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Finance and Appraisal > Chapters 1-4 > Flashcards

Chapters 1-4 Flashcards

1
Q

What is Real Property?

A

All interest, Benefits and RIGHTS inherent in the ownership of physical real estate

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2
Q

Define Real Estate

A

An identified parcel or tract of land including any improvements

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3
Q

What are the 6 items in the “Bundle of Rights”?

A

G.L.U.E.S.E.

Give Property Away
Lease
Use
Enter Property
Sell
Exercise all or none of the above
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4
Q

Define Fee Simple

A

Occupied by the Owner -Most Complete Form of Ownership

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5
Q

Define Lease Fee:

A

Owner- Lease to Tenant

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6
Q

Define Leasehold:

A

Tenant- Tenant’s position - a tenant can create value with a beneficial lease

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7
Q

4 Powers of Governement

A

P.E.E.T.

1- Police Power
2-Eminent Domain
3-Escheat
4-Taxation

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8
Q

What is Eminent Domain?

A

Condemnation - Government takes property for good of the community

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9
Q

Give 2 examples of police power:

A

Zoning

Building Codes

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10
Q

What is Escheat?

A

Gov. take property with death of owner with no heirs

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11
Q

What is Real Property?

A

Land and building (and attachments)

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12
Q

What is Personal Property? Give Example

A

Moveable items (Not considered RE)

  • Fridge
  • Trampoline
  • Portable Book Shelves
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13
Q

Give an example of an intangible asset:

A

Business Enterprise, copyright, trademark, IP

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14
Q

Is a Fixture Real Property or Personal Property?

A

Real Property

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15
Q

What is a Fixture? Give examples

A

Fixture: Any object permanently attached to a property by way of bolts, screws, nails, glue, cement etc. Ex: Chandeliers, ceiling fans, window

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16
Q

4 Tests of Fixture:

A

1- Manner of Attachment
2-Adaptation- Character of item and adaptation to the RE
3-Intent - Intent of party who attached item
4-Mutual Agreement- Agreement of both Parties

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17
Q

What is a trade fixture? Is it real or personal property?

A

Personal Property

Chattel - Example Jewelry cabinets commercial lease

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18
Q

Name 5 types of RE assets:

A 
1- Residential
2-Commercial
3- Agricultural
4-Industrial
5-Special Purpose
19
Q

Name 5 types of Value:

A 
Market Value 
Use Value - for specific user or purpose
Investment Value - for spec. investor based on returns
Assessed Value- Taxable value
Business Value- Intangible assets
20
Q

The “act” or process of developing an opinion of value

A

Appraisal

21
Q

4 Concepts of Land

A

1- Geographic and Environmental
2-Legal
3-Economic
4-Social

22
Q

Geographic and Environmental Concept of Land states that land is:

A 
Unique
Immobile
Durable
Finite
Useful
Influenced by: climate, trends, etc.
23
Q

Legal concept of land includes:

A
  • Pyramid “to the sky and depths”
  • Easements
  • Access Regulations
  • Water and Mineral
  • Zoning and Other Restrictions
  • Recording and Conveying Titles
24
Q

Economic Concept of Land States that:

A

Land is valuable, source of wealth, and has value

25
Q

The social concept of land includes:

A

How is land used?

-Zoning - govt. has right to decide use.

26
Q

Private
Concurrent
Legal Entities

A

Forms of Real Property Ownership

27
Q

Four Agents of Production:

A

Land- The cost of acquiring the land
Labor- The physical and intellectual contribution
Capital- Equipment, buildings and infrastructure
Entrepreneurial Coordination- Profit above the return of equity

28
Q

Utility
Scarcity
Desire
Effective Purchasing Power

Bonus: What do these create?

A

Factors of Value

Bonus: Create Demand

29
Q

Define Utility:

A

Ability of a product to satisfy a human want, need or desire.

30
Q

Define Scarcity:

A

Supply relative to demand

31
Q

Define Desire:

A

Wish to satisfy human needs

32
Q

Define Effective Purchasing Power:

A

Ability of participate in the market

33
Q

What is the difference between Price, Cost, and Value?

A

Price: Amount being paid in exchange
Cost: Total dollar expenditure for an improvement (direct or indirect)
Value: Monetary worth of a property to buyers and sellers at given time. Present worth of future benefit

34
Q

Fundamental Appraisal Concepts

A 
Anticipation
Change
Supply & Demand
Competition
Substitution
Opportunity Cost
Balance
Contribution
Surplus Productivity
Conformity
Externalities
35
Q

What is USPAP?

A

USPAP: Uniform Standards of Professional Appraisal Practice

36
Q

Are Appraisers advocates or a disinterested third party?

A

Disinterested third party

37
Q

What are the 8 Steps in Valuation?

A 
1- Identification of the problem 
2-Scope of Work Determination
3-Data Collection and Property Description
4-Data Analysis
5-Land Value Opinion
6-Application of the Approaches to Value
7-Reconciliation of Value Indications and Final Opinion of Value
8-Report of Defined Value
38
Q

How to Identify Problem in Valuation?

A

Identify: Client, Use of Appraisal, Purpose, Date of Valuation, Property Characteristics

39
Q

How to Determine Scope of Work in Valuation?

A

What are you asked to do?

Required detail?

40
Q

What Data Used in Valuation?

A

Market Area Data
Subject Property Data
Comparable Property Data

41
Q

How to complete Data Analysis in Valuation?

A

Market Analysis

Highest and best use Analysis

42
Q

What is Value Land Opinion in Valuation?

A

Separated land value from total property value

43
Q

3 Application of Approaches to Value

A

Cost Approach
Sales Comparison Approach
Income Capitalization Approach

44
Q

What is Reconciliation and Conclusions in relation to Valuation?

A

Reconciliation, Explain data analysed, methods used, and reasoning behind value conclusion.

Give each valuation method consideration and weight each approach accordingly

Finance and Appraisal (2 decks)

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