Flashcards in Chapter 16, RE Appraisal Deck (44)
an opinion of value based on supportable evidence and approved methods
an opinion of market value o a property given to a lender or a client with detailed market information
and independent professional trained to provide and unbiased opinion of value in an impartial and objective manner, following an identified appraisal process
Appraiser Independence Requirements
Regulations issued by Fannie Mae that must be followed by appraisers to ensure accurate and objective appraisals.
Requires that any appraisal used in connection with a federally related transaction be performed by a competent individual who is licensed or certified by the state in which the appraiser practices,
Uniform Standards of Professional Appraisal Practice (USPAP)
in conducting an appraisal an appraiser must follow these standards established by the Appraisal Standards Board (ASB) of the Appraisal Foundation
Comparative Market Analysis
is distinctly different from an appraisal report offered by a license or certified appraiser.
An appraisal is based on a detailed analysis of market condition, the features of the subject property and comparable properties in the neighborhood, recent sales and listings, land value and current construction cost.
Brokers' Price Opinion
a less expensive alternative of evaluating property that is often used by lenders working with home equity lines, refinancing, portfolio management, loss mitigation and collections.
Uniform Residential Appraisal Report
the form required by many gov't agencies. It highlights the extensive list of certifications required to of the appraiser and is accompanied by a page of instructions.
The appraise, relying on experience and expertise in valuation theories, develops an objective report that supports the value indicated by the market.
monetary worth based on desirability a property must have DUST
Demand-the need or desire for possession or ownership backed by financial means to satisfy that need
Utility- the property's usefulness for its intended purpose
Scarcity- a finite supply
Transferability- the relative ease with which ownership rights are transferred form one person to another.
generally considered the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale.
The opinion of value based on an nanlysis of data
is a property's asking, offer or sales' price
The total amount of money incurred for products or services.
Value is created by the expectation that certain events will occur. The Income approach to value is based on the principle of anticipation.
the principle where no physical or economic condition remains constant;
An appraiser must be knowledgeable about both the past and the predictable future effects of natural phenomena and the behavior of the marketplace
the interaction of supply and demand
means that maximum value is created when a property is in harmony with its surroundings.
the value of any part of a property is measured by its effect on the value of the whole parcel.
Highest and Best Use
the most profitable single use of the property
can change with social, political and economic forces.
law of increasing returns
as long as money spent on improvements produces an increase in property value this law applies.
Law of diminishing returns
the point where additional improvements do not increase income or value.
is evidence when the consolidation of adjacent lots into a single larger one produces a greater total land value than the sum of the two sites valued separately.
The amount that the value of the combined properties is increased by successful assemblage
the process of merging two separately owned lots under one owner
the worth of a letter-quality property is adversely affected by the presence of a lesser-quality property
the value of a modest home would be higher if it were located among larger, fancier properties
The maximum value of a property tends to be set by how much it would cost to purchase an equally desirable and valuable substitutes property.
Supply and demand
the value of a product depends on the supply. when supply increases...value decreases. When supply decreases value increases.
The Sales Comparison Approach
aka Market Data Approach
value is obtained by comparing the property being appraised-the subject property - with recently sold comparable properties-properties similar to the subject in location and features.