final exam Flashcards
1
Q
The total demand for a type of real estate offered on the open market by all economic agents within an economy or market that may be leased or sold during a certain period.
A
Absorption
2
Q
Traditionally considered land, labor, capital, and coordination (coordination is also sometimes called management or entrepreneurial profit).
A
Agents of production
3
Q
An economic theory where value is created by expectations of future benefits such as income, appreciation, tax benefits, etc.
A
Anticipation
4
Q
An opinion or estimate of value regarding real estate, as of a specified date, which is supported by documented data. The_______
, or valuation process, is a sequence of steps used by the appraiser to derive a reasonable value estimate.
A
Appraisal
5
Q
Judgment supported by facts, logic, and reasonable analysis.
A
Appraiser’s opinion
6
Q
Consumers are interviewed based on their opinions or attitudes for certain characteristics of a property to determine demand.
A
Attitudinal surveys
7
Q
An economic principle that is caused when numerous factors exert proportional influence on value. Favorable factors include the four agents of production: land, labor, capital, and coordination.
A
Balance
8
Q
The center of an urban area, typically zoned for various uses such as retail, office, and residential. Further, in some areas, transportation starts and ends in the ____since it is the central location for employment.
A
Central Business District (CBD)
9
Q
An economic principle that demonstrates how new social patterns, technology, employment, transportation, and other factors create new demands for real estate.
A
Change
10
Q
A non-residential property for use by office, hotel, or a retail user. Nearly all local governments require restrictions for ______ locations in conjunction with residential properties.
A
Commercial real estate
11
Q
An economic principle stating that individuals and firms strive for a greater share of a market to sell or buy goods and services, each acting independently, by offering the most favorable goods and services.
A
Competition
12
Q
An economic principle which states that value maximizes when a property is in conformity with the demands of market participants.
A
Conformity
13
Q
A principle that states the site and improvements must be valued on the basis of the same use.
A
Consistent use
14
Q
__________ is a common concept in economics, and gives rise to derived concepts such as consumer debt.
A
Consumption
15
Q
The value of a component of property depending upon its contribution to the value of the whole property. This principle is also known as marginal productivity.
A
Contribution
16
Q
The desire for a specific good or service.
A
Demand
17
Q
Demand analysis that includes the investigation and identification of the most probable user including his or her preferences based on behavioral, motivational, and psychological factors.
A
Demand segmentation
18
Q
The motivation of an individual, group of persons, or business entity to purchase property.
A
Desire
19
Q
A person or company who purchases a tract of vacant land and develops the real estate with improvements to yield a profit.
A
Developer
20
Q
Patterns of growth that would affect consumer behavior in an area such as a river, forest, topography, transportation, etc.
A
Development patterns
21
Q
A process of real estate development whereby vacant land is identified, purchased and a design concept implemented.
A
Development process
22
Q
This type of market analysis is the study of a specific macroeconomic market area along with the supply and demand factors for a specific property type focusing on local economics.
A
Economic base analysis
23
Q
the social science that studies the production, distribution, and consumption of goods and services.
A
Economics
24
Q
Occurs when a prospective purchaser has enough disposable income available to satisfy his or her desires, needs, and wants.
A
Effective purchasing power
25
The power of a government to take private property for public use, usually with compensation paid to the owner.
Eminent domain
26
The value of a piece of property over and above any mortgage or other liabilities attached to it.
Equity
27
someone who has successfully completed formal study, experience, and passed a state licensing exam, where applicable.
Expert
28
An economic principle pertaining to an item or event, which is external to the boundaries of the property. It can have a positive or negative effect on the property. Many of the forces that affect or influence real estate values pertain to governmental, physical, economic, and social factors.
Externality
29
Absolute ownership of real property, limited only by the government powers of taxation, police power, eminent domain, and escheat. In addition, fee simple ownership could also be limited by certain encumbrances such as the mortgage loans, deed restrictions, unpaid taxes, easements, mechanics' liens, and leases.
Fee simple ownership
30
A term used in both law and accounting based on the economic term of "market value." It is the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.
Fair Market Value (FMV)
31
__________________is absolute ownership of real property, limited by the four basic government powers of taxation, eminent domain, police power, and escheat as well as encumbrances or conditions in the deed.
