Chapter 16

Question 1

What is TAF?

Answer 1

The Appraisal Foundation which is is a private, not-for-profit corporation, responsible for establishing, improving and promoting minimum uniform appraisal standards and appraiser qualifications criteria”

Question 2

The Appraisal Foundation is formed of

Answer 2

The Appraiser Qualifications Board - establishes the qualification criteria for licensing

The Appraiser Standard Board - establishes the rules for developing an appraisal and reporting its results

The Appraisal Practices Board - responsible for identifying and issuing opinions on recognized valuation methods and techniques

Question 3

There are three types of license appraisers

Answer 3

Registered Trainee Appraiser - 100 hours of FREAB course
Certified Residential Appraiser - 200 hours of FREAB courses
Certified General Appraiser - 300 hours of FREAB courses

Question 4

Appraisers must provide certified reports which comply with user requirements and reports must:

Answer 4

be retained for up to 5 years after the appraisal or 2 years after a court appearance whichever is longer.

Question 5

Real Estate professionals can appraise and leverage the following methods:

Answer 5

A comparative market analysis

A broker’s price opinion

Question 6

The goal of the appraiser is to determine:

Answer 6

market value, insurance value, salvage value, and the tax value of a property

Question 7

The appraiser’s compensation is based on

Answer 7

the appraiser’s time and effort not on the price of the property

Question 8

What is the appraisal process?

Answer 8

1. Appraiser understands why he or she was hired
2. Gather, record and verify the necessary data
3. Analyze and interpret neighborhood analysis
4. Analyze and interpret site analysis
5. Estimated land value
6. Estimate the value of the property

Question 9

What are the characteristics of value? DUST

Answer 9

Demand
Utility
Scarcity
Transferability
Situs

Question 10

There are three approaches to value:

Answer 10

Sale Comparison Approach or Market Data Approach

The Cost Approach also called the Summation Approach - it is used primarily for buildings and relies on techniques such as Reproduction Cost and Replacement Cost

Question 11

Cost can be determined by three methods:

Answer 11

Square foot cost

Unit in Place

Quantity Survey Method

Question 12

Steps in the Cost Approach

Answer 12

1. Estimate the value of the land alone as if vacant.
2. Determine either the replacement or reproduction cost of the building,
3. Deduct all accrued depreciation from the replacement cost.
4. Add the estimated land value to the depreciated replacement or reproduction cost.

Question 13

There are three types of depreciation:

Answer 13

1. Physical Deterioration
2. Functional Obsolescence
   a. Curable
   b. Incurable
3. Economic Obsolescence

Question 14

Economic, Environmental, or External Obsolescence is

Answer 14

an Incurable Functional Obsolescence

Question 15

Effective Age

Answer 15

Differs from the actual age by such a factors such as depreciation, quality of maintenance,

Question 16

Chronological age

Answer 16

is the actual age

Question 17

Value can be defined in several terms:

Answer 17

Physical Life
Economic Life
Economic Rent

Question 18

Incurable vs. Curable

Answer 18

When a property has repairs or updating that is economically feasible, it said to be curable.

Question 19

What are the steps involved in the cost approach?

Answer 19

1. Estimate the value of the land alone as if vacant.
2. Determine either the replacement or reproduction cost of the building.
3. Deduct all accrued depreciation from the replacement cost.
4. Add the estimated land value to the depreciated replacement or reproduction

Question 20

Income Approach is as follows:

Answer 20

E (effective gross income) = P (potential gross income) less V (vacancy and collection losses)

N (net operating income) = E (effective gross income) less O (operating expenses)

Question 21

Gross Rent Multiplier

Answer 21

Rent X Gross Rent Multiplier