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Appraisal Approaches and Principles of Approaches 9 Flashcards

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1
Q

Estimate or Opinion of Value and Supported by an Analysis of Facts.

A

Appraisal -

Estimate or Opinion of Value and Supported by an Analysis of Facts

Chap 9

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2
Q

(AVM) Aut_______ Val______ Mod____

Appraisal made by Placing Data into an Algorithm

A

(AVM) Automated Valuation Model -

Appraisal made by Placing Data into an Algorithm

Chap 9

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3
Q

Or_______

Way Building is “Situated on Lot”

A

Orientation -

Way Building is “Situated on Lot.”

Chap 9

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4
Q

Dir_______nal G______

Way Community is Developing

A

Directional Growth -

Way Community is Developing

Chap 9

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5
Q

Greater Properties “Positively Effect** **Value“ of Lesser Properties

A

Principle of Progression -

Greater Properties “Positively Effect Value” of Lesser Properties

Chap 9

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6
Q

F___ C___ V____ aka Ass_____ Val____

Value for Tax Purpose

A

Full Cash Value; Assessed Value -

Value for Tax Purpose

Limited Prop Value x Assessed Value Ratio = Assessed Value

Chap 9

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7
Q

Ins____ V____

Value when Building Destroyed

A

Insurance Value -

Value when Building Destroyed

Chap 9

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8
Q

U_____

Capacity of Product to “Satisfy Human Need“

A

Utility -

Capacity of Product to “Satisfy Human Need“

Chap 9

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9
Q

T_________

Relative Ease of Transferring Ownership

A

Transferability -

Relative Ease of Transferring Ownership

Chap 9

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10
Q

Principal of R________

Presence of Lesser Properties “Adversely Affect** **Value” of Greater Properties

A

Principal of Regression -

Presence of Lesser Properties“Adversely Affect Value” of Greater Properties

Chap 9

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11
Q

Major Elements of Value - DUST:

  1. Dem___
  2. U____,
  3. Sc____
  4. T__________
A

Major Elements of Value -

DUST:

  1. Demand,
  2. Utility,
  3. Scarcity
  4. Tranferability

Chap 9

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12
Q

Mar___ V____ -

Amount Willing Buyer Will Pay and Seller Will Accept

Note: Market Value - Amount Given and Taken for a Property

A

Market Value -

Amount Willing Buyer Will Pay and Seller Will Accept

Note: Market Value - Amount Given and Taken for a Property

Chap 9

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13
Q

M____ P______

Amount Given and Taken for a Property

Note: Market Value - What Willing Seller/Buyer Will Pay

A

Market Price -

Amount Given and Taken for a Property

Arms Length Transaction - One in Which Parties Have Equal Bargaining Positions.

Note: Market Value - What Willing Seller/Buyer Will Pay

Chap 9

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14
Q

Amount of Money to Build Brand New?

A

Cost -

Amount of Money to Build Brand New

Chap 9

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15
Q

Principle of H_____ and B___ Use - Use of Property that Brings Greatest Net Return

  1. Only One - Highest Best Use: at Any One Time
  2. Based On Net Income: Takes Z____, Building Codes and Surrounding Market Into Account.
  3. Excess Land: Does Not Support Highest and Best Use
A

Principle of Highest and Best Use - Use of Property that Brings Greatest Net Return

  1. Only One - Highest and Best: Use at Any One Time
  2. Based On Net Income: Takes Zoning, Building Codes and Surrounding Market into Account.
  3. Excess Land: Does Not Support Highest and Best Use

Chap 9

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16
Q

Principle of Sub_________

No Reasonable Person Will Pay More for a Property Than Would Pay For a Duplicate

Will Not Pay More for Duplicate!

A

Principle of Substitution -

No Reasonable Person Will Pay More for a Property Than Would Pay For a Duplicate

Will Not Pay More for Duplicate!

Chap 9

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17
Q

Principle of Su___ and De____

The Idea that Value is Affected by the Scarcity and Desire.

A

Principle of Supply and Demand -

The Idea that Value is Affected by the Scarcity and Desire.

Chap 9

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18
Q

Principle of C________

Value will Remain Stable in area with Reasonable Conformity.

A

Principle of Conformity -

Value will Remain Stable in area with Reasonable Conformity.

