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Flashcards in Apraisels Deck (32):
0

Book value

Is the depreciation cost basis. For accounting and tax purposes, the book value is used by corporations

1

Band of investment approach

(NOI) Net operating income divided by the investors capitalization rate equals value

2

Gross rent multiplier

The gross rent multiplier is determined by dividing the average selling price by the annual income 300÷30 equals gross multiplier of 10, gross multiplier of 10×40,000 = 400,000

3

USPAP

uniform standards of professional appraisal practices

4

Theory of distribution

The four factors include land, labor, capital and management. Property value is at the highest if these factors are balanced

5

Cost approach

The cost approach is preferable when appraising unique properties

6

Highest and best use

Produces the greatest value over all alternative uses

7

Elements of value

Utility, scarcity, and demand all elements of value

8

Market data

The market data approach is essential in almost every appraisal

9

Reconciliation

Is the process of applying all three methods of appraisal approaches

10

Real estate

Is physical tangible and inmobile

11

Physical obsolescence

Wear and tear would be physical obsolescence

12

Gross lease

Is a lease in which the rent includes all the operating expenses to a tenant

13

FIRREA

Stands for financial institutions Reform recovery, and enforcement act of 19/89 or the bailout bill that established new regulations to become an appraiser and develop an appraisal report

14

Cost approach

This method is used because damage would be determined by the replacement cost

15

Appraisal reports

Appraisal reports may be in writing all verbal but must always be in conformance with uniform standards of professional appraisal practice. USPAP

16

Three types of properties

The three types of properties include real estate, real property, and personal property

17

Capitalization rate

Cap rate is an analysis of how much investors are willing to spend in a certain neighborhood in return for a certain amount of income

18

Appraisar

At minimum an appraiser must hold an appraisal license although many banks preferred certification

19

Effective gross income

Effective Gross income is gross rents less an amount for vacancy and collection expenses

20

URAR forms

Uniform Residential Appraisal Report and is required by various agencies and organizations.( Single - family residential appraisals are reported on this form.

21

Sales, income, and cost approaches

These three approaches are required by the US government as a basis for valuation and final mythology

22

Market or sales data approach to appraisal

Sell prices of comparable properties are adjusted match the specifications of the subject property

23

Capitalization approach

Also known as the income approach

24

Formula for determining the value of investment property

Net operating income is divided by the appropriate capitalization rate to arrive at the value of the property (Net operating income divided by Capitalization rate= Value)

25

Real property

Real property includes rights, interests, and benefits that are inherited with real estate

26

An appraisal report must be presented

The client dictates how the appraisal will be delivered. It could be verbal, such as court testimony services, or maybe In writing

27

Market value

Market value is affected by supply and demand of the marketplace, which includes the number of buyers and sellers at the time of the appraisal

28

Comps

Comps short for comparables meaning other like kind properties sales in the neighborhood that could assist in establishing the market value of the subject property

29

All appraisal reports must be

Appraisal reports may be in writing or verbal but must always be in conformance with uniform standards of professional appraisal practice. USPAP

30

In arriving at the final opinion of value, the appraiser

The appraiser does not average. He will analyze and place the weight on the most appropriate approach

31

If investor was using factors of annual gross income average selling prices of properties in a community, this would be an example of

Gross rent multiplier would be the method utilizing these seconds