Fee simple absolute
32
A criteria within highest and best use analysis that requires that a use must produce a positive return on investment.
Financially feasible
33
The study of capital and income that characterizes the financial services industries as part of the SIC/NAIS breakdown of types of industry: finance, insurance, and real estate. The SIC was replaced by the North American (Canada, USA, Mexico) Industry Classification System (NAICS) in 1997.
FIRE (finance, insurance, real estate)
34
In retailing, general merchandise such as apparel, furniture, etc.
General merchandise, apparel, furniture and other (GAFO)
35
Relates to information appropriate for many properties, which includes all of the four forces (social, economic, environmental/physical, and governmental).
General data
36
The principle that an older lower-valued area, often an inner-city neighborhood, can be revitalized as properties are renovated or remodeled.
Gentrification
37
A type of value used for properties such as a restaurant or hotel which includes both tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate.
market value of the going concern
38
An economic output divided into physical goods and intangible services.
Goods and Services
39
A model within market delineation that predicts and describes behaviors that imitate gravitational interaction such as public transportation or real estate demand.
Gravity models
40
The reasonably probable and legal use of vacant land or an improved property which results in the highest value as a result of applying the four test criteria: physically possible, legally permissible, financially feasible, and the maximally profitable.
Highest and best use
41
An economic principle that states a feature, repair, addition, etc. might increase or decrease real estate values. As such, the laws of increasing or decreasing returns state that beyond a certain point, adding additional features may or may not increase value.
Increasing/decreasing returns
42
A fee required by local governments for proposed real estate development that helps the locality pay for costs of public services to the new development such as water, sewer, public schools, etc. These fees typically help the locality reduce the economic burden because of population growth within the area.
Impact fee
43
An addition to vacant land that increases the value such as a residential home, commercial property, streets, electric, or sewerage system.
Improved property
44
A market that is characterized by an uneven flow of information, with goods and services that are not easily produced or transferable.
Inefficient market
45
During the negotiation process, only one party is privy to important information that may affect the outcome of the transaction. Information asymmetry causes inefficient markets, since not all the market participants have access to the information needed for their decision-making processes.
Information asymmetry
46
The property owner's ownership interest in a property that is subject to a lease agreement.
Leased fee interest
47
The interest held by the lessee or tenant(s) in a property based on the lease agreement.
Leasehold interest
48
A criteria within highest and best use analysis that the appraiser applies by considering both public and private regulations that affect and limit uses for the subject property. These regulations might include easements, zoning, or other land use regulations such as CC&R's (covenants, conditions, and restrictions) which may be recorded with the deed.
Legally permissible uses
49
During the research phase of the market analysis, an appraiser determines the level of analysis appropriate for the appraisal. These levels are the inferred analysis and the fundamental analysis.
Levels of a market analysis
50
A place where goods and services are exchanged, often between buyers and sellers.
Market
51
Business and real estate cycles travel through an adjustment process due to the length of time it takes to conceive an idea, design a plan of action, finance, and construct the project. Because of these delays, there is a great potential for disequilibrium.
Market adjustments
52
A ____________ is the classification and study of current supply and demand conditions in a particular area for a specific type of property. Further, the ____________develops the supportable basis for determining highest and best use, vacant or improved.
Market analysis
53
A ____________ or study consists of interviews, comprehensive data, maps, tables, etc. and demonstrates the marketability of a specific property or the possible future of an existing property.
Marketability analysis
54
Define the primary and secondary market areas and include the types of tenants or clientele the building might attract and the locations as well as time-distance relationships to nearby complementary services such as restaurants, schools, voting districts, etc. compared to the competition.
Market area delineation concepts
55
Defines the geographic demand for a specific property.
Market delineation
56
Entities involved in a real estate transaction that receive and possibly act upon all relevant information.
Market participants
57
A method of analyzing the market to determine the wants and needs of the population.
Market research
58
Defines and subdivides a large homogenous market into segments based on location, demographics, and consumer behavior.