Chap 9

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19
Q

D_____

Amount of “Desire” to Buy a Product

A

Demand -

Amount of “Desire” to Buy a Product

Chap 9

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20
Q

Principle of C________-

Idea that Excess Profits can Increase Competition which Destroys Profits

A

Principle of Competition -

Idea that Excess Profits can Increase Competition which Destroys Profits

Chap 9

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21
Q

Principle of Ch____ -

Appraisal Principle “Values Do Not Remain the Same.” Appraisers Must Consider how Changing Economic and Social Conditions Affect Value

A

Principle of Change -

Appraisal Principle “Values Do Not Remain the Same.” Appraisers Must Consider how Changing Economic and Social Conditions Affect Value

Chap 9

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22
Q

Principle of Dev______, Equi_____, Disin_______ -

Idea that Property Goes Through Phases of Growth, Stability, and Decline.

A

Principle of Development, Equilibrium, Disintegration -

Idea that Property Goes Through Phases of Growth (Development), Stability (Equilibrium), and Decline (Disintegration)

Chap 9

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23
Q

Com_______ Approach (Ma____ Da__/ Dir___ Sa____ Approach) -

Appraisals that Uses Similar Comparable and Recent Sales

A

Comparison Approach (Market Data/ Direct Sales Approach) -

Appraisals that Uses Similar Comparable and Recent Sales

Chap 9

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24
Q

Sq____ F_____ of Liv____ Area -

Measuring “Exterior Dimensions” of Exterior Walls

Note: Not Garage or Patio

A

Square Footage of Living Area -

Measuring “Exterior Dimensions” of Exterior Walls

Note: Not Garage or Patio

Chap 9

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25
**Det\_\_\_\_\_\_\_\_** - **Loss of Value** **by "Wear and Tear."**
**Deterioration** - **Loss of Value** **by "Wear and Tear."** **Chap 9**
26
**Principle of An\_\_\_\_\_\_\_\_\_** - **Value affected by** **"Future Events"**
**Principle of Anticipation** - **Value affected by** **"Future Events"** **Chap 9**
27
**E\_\_\_\_\_ In\_\_\_\_\_\_** - ## Footnote **Appreciation by Owners Efforts**
**_Earned Increments_ -** **Appreciation by Owners Efforts** **Chap 9**
28
**U\_\_\_\_\_\_\_\_ Increments -** **Appreciation by Other Factors, Out of Owners Control**
**Unearned Increments -** **Appreciation by Other Factors, Out of Owners Control** **Chap 9**
29
**Plot\_\_\_\_\_ (Assem\_\_\_\_\_\_\_)** - **_Joining_** **"_Smaller Parcels_" into** one **_Larger One_**.
**Plottage (Assemblage)** - **_Joining_ "_Smaller Parcels_" into** one **_Larger One_.** **Chap 9**
30
**Principle of Contr\_\_\_\_\_\_\_** - ## Footnote **Value of Component that _Adds To or Detracts_ from Value of Whole.**
**Principle of Contribution** - ## Footnote **Value of Component that _Adds To or Detracts_ from Value of Whole** **Chap 9**
31
**Def\_\_\_\_\_\_ M\_\_\_\_\_\_\_\_\_\_** - **_Repairs_ Put Off _For Future_**_._
**Deferred Maintenance** - **_Repairs_ Put Off _For Future_**_._ **Chap 9**
32
**Functional Obsolescence** - **(Outdated)** 1. **Loss Due To** **Out\_\_\_\_ Features (Curable)** , 2. **T\_\_\_\_\_\_\_ Advances (Curable)**, or 3. **Poor Floor D\_\_\_\_\_ (\*\*Incurable\*\*).**
**Functional Obsolescence** - **(Outdated)** 1. **Loss Due To** **Outdated Features (Curable),** 2. **Technological Advances (Curable),** 3. **Poor Floor D\_\_\_\_\_ (\*\*Incurable\*\*)** **Chap 9**
33
**_Deterioration**_ such as _**Termites_, _Weather Damage_, _Leaky Roof_, _Cracked Paint_**. ## Footnote **Are they Curable or Non-Curable?**
**Curable** - **_Deterioration_** such as **_Termites_, _Weather Damage_, _Leaky Roof_, _Cracked Paint_**. **Remember: Floor Plan Design** - **NOT Curable** **Chap 9**
34
