12 Ch4 Case Study quiz Flashcards
A duplex, situated in a commercial area, sells for $500,000. The lot, if vacant and available for commercial development, would be worth $500,000. What is the contributing value of the duplex?
$0
A single-family home, located in a commercial area, sells for $375,000 to a residential owner occupant. The lot, if vacant and available for commercial development, would be worth $350,000. What is the contributing value of the home?
$25,000
A single-family home, located in a commercial area, sells for $375,000 to a residential owner occupant. The lot, if vacant and available for commercial development, would be worth $350,000. What would be the highest and best use of the property, as improved?
Continued single-family use
A single family home situated in a commercial area is worth $165,000, and could be razed at a cost of $12,000. The site value is $175,000. If the home were converted to office use, at a cost of $24,000, it would be worth $195,000. What is the highest and best use of the property as improved?
Conversion to office use
A single family home situated in a commercial area is worth $80,000. The site value is $70,000. If the home were converted to office use, at a cost of $15,000, it would be worth $92,000. What is the highest and best use of the property as improved?
Continuation as a single-family home
The Fannie Mae definition of market value requires that the property improvements must be in compliance with zoning.
FALSE. The “illegal” unit must be disclosed, but the appraiser’s definition of market value does not require the improvements be in compliance with current zoning. Ch 4, Problem 1 - Question 2
An appraiser is valuing a property with an illegal dwelling unit. What part of USPAP requires an appraiser to recognize the illegal use and analyze its effect on value?
The COMPETENCY RULE. Illegal uses are common in many markets. The COMPETENCY RULE requires the ability to recognize the illegal use and analyze its effect on value. Ch 4, Problem 1 - Question 3
Would it be a violation of USPAP to provide an opinion of value that includes an “illegal”unit?
It would be a violation of USPAP to NOT include it.
Fannie Mae will purchase a loan on a property with an illegal dwelling unit if
The borrower qualifies for the mortgage without considering the rental income from the illegal unit. The appraisal report must state that the use is illegal. Three comparable properties must have the same illegal use.
A fully-occupied duplex, situated in a commercial area, sells for $229,000. The lot, if vacant and available for commercial development, would be worth $75,000. What is the contributing value of the duplex?
$154,000
A single family home situated in a commercial area is worth $395,000, and could be razed at a cost of $15,000. The site value is $420,000. If the home were converted to retail use, at a cost of $50,000, it would be worth $440,000. What is the highest and best use of the property as improved?
Raze the home and redevelop the site. The highest and best use is to raze the home and redevelop the property. The as-is value of $395,000 plus the cost of razing ($15,000) equals $410,000, and the site will be worth $420,000 when the home is razed. Converting to retail use at a cost of $50,000 would only bring a $45,000 increase in value, so conversion would not be economically feasible. Ch 4, Problem 3 - Question 2
A single family home situated in a commercial area is worth $80,000, and could be razed at a cost of $8,000. The site value is $90,000. If the home were converted to retail use, at a cost of $20,000, it would be worth $98,000. What is the highest and best use of the property as improved?
Raze the home and redevelop the site. The highest and best use is to raze the home and redevelop the property. The as-is value of $80,000 plus the cost of razing equals $88,000, and the site will be worth $90,000 when the home is razed. Converting to retail use at a cost of $20,000 would only bring an $18,000 increase in value, so conversion would not be economically feasible. Ch 4, Problem 3 - Question 2