Market segmentation
59
Generally considered the most probable price that a property will sell for, under all conditions of a fair sale, with each party acting with full knowledge and in their own best interest. There are many different specific definitions of market value in common use by appraisers.
Market value
60
A criteria within highest and best use analysis that identifies the most profitable use to which a vacant or improved property can be put.
Maximally productive
61
A principle of economics that studies individuals, households, and businesses, in order to better understand their decisions regarding the use of their resources.
Microeconomics
62
The transfer of an interest in property to a lender as a security for a debt or during the loan period. During this loan period, the property is the lender's security for a debt.
Mortgage
63
An area within a larger city, town, or suburb with geographic boundaries.
Neighborhood
64
An economic principle that describes the income or opportunity that is lost because an alternative was not chosen.
Opportunity cost
65
The state or fact of exclusive rights and control over property, which may be an object, land/real estate, or some other kind of property (like government-granted monopolies collectively referred to as intellectual property). It is embodied in an ownership right also referred to as title. ________ is the key building block in the development of the capitalist socio-economic system.
Ownership
66
A criteria within highest and best use analysis that pertains to limitations caused by topography, terrain, wetlands, conservation easements, poor drainage, and limited access or unstable subsoil conditions.
Physically possible uses
67
In microeconomics, ________is quite simply the conversion of inputs into outputs. It is an economic process that uses resources to create a good or service that is suitable for exchange.
Production
68
Undeveloped vacant land that does not have any infrastructure or other improvements such as utilities.
Raw land
69
A tax designation for a corporation investing in real estate, reducing or eliminating corporate income taxes. In return, ______require distribution of 90% income, which may be taxable, into the hands of the investors.
Real estate investment trust (REIT)
70
A succession of submarkets based on participants with various desires and needs that change autonomously of one another, based on a group of complementary land uses that may be divided by natural barriers, political boundaries, districts, income levels of inhabitants, or streets.
Real estate market
71
The general contraction of the business cycle in economics during a sustained period. This occurrence is typically over two consecutive quarters of negative GDP growth.
Recession
72
Also known as the market data approach or market approach, although these two alternative terms are generally considered outdated. It is one of three appraisal methods for estimating value within an appraisal. This approach compares and analyzes the subject property to the sales prices of similar or comparable properties recently sold.
Sales Comparison Approach:
73
_______ is a factor of value directly associated to supply and demand. When an inadequate supply of real estate in a particular location results in unfavorable demand/supply relationships, prices increase.
Scarcity
74
A market participant who wishes to transfer ownership of his or her property to a purchaser in exchange for compensation.
Seller
75
A process used within most market/marketability analyses to determine market conditions such as supply and demand.
Six-Step Process
76
The ______________ comprise academic disciplines concerned with the study of the social life of human groups and individuals including anthropology, communication studies, economics, human geography, history, political science, psychology, and sociology.
Social Science
77
Relates to information used directly in the analysis of the subject property and while encompassing the comparables used in the valuation process.
Specific data
78
A market analysis based on drive times, customer segments, and household incomes. This widely used technique for market delineation is utilized for many purposes including residential, retail, hotel/motel, and industrial analysis for customer loyalty programs, transportation models, proposed development, etc.
Spotting Technique
79
A _______ is a specialized sub-section of a market based on the geographic or economic conditions. A ________ is a secondary market compared to the primary market.
Submarket
80
An economic principle that states that a buyer will pay no more for a property than he or she would pay to acquire an equally desirable substitute property.
Substitution
81
Entails examining and analyzing the current competitive properties and their characteristics based on economic, financial, location, as well as site and building size, if appropriate.
Supply analysis
82
An economic principle describing how values or prices are related to the number of goods made available ________and the number of goods people want _______
Supply and Demand
83
An economic principle which states that the net income remaining after the costs of labor, capital, and coordination have been paid is attributable to the land.
Surplus Productivity
84
A legal term to describe a bundle of rights in a piece of property in which a party may own a legal interest.
Title
85
These costs include financing, commissions, closing costs, title insurance, moving costs, legal fees, land transfer taxes, deed registration fees, etc. Buying and selling real estate is much more expensive than most types of transactions.