**C\_\_\_ Approach (S\_\_\_\_\_\_ Approach)** - ## Footnote **Appraisal that uses _Calculated_ Building Costs, _Subtracted_ Depreciaton and _Added_ Land Values** **Bldg Cost - Depreciation + Land = Cost Approach Value** **One of Kind Properties - Church, Municipal Buildings**
**Cost Approach (Summation Approach)** - **Appraisal** **that uses** **_Calculated_ Building Costs, _Subtracted_ Depreciaton and _Added_ Land Values** **Bldg Cost - Depreciation + Land = Cost Approach Value** **One of Kind Properties - Church, Municipal Buildings** **Chap 9**
35
**Repl\_\_\_\_\_\_ Cost** - **_Cost_** to **build _Reasonable_ _Duplicate_**
**Replacement Cost** - **_Cost_** to **build _Reasonable_ _Duplicate_** **Chap 9**
36
**Repro\_\_\_\_\_ Cost -** **_Cost_** to **Build "_Exact_" _Duplicate_ at Today's Prices.**
**Reproduction Cost -** **_Cost_** to **Build "_Exact_" _Duplicate_ at Today's Prices.** **Chap 9**
37
**Reh\_\_\_\_\_\_\_\_\_** - ## Footnote **Curing "Deferred Maintenance"**
**Rehabilitation** - _Curing_ **deferred maintenance** **Chap 9**
38
**Economic Obsolescence - (Outside)** **Loss by Outside Factors:** 1. **Neigh\_\_\_\_\_ Conditions (Air, Noise, Pollution)** 2. **Over Imp\_\_\_\_\_,** 3. **Negative Legislation** **(Z\_\_\_\_),** 4. **Change in B\_\_\_\_\_\_/Mar\_\_\_ Conditions**
**Economic Obsolescence - (Outside)** **Loss by Outside Factors**: 1. **Neighborhood Conditions (Air, Noise, Pollution),** 2. **Over Improvements,** 3. **Negative Legislation (Zoning),** 4. **Change in Business/Market Conditions** **Chap 9**
39
**(URAR) Un\_\_\_\_ Res\_\_\_\_\_\_ Appraisal Report** - ## Footnote **Standard Appraisal Form for SFR**
**(URAR) Uniform Residential Appraisal Report** - ## Footnote **Standard Appraisal Form for SFR** **Chap 9**
40
**Sq\_\_\_\_ F\_\_\_\_\_ Under R\_\_\_\_ -** **Area** **of Building** **includes _Garages and Patios_**
**Square Footage Under _Roof_ -** **Area of Building** **includes _Garages and Patios_** **Chap 9**
41
**De\_\_\_\_ Appraisal -** **Appraisal** from "**_Internet Information_" _without_ Inspecting** **Property**
**Desktop Appraisal -** **Appraisal** from **"_Internet Information"_ _without_ Inspecting** **Property** **Chap 9**
42
**Principle of Extern\_\_\_\_\_\_\_** - **Principle** that **Factors "Outside Property" have _Positive_ or _Negative_ _Affect on Value_.**
**Principle of Externalities** - **Principle** that **Factors "Outside Property" have _Positive_ or _Negative_ _Affect on Value_.** **Economic Obsolescence - Neighborhood, Air, Noice, Over Improved, Adverse Zoning** **Chap i**
43
**Salv\_\_\_\_ (Resid\_\_\_) Value -** **Value** **of Buildings** at **_End of Physical Life_**
**Salvage (Residual) Value -** **Value of Buildings** at **_End of Physical Life_** **Chap 9**
44
**M\_\_\_\_\_ Value** - **Value** for **Loan Purposes, using Property as Collateral**
**Mortgage Value** - **Value** for **Loan Purposes, using Property as Collateral** **Chap 9**
45
**Mar\_\_\_\_ P\_\_\_\_\_** **Money Given/Taken** **Note: Market Value - Amount Given and Taken for a Property**
**Market Price** - ## Footnote **Money Given/Taken** **Note: Market Value - Amount Given and Taken for a Property** **Chap 9**
46
**Principle of H\_\_\_\_ and B\_\_\_ U\_\_ -** **Use of Property that _Brings Greatest Net Return_**
**Principle of Highest and Best Use -** **Use of Property that _Brings Greatest Net Return_** **Chap 9**
47
**Principle of S\_\_\_\_ and D\_\_\_\_\_** - Value by _Scarcity_ and _Desire_ of Item
**Principle of Supply and Demand** - Value by _Scarcity_ and _Desire_ of Item **Chap 9**
48
**C\_\_\_ Approach (S\_\_\_\_\_\_ Approach)** - ## Footnote **Appraisal that uses Calculated Building Costs, _Subtracted_ Depreciaton and _Added_ Land Values** **Bldg Cost - Depreciation + Land = Value** **One of Kind Properties - Church, Municipal Buildings**
**Cost Approach (Summation Approach)** - ## Footnote **Appraisal that uses Calculated Building Costs, _Subtracted_ Depreciaton and _Added_ Land Values** **Bldg Cost - Depreciation + Land = Value (Cost Approach)** **One of Kind Properties - Church, Municipal Buildings** **Chap 9**
49
