Quiz 16 The Real Estate Appraisal Flashcards
Market value is defined by all EXCEPT
A) the assumption that the buyer and seller are sufficiently informed.
B) the allowance of a reasonable time for market exposure.
C) the relation to the price for which the property should sell in the open market.
D) the consideration of the price for which the property was last sold.
D) the consideration of the price for which the property was last sold.
The former selling price of the property is not a consideration when determining market value.
Which principle is the sales approach based on? A) Conformity B) Change C) Anticipation D) Substitution
D) Substitution
Substitution is the principle used when determining value based on the market data or sales comparison approach to value.
Which BEST describes the principle that a home maintains its highest value by being in a neighborhood with similar-type housing? A) Competition B) Highest and best use C) Regression and progression D) Conformity
D) Conformity
Conformity is an appraisal principle of value based on the concept that the more a property or its components are in harmony with the surrounding properties or components, the greater the value.
The decision to convert a two-family residential home into a commercial office, housing a real estate firm and an insurance company is an example of what appraisal principle? A) Plottage increments B) Highest and best use C) Anticipation D) Regression and progression
B) Highest and best use
Highest and best use is the possible use of a property that would produce the greatest net income and thereby develop the highest value.
When an appraiser uses the phrase “effective age,” he or she is referring to
A) the number of years since improvements were made.
B) the age of the property based on its condition.
C) the estimated total life of an improvement.
D) the number of years during which the property will yield a worthwhile return on investment.
B) the age of the property based on its condition.
Effective age differs from the actual age (chronological age) by such variable factors as depreciation, quality of maintenance, and the like. In other words, effective age is based on the property’s condition.
Peeling paint on a home is an example of A) inferior product selection. B) economic obsolescence. C) functional obsolescence. D) physical deterioration.
D) physical deterioration.
Physical deterioration is a reduction in utility, usefulness, or value resulting from physical condition. The deterioration can be divided into either curable (painting/routine maintenance) or incurable types (installing siding on a building that also needs major interior repairs).
The first step in an appraisal is to A) compare sold properties. B) define the problem. C) analyze the neighborhood. D) gather data.
B) define the problem.
The first step is to state or define the problem.
A property valuation provided to a lending institution for distressed properties on the market is a A) real estate appraisal. B) broker’s price opinion. C) short sale analysis. D) All of the above.
B) broker’s price opinion.
A broker’s price opinion is a property valuation provided to a lending institution for distressed properties on the market. These opinions became valuable in determining short sale approval prices and, in some cases, foreclosure sale prices during the housing crisis from 2008-2012.
External obsolescence in a property is generally
A) a result of poor maintenance.
B) due to architectural faults.
C) a type of depreciation that is incurable.
D) caused by the aging process.
C) a type of depreciation that is incurable.
External obsolescence is a loss of value (typically incurable) resulting from factors that exist outside of the property itself; a type of depreciation caused by environmental, social, or economic forces over which an owner has little or no control.
The three distinct boards of TAF are
A) Appraisal Qualification Board, Appraisal Standards Board, Appraisal Practices Board.
B) Appraisal Certification Team, Temporary Certified Appraisers, Appraisal Communications Committee.
C) Appraiser, Appraiser Qualifier, Appraisal Law.
D) Appraisal Brokers, Appraisal Oversight, and Appraisal Training.
A) Appraisal Qualification Board, Appraisal Standards Board, Appraisal Practices Board.
The three distinct boards of the appraisal foundation (TAF) are the Appraisal Qualification Board, the Appraisal Standards Board, and the Appraisal Practices Board.
The gross rent multiplier uses A) sale price and monthly rental rates. B) sale price and depreciation. C) sale price and budget costs. D) sale price, monthly rental rates, and fixed costs.
A) sale price and monthly rental rates.
The gross rent multiplier uses the sales price and the monthly rental rates.
