitive repairs.

Answer 16

Incurable physical deterioration

Question 17

Outdated design or safety standards.

Answer 17

Functional obsolescence

Question 18

Functional obsolescence that includes upgrades to things like wiring and plumbing

Answer 18

Curable Functional obsolescence

Question 19

Functional obsolescence that is generally identified after weighing the value added to the property upgrades and finding the “cure” cost-prohibitive.

Answer 19

Incurable Functional obsolescence

Question 20

Obsolescence that refers to surrounding influences on a subject property.

Answer 20

External/economic/locational obsolescence

Question 21

The most probable price a property would bring in a competitive, fair, and open market. The price an informed seller is willing to accept, and an informed seller is willing to pay.

Answer 21

Market value, fair market value

Question 22

Intended to estimate market value.

Answer 22

Appraised value

Question 23

The value a taxing authority has placed on a property for tax computations (NOT a current, actual market value)

Answer 23

Assessed value

Question 24

The maximum amount a lender will lend.

Answer 24

Loan/Mortgage Value

Question 25

The maximum amount an insurance company will insure.

Answer 25

Insured/agreed Value

Question 26

An insurance determination of the depreciated value of the property, or replacement cost minus accrued value.

Answer 26

Actual cash value.

Question 27

What a property is worth to a condemning authority in an eminent domain proceeding.

Answer 27

Condemnation value

Question 28

The value given on the probated asset list for the real property of a deceased owner.

Answer 28

Estate value.

Question 29

1. Utility 2. Scarcity 3. Demand 4. Transferability

Answer 29

Elements of value

Question 30

It is useful for something

Answer 30

Utility

Question 31

The available supply

Answer 31

Scarcity

Question 32

A combination of the desire to own it and the ability to purchase it.

Answer 32

Demand

Question 33

It can be sold or exchanged.

Answer 33

Transferability

Question 34

An estimate of value as of a specified date.

Answer 34

An appraisal

Question 35

1. Define/state the problem 2. Determine the data needed and collect it 3. Determine the highest and best use of the land and property 4. Estimate the property value 5. Reconcile the data 6. Prepare the final report

Answer 35

The check-list for reaching an estimate of value

Question 36

An approach to estimate property value which compares the subject property to comparable properties that have recently been sold on the market.

Answer 36

Direct sales (market data) approach

Question 37

An approach to estimate property value which estimates value based on what it would cost to buy the land and build comparable replacements for all of the property improvements.

Answer 37

The cost approach

Question 38

1. Estimate the value of the land only 2. Estimate the new construction cost. 3. Determine the accrued, or combined, depreciation 4. Subtract the accrued depreciation 5. Add the value of the land to the value of the improvements

Answer 38

5 steps to preparing a cost approach analysis

Question 39

The primary method for determining the new construction costs of improvements needed for the 5 steps to preparing a cost approach analysis. Determines the current cost of an acceptably similar copy.

Answer 39

Replacement Cost

Question 40

Multiply cost-per-square foot of building a comparable by the square footage of a new building to estimate construction costs.

Answer 40

Square foot method

Question 41

An approach to estimate property value which estimates the present value of future net income of income-producing properties through the process of capitalization. Based on the principle of anticipation.

Answer 41

The income approach

Question 42

Converts future income projections into current value

Answer 42

Capitalization

Question 43

The rate of return on the cost of investment

Answer 43

Capitalization rate

Question 44

The maximum rental income at 100% occupancy.

Answer 44

Potential gross income

Question 45

The actual income after subtracting vacancies and rent collection losses.

Answer 45

Effective gross income

Question 46

What's left of the gross income after subtracting all of a property's operating expenses (except tax).

Answer 46

Net operating income

Question 47

Method of estimating value often used for one-to-four unit residential rentals or for small commercial and industrial sites.

Answer 47

Gross rent multiplier, gross income multiplier

Question 48

The economic climate and the supply of properties that are in demand.

Answer 48

Overall market conditions.

Question 49

The result of defects caused by negative actions of past owners.

Answer 49

Stigmatised or psychologically impacted property