**A\_\_ L\_\_\_\_\_\_ Tran\_\_\_\_\_\_** - ## Footnote **Transaction Where Parties Have Equal Bargaining Positions.**
**Arm's-Length Transaction** - ## Footnote **Transaction Where Parties Have Equal Bargaining Positions.** **Chap 9**
50
**Arm's Length Transactions include**? ## Footnote **For\_\_\_\_\_, Relatives S\_\_\_\_, and Condem\_\_\_\_\_ Proceedings**
**Arm's Length Transactions Include**? ## Footnote **Foreclosures, Relatives Sales, and Condemnation Proceedings** **Chap 9**
51
**Principle of H\_\_\_\_\_ and B\_\_\_ Use -** **Principle Used that Will Generate Greatest Net Return** **What is based on "_Net Income_," _Zoning_, _Building Codes_, and _Surrounding Market_**
**Principle of Highest and Best Use -** **Principle Used that Will Generate Greatest Net Return** **Based on "_Net Income_," _Zoning_, _Building Codes_, and _Surrounding Market_** **Chap 9**
52
**Fu\_\_\_\_\_\_\_ Ob\_\_\_\_\_\_\_\_\_** - **Outdated** ## Footnote **_Poor Floor Plans_ - Form of Depreciation that "Is Not" Curable (Incurable)**
**Functional Obsolescence** - **Outdated** **_Poor Floor Plans_ - Form of Depreciation that "Is Not" Curable (Incurable)**
53
**_Economic Obsolescence (External)_ - Factors Outside of Property** that deal with **Neighborhood Issues** includes? 1. **A\_\_,** 2. **N\_\_\_\_** 3. **Poll\_\_\_\_\_,** 4. **Traf\_\_\_\_** 5. **Adverse Z\_\_\_\_\_** 6. **Over Improved Property**
**_Economic Obsolescence (External)_ - Factors Outside of Property** that deal with **Neighborhood Issues** includes? 1. **Air,** 2. **Noise** 3. **Pollution,** 4. **Traffic** 5. **Adverse Zoning** 6. **Over Improved Property** **Chap 9**
54
**_Comparison Approach_ relies Most "Heavily Relies On -** 1. **Ex\_\_\_\_ Res\_\_\_\_\_\_** 2. **V\_\_\_\_ L\_\_\_\_**
**_Comparison Approach_ relies Most "Heavily Relies On -** 1. **Existing _Residences_** 2. **_Vacant Land_** **Chap 9**
55
**_Comparison Approach (Market Data/Sales)_ -** 1. **Many Buyer/Sellers** 2. **Comparable Sales at A\_\_\_ Length** 3. **3 Comparables** 4. **Adj\_\_\_\_\_\_** 5. **_Heavily Relies On_** **Existing _Residence and Vacant Land_**
**_Comparison Approach_** **_(Market Data/Sales)_ -** 1. **Many Buyer/Sellers** 2. **Comparable Sales at Arm's Length** 3. **_3_** **Comparables** 4. **Adjustments** 5. **_Heavily Relies On_** **Existing _Residence and Vacant Land_** **Chap 9**
56
**Comparison Approach - Adjustments** 1. **D\_\_\_ of Sale** 2. **Loc\_\_\_\_\_\_** 3. **Fin\_\_\_\_\_\_\_\_** 4. **Condition or Features** 5. **Concessions** 6. **Property with \*\*_Fewest Adjustments_\*\* \*\*\*_Most Comparable_\*\*\***
**Comparison Approach - Adjustments** 1. **Date of Sale** 2. **Locations** 3. **Financing** 4. **Condition or Features** 5. **Concessions** 6. **Property with \*\*_Fewest Adjustments_\*\* \*\*\*_Most Comparable_\*\*\*** **Chap 9**
57
**C\_\_\_ Approach (Su\_\_\_\_\_\_) -** **Building Cost - Depreciation + Land Value** **= Appraised Value** **One of Kind Properties - Church, Municipal Buildings**
**Cost Approach (Summation) -** **Building Cost - Depreciation + Land Value** **= Appraised Value** **One of Kind Properties - Church, Municipal Buildings** **Chap 9**
58
**Cost Approach** (**Heavily Relies On**}: ## Footnote **One of a K\_\_\_ Properties, such as _Churches_, _Municipal Buildings_, _New Constructions_**
**Cost Approach** (**Heavily Relies On):** **One of a Kind Properties**, such as **_Churches_, _Municipal Buildings_, _New Constructions_** **Chap 9**
59
Scarcity means
**Supply = Scarcity** **Chap 9**
60
**Desire means**
**Demand = Desire** **Chap 9**
61
**Growth means**
**Development = Growth** **Chap 9**
62
**Principle of H\_\_\_\_ and B\_\_\_ U\_\_ -** **Use of Property that Brings Greatest Net Return**
**Principle of Highest and Best Use -** **Use of Property that Brings Greatest Net Return** **Chap 9**
63