Transaction costs
86
The ability to purchase, sell, occupy, or dispose of a real estate property in any way desired by the owner
Transferability
87
A vacant parcel of land which does not have any physical buildings.
Unimproved property
88
In economics, ______ is a measure of the relative satisfaction from, or desirability of, consumption of various goods and services. In order for a service or good to have value, ______ must be present.
Utility
89
An economic concept which expresses the relationship between a property and its monetary worth at a given time. As it refers to real property appraisal, _______is not a fact, but an opinion, and it must be properly defined.
Value
90
Local government regulations to specify use of a property or its site.
Zoning
91
a real estate contract where the purchaser and sellers of a real estate property are acting independently, without coercion, of their own self-interest, and are not related to one another.
arm's length transaction
92
Cash flow often used to evaluate the cash flow from an income-producing property by subtracting the debt service from the net operating income.
Before-tax cash flow (equity dividend)
93
In business development, a _________approach means that the adviser takes the needs and wishes of the would-be entrepreneur as the starting point, rather than a market opportunity (which would be a "top-down" approach).
Bottom-up approach
94
A ratio that indicates the property's ability to generate sufficient income to pay for debt services.
Break-even ratio (also known as default ratios)
95
________ is a simple method of converting the net income generated by a property into an estimate of value by capitalizing at an appropriate rate.
Capitalization
96
The rate used for converting net income to an indication of value. The basic relationship of income to value is expressed by the formula V = I/R (value equals income divided by a rate) or V = I x F (value equals income multiplied by a factor).
Capitalization rate (cap rate)
97
An analysis of the periodic payments that accrue from an investment after all cash expenses, payments, and taxes have been deducted.
Cash flow analysis
98
A property that is analyzed within the sales comparison approach to arrive at an indicated value for the subject property.
Comparable property
99
The ratio that indicates the property is producing adequate income to cover the loan payment. This ratio assists investors and lenders with their investment decisions. A DCR less than "one" means a property does not produce adequate income to make the loan payment.
Debt coverage ratio (DCR)
100
The study of a population and its characteristics such as age, sex, familial status, occupation, income levels, etc.
Demographics
101
The study of methods and tools in statistics for collecting data and mathematical models to describe and interpret data.
Descriptive statistics
102
The method used to allow for loss of compound interest which money would typically earn if not invested in real estate. It is commonly used to convert anticipated future cash flows into a current value.
Discounting
103
In finance, the ____________ approach describes a method of valuing a project, company, or asset using the concepts of the time value of money, by discounting future cash flows to present value.
Discounted cash flow
104
The process of exerting reasonable effort while compiling information for an analysis.
Due diligence
105
The application of mathematical and statistical techniques to economic data and problems.
Econometrics
106
The amount remaining after vacancy and collection loss is subtracted from potential gross income and miscellaneous income.
Effective gross income
107
The ______is the sales price divided by the effective gross income at stabilized occupancy. This calculation is utilized for investment properties.
Effective gross income multiplier
108
Financial tables originally published in 1959 by their formulator, L.W. Ellwood, which were used to formulate computers and pocket calculators to solve mortgage-equity problems.
Ellwood Tables
109
Market research by a personal visit to a real estate property to interview tenants, neighbors, etc. for compiling property and location data.
Fieldwork
110
A __________ analysis forecasts demand based on specific information within the subject market. For instance, the appraiser utilizes capitalization rates for specific types of properties within the subject market area to estimate the value of the subject. This analysis relies on the appraiser's problem-specific data searches, interviews, and surveys: known as primary data.
Fundamental analysis
111
A method that compares the subject's share of the market, adjusts the subject to the competition using quantifiable rating techniques, calculates the subject's historical capture rate, and other factors.
Fundamental capture method
112
The sales price divided by the gross income generated by the property; does not account directly for vacancy, collection loss, or operating expenses.
Gross income multiplier
113
Also known as the Income Approach. One of three appraisal methods based on the concept that a property's value relates to its income-producing potential.
Income capitalization approach
114
An assumption of the future instead of the known conclusion.
Inference
115
The systems and techniques in statistics for making probability-based decisions and accurate predictions based on incomplete (sample) data.
Inferential statistics
116
The ______analysis, often referred to as a trend analysis, is a technical analysis utilized to forecast changes in future value by analyzing historical information. An ______ analysis is not specific to a particular property or subject. A technique or analysis that compares the subject to general market indicators such as comparable property data, secondary data surveys and forecasts, the subject's historical performance, local economic analysis, and other factors.
Inferential or inferred analysis
117
Describes the differences within a population in a statistical calculation.
Measure of dispersion
118
The middle number within a series of numbers arranged by sequence in statistical analysis.
Median
119
An area of one or more adjacent cities and/or counties with at least one urban core area and a population above 50,000 persons.
Metropolitan statistical area (MSA)
120
Excess income such as laundry, utilities, interest, interest earned on capital improvement reserve accounts, monthly management operating accounts, and bank deposits such as CDs and treasury notes, insurance reimbursements, storage bin rentals, garage/parking rents, furniture rental income, clubhouse rental, special fees for the pool or health club, concessions from vending machines, pay telephones, or other additional income or fees not accounted for elsewhere.
Miscellaneous Income
121
The number that occurs most frequently within statistical analysis.
Mode
122
The standard used by federal statistical agencies to classify businesses for collecting, analyzing, and publishing statistical data related to the U.S. business economy.
North American Industry Classification System (NAICS)
123
Complements the operating expense ratio by demonstrating the net income percentage of the potential gross income.
Net income ratio
124
The _____is calculated by subtracting vacancy, collection loss, and operating expenses from gross income. However, ____ does not deduct interest, loan amortization, depreciation, or income taxes.
Net operating income (NOI)
125
A smooth symmetrical bell-shaped curve. The ______ distribution can describe many populations.
Normal distribution
126
Which principle equally applies to residential and commercial properties?
Substitution
127
The appraisal development process and appraisal reporting process is considered to be one function.
False
128
What is created in the mind of an individual or market participant?
Value
129
An appraiser inspects a subject property, which is a vacant apartment building. The appraiser’s measurements and field notes from the inspection would be considered what type of data?
Specific Data
130
The rights and benefits inherent in the ownership of a parcel of land would be defined as:
Real property
131
What are the forces that influence real estate markets? GEES
Governmental, environmental, economic, and social
132
Harry is preparing a real property appraisal report for his client. Which USPAP Standard must he follow when preparing this report?
STANDARD 2
133
USPAP cautions appraisers to use the definition of market value that is specified in the DEFINITIONS section of USPAP.
False
134
The land, and everything permanently attached thereto, is the definition of what term?
Real estate
135
Which value characteristic implies the presence of a need or demand, which considers the monetary power to fill that need?
Desire
136
What is the loss of income resulting from not choosing an alternative?
Opportunity Cost
137
The essential expenses needed to sustain income streams for the operation of the property. _______expenses generally include fixed and variable expenses.
Operating expenses
138
The comparison of expenses and revenue of a property.
Operating statement ratios
139
The OAR or Ro is calculated by dividing the NOI by the sales price of a property.
Overall rate (OAR)
140
Any factor that determines a range which restricts a process or policy. For instance, a zoning ordinance may limit the type of building allowed within a specific district.
Parameter
141
Growth of the population due to new employment in the area, new schools, shopping, or other characteristics desirable by consumers.
Population growth
142
The number of people in the primary and secondary trade areas from the most recent census information as well as projections from state, regional, and local government agencies.
Population trends
143
The total amount of income from all sources of rent for the income-producing property, based on 100% occupancy.
Potential Gross Income (PGI)
144
The value of real estate on a specific date calculated by discounting future income to reflect the time value of money and other factors.
Present value
145
The average of statistical prices for a class of goods or services in a region for an interval of time. These prices compare the difference between periods or geographical locations.
Price indices
146
Data that has been compiled for a specific purpose, and has not been collated or merged with others. The _____ data is gathered by the appraiser and relates to specific markets in which the property is located and may include specific sales information, surveys of buyers' preference, absorption statistics for the assignment, and competitive inventory surveys.
Primary data
147
The study of consumer behaviors within a market segment such as level of education, income, occupation, familial status, age, sex, race, and other factors.
Psychographic
148
What is the greatest weakness in using GIM as a unit of comparison?
It is simplistic, and may not fully address vacancy or expenses
149
A property being appraised has a debt coverage ratio of 1.1. What does this mean?
The property generates enough income to make the mortgage payment.
150
The value conclusion indicated by the Sales Comparison Approach is always market value.
False
151
What is a single sample in a group?
A variable (sometimes referred to as a variate)
152
What is the adjustment process that values the subject by adjusting the sales price of the comparable sales based on specific differences?
Elements of comparison
153
If a property’s gross annual income is $24,000 and its sale price is $720,000, what is the indicated GIM?
30
154
In which approach is there a process to itemize the differences between the subject and the comparable sales?
Sales Comparison Approach
155
What kind of data is measured?
Quantitative data
156
The empirical rule states that in a bell-shaped curve, what percentage of observations will fall within two standard deviations of the mean?
95
157
In a study which indicates that spending more hours on an appraisal assignment equates to higher customer satisfaction, the number of hours spent would be considered the _________ variable.
Independent
158
What does the GIM reflect?
All the factors that market participants consider when pricing properties
159
When appraising office buildings, an appraiser often categorizes these buildings into classes (Class A, Class B, Class C). This is an example of _______ measurement.
Ordinal
160
What is often the most significant problem with using a sale that was the result of a contract for deed?
Determining the date when the actual meeting of the minds took place between the buyer and seller
161
What kind of data is observed, but not measured?
Qualitative data
162
What is another word for a variable?
Variate
163
What is the final step in the Sales Comparison Approach?
Reconciliation
164
What is the main purpose of verifying real estate transactions?
Confirm the sale occurred pursuant to the definition of market value
165
An industrial property sold for $150,000, and its gross annual rental income is $7,500. What is the indicated GIM?
20
166
What is the principle which holds that in a bell-shaped curve, 68% of the observations will fall within one standard deviation of the mean?
Empirical rule
167
What type of technique involves the appraiser surveying market participants and using this information to estimate adjustments?
Stated preference method
168
What is one way of estimating an adjustment for utilities?
Estimating the cost of bringing utilities to the site
169
An appraiser is making adjustments for location, financing terms, and market conditions in an appraisal. What is the proper order of these adjustments?
Financing terms, market conditions, location
170
Cash equivalency is determined through the eyes of the:
Seller
171
A comparable property sold for $800,000. In the sales comparison grid, it is adjusted downward 5% for property rights, downward 10% for financing terms, and upward 15% for market conditions. What is the dollar adjustment for property rights conveyed?
$40,000
172
An appraiser is analyzing three comparable sales in the sales comparison approach. Sale 1 sold for $225,000 and is rated overall superior to the subject. Sale 2 sold for $208,000 and is rated overall inferior to the subject. Sale 3 sold for $215,000 and is rated overall inferior to the subject. The appraiser reconciles the indicated value of the subject at $220,000. This is an example of _________ analysis.
Qualitative
173
What is the most common way of extracting and supporting adjustments in the Sales Comparison Approach?
Paired sales technique
174
When using sale price per square foot as a unit of comparison, an appraiser should:
Bracket the subject’s square footage
175
An appraiser is using sale price per square foot as a unit of comparison for a vacant commercial lot. The subject property is 2 acres. One of the appraiser’s comparable sales is 0.3 acre; another comparable sale is 6 acres. What should the appraiser consider at this point?
Economies of scale
176
A property sold for $60,000. Nine months later, it sold again for $69,000. No modifications were made to the property during this period. What is the indicated annual adjustment for market conditions?
+20%
177
What would be the most common unit of comparison used in valuing an improved retail commercial property?
Price per square foot of building area
178
When appraising a parcel of real property, when should an appraiser make modifications to the scope of work decision?
As soon as such modifications are deemed necessary
179
Sale B is a half-acre commercial lot with a 1,400 square foot building located on a side street, which sold for $110,000. Sale C is a half-acre commercial lot with a 1,500 square foot building located on a side street, which sold for $120,000. Based on the information that can be extracted from these sales, what would be the dollar adjustment for a 150 square foot difference in building size?
