Unit 16: Real Estate Appraisal Flashcards
An appraisal provides the appraiser’s opinion of value based on ___________ evidence and appraisal _______.
supportable, methods
Appraisal methods are defined by the _______ _________ of ____________ _________ ________ (USPAP) established by the Appraisal Foundation’s _________ _________ Board.
Uniform Standards of Professional Appraisal Practice, Appraisal Standards
An appraiser must be state-licensed or certified for an appraisal performed as part of a _________ _______ transaction, per the _________ ____________ ______, ________, and ___________ ___ of 1989 (FIRREA)
federally related, Financial Institutions Reform, Recovery, and Enforcement Act
The _________ ______________ Board sets minimum education and experience requirements for licensing or certification and the ________ __________ Board recommends acceptable business practices.
Appraiser Qualifications, Appraisal Practices
The _______ ___________ _________ ______ (URAR) is required by Fannie Mae and Freddie Mac.
Uniform Residential Appraisal Report
A ___________ ______ ________ (CMA) is a report by a real estate professional of market statistics, but it is not an appraisal.
comparative market analysis
A _______ _____ _______ (BPO) may be used in transactions involving home equity lines, refinancing, portfolio management, loss mitigation, and collections.
broker’s price opinion
Value is created by ______, _______, ________, and _______________ of property (DUST).
demand, utility, scarcity, and transferability
______ _____ is the most probable price that property should bring in a fair sale, but not necessarily the same as the price _____ or ____ or the cost to _________.
Market value, asked or paid, construct
________ is the increase in value that can result when two or more parcels of land are combined in the process called __________.
Plottage, assemblage
The principle of ____________ is the foundation of the sales comparison approach. A buyer will not want to pay more for a property than it would cost to purchase an equally _________ and ________ property.
substitution, suitable and desirable
The _____ __________ approach of appraisal (______ ____ approach) makes use of sales of properties comparable to the property that is the subject of the appraisal by adding or subtracting from the sales price of each comp the value of a feature present or absent in the subject property versus the comparable.
sales comparison, market data
The ____ approach of appraisal uses the _______ ____ of constructing building and other property improvements and an estimate of _______ ____________ using the straight-line method (economic age-life method), or an estimate of individual items of physical deterioration, functional obsolescence, or external obsolescence.
cost, current cost, accrued depreciation
The ______ approach is based on the present value of the right to future income arrived at by these steps:
- Estimating annual potential _____ income
- Deducting an allowance for _______ and rent loss to find _________ gross income
- Deducting annual operating expenses to find ___ _________ ______ (NOI)
- Estimating the rate of ______ (capitalization rate or cap rate) for the subject by analyzing cap rates of similar properties
- Deriving an estimate of the subject’s market value by applying the cap rate to the property’s annual NOI using this formula: ___ _________ ______ ÷ ______________ ____ = value
income, gross, vacancy, effective, net operating income, return, net operating income ÷ capitalization rate = value
______________ is the process by which the validity and reliability of the results of the approaches to value are weighed objectively to determine the appraiser’s final opinion of value.
Reconciliation is the process by which the validity and reliability of the results of the approaches to value are weighed objectively to determine the appraiser’s final opinion of value.