**C\_\_\_ Approach (S\_\_\_\_\_\_ Approach)** - **Appraisal** that uses **Calculated Building Costs, _Subtracted_ Depreciaton and _Added_ Land Values** **Bldg Cost - Depreciation + Land = Appraised Value** **One of Kind Properties - Church, Municipal Buildings**
**Cost Approach (Summation Approach)** - **Appraisal** that uses **Calculated Building Costs, _Subtracted_ Depreciaton and _Added_ Land Values** **Bldg Cost - Depreciation + Land = Appraised Value** **One of Kind Properties - Church, Municipal Buildings** **Chap 9**
64
**Stability (Balance) means**
**Equilibrium = Stability, Balance** **Chap 9**
65
**Decline means**
**Disintegration = Decline** **Chap 9**
66
**V\_\_\_\_\_** **Worth of Property and has for 4 Major Elements such as _Demand_, _Utility_, _Scarcity_, and _Transferabilty_**
**Value (Worth) -** **Worth of Property and has for 4 Major Elements such as _Demand_, _Utility_, _Scarcity_, and _Transferabilty_** **Chap 9**
67
**_Land_** **_Not Needed_** to support the **Highest and Best Use.**
**Excess Land -** **_Land_ _Not Needed_** to support the **Highest and Best Use.** **Chap 9**
68
**Increase in Value** for **Any Reason**
**Appreciation -** **Increase in Value for Any Reason.** **Chap 9**
69
**Loss in Value for Any Reason. In the Cost Approach _Most Difficult_ to Estimate.**
**Depreciation -** **Loss in Value for Any Reason. In the Cost Approach _Most Difficult_ to Estimate.** **Cost Approach - One of a Kind Properties, such as _Churches_, _Municipal Buildings_, _New Constructions_** **Chap 9**
70
**An _Exterior Inspection_ of a Home by a Licensed Appraiser. Lenders Typically Use to Document Comparable Properties.**
**Drive-By Inspection** **An _Exterior Inspection_ of a Home by a Licensed Appraiser. Lenders Typically Use to Document Comparable Properties**
71
**C\_\_\_ Approach (S\_\_\_\_\_\_ Approach)** - ## Footnote **Appraisal that uses Calculated Building Costs, _Subtracted_ Depreciaton and _Added_ Land Values** **Bldg Cost - Depreciation + Land = Appraised Value** **One of Kind Properties - Church, Municipal Buildings**
**Cost Approach (Summation Approach)** - ## Footnote **Appraisal that uses Calculated Building Costs, _Subtracted_ Depreciaton and _Added_ Land Values** **Bldg Cost - Depreciation + Land = Appraised Value** **One of Kind Properties - Church, Municipal Buildings** **Chap 9**
72
**In Preparing an Estimate of Value for a Thirty Year Old House, an Appraiser will MOST LIKELY Use Which of the Following Approaches to Value?** 1. Replacement Cost 2. Reproduction Cost 3. Market Data 4. Income
**In Preparing an Estimate of Value for a Thirty Year Old House, an Appraiser will MOST LIKELY Use Which of the Following Approaches to Value?** 1. Replacement Cost 2. Reproduction Cost 3. **Market Data** 4. Income **Chap 9**
73
**When Market Data is lacking and the property has no income, the appraisal approach MOST LIKELY to be used is the:** 1. Comparison 2. Cost 3. Capitalization 4. Market Data
**When Market Data is lacking and the property has no income, the appraisal approach MOST LIKELY to be used is the:** 1. Comparison 2. **Cost** 3. Capitalization 4. Market Data
74
**If a property is built usng inferior building materials this would directly result in** 1. Functional Obsolescence 2. Physical Deterioration 3. External Obsolescense 4. Reproduction Cost
**If a property is built usng inferior building materials this would directly result in** 1. **Functional Obsolescence** 2. Physical Deterioration 3. External Obsolescense 4. Reproduction Cost **Chap 9**
75
**An owner improves a property bringing it up to value commensurate with surrounding properties. This is an example of:** 1. Conformity 2. Contribution 3. Competition 4. Regression
**An owner improves a property bringing it up to value commensurate with surrounding properties. This is an example of:** 1. **Conformity** 2. Contribution 3. Competition 4. Regression **Chap 9**

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