$15,000
180
When verifying a sale of a property, an appraiser discovers that the seller was having severe financial difficulties and agreed to sell the property quickly at a below-market price. If the appraiser is able to extract and support an adjustment, can this sale be used as a comparable in an appraisal?
Yes, this adjustment would be for conditions of sale
181
A low-cost apartment building has been remodeled with very expensive high-end plumbing fixtures, which are considered a super-adequacy for the structure. This would be an example of ____________.
Functional obsolescence
182
An appraiser locates several sales that are similar except for one feature and pairs them to extract an adjustment
the paired sales technique
183
When verifying the sale of an apartment building, an appraiser discovers that the seller was the purchaser’s grandmother. The appraiser should:
Not use the sale
184
A comparable property is currently offered for sale for $89,900. Properties in this area have a typical sale-to-list ratio of 92%. When using this property as a comparable listing, what is the adjustment that is necessary for sale-to-list ratio?
-$7,192
185
An appraiser concludes that an industrial building with an inadequate loading dock has an annual rent of $0.25 less per square foot than a property with an adequate loading dock. If the gross income multiplier is 6, what would be the dollar adjustment on a 40,000 square foot warehouse with an inadequate loading dock?
$60,000
186
Property A is a four-unit apartment building with a four-car garage, which sold for $225,000. Property B is a similar four-unit apartment building with no garage, which sold for $205,000. What is the indicated adjustment for a four-car garage?
$20,000
187
A comparable property sold for $800,000. In the sales comparison grid, it is adjusted downward 5% for property rights, downward 10% for financing terms, and upward 15% for market conditions. What is the dollar adjustment for market conditions?
$102,600
188
In the Sales Comparison Approach, if an appraiser’s initial observations are inadequate or untrustworthy, the appraiser should:
Collect and analyze additional data
189
When the national real estate market began to decline in 2006-2007:
Many appraisers continued to make positive time adjustments out of habit
190
What two kinds of adjustments may be made for elements of comparison?
Qualitative and Quantitative
191
An appraiser is valuing a property, owned in fee simple. One of the comparables is owned in leased fee, and the appraiser makes an adjustment for this difference. What would this adjustment be considered?
Property rights conveyed
192
A buyer is unable to obtain typical market financing. The seller agrees to carry the financing for the buyer, at below-market terms. The sale price of this property is likely to be ________ than it would have been if typical market financing had been utilized.
Higher
193
In an appraisal, an appraiser is making adjustments for both property rights conveyed and financing terms. Which adjustment should be made first?
Property rights
194
When is the Sales Comparison Approach most effective?
When sufficient market data is available to extract and support adjustments
195
What is the mission of the U.S. Department of Transportation?
Ensure a fast, safe, efficient, and accessible transportation system
196
An appraiser is valuing an old 5,000 square foot single-family home. The appraiser is unable to find any sales of similar old single-family homes; however, he does find several sales of large old homes that had been converted to apartments. What may this indicate to the appraiser?
Single-family use may not be the highest and best use of the subject property
197
Where does an appraiser preserve evidence of USPAP compliance?
The workfile
198
What is the formula for the Cost Approach?
Value = Cost – Depreciation + Site Value
199
What is another name for the Cost Approach?
The summation approach
200
When developing the Income Approach, what may an appraiser need to reconcile?
Market rent
201
Which part of USPAP addresses communication of assignment results?
STANDARD 2
202
With regard to reconciliation, how much information does USPAP require in an appraisal report?
Sufficient information so that it can be understood
203
The concept of adjustments is based primarily on what principle?
Contribution
204
What is the final step in the appraisal development process?
Reconciliation
205
Factors that have an effect on the sale prices or value of comparable properties, for which adjustments are made in the Sales Comparison Approach, are known as _________.
Elements of comparison
206
Intangible adjustments are also known as:
Transactional adjustments
207
Which appraisal term refers specifically to the number of goods and services that can be purchased with a unit of currency?
Transferability
208
An appraiser has been engaged to complete an appraisal on a commercial property and to provide a range of value. What should the appraiser consider when determining how wide the reported range should be?
The intended use of the appraisal
209
In a real property appraisal, an appraiser's point of focus should be:
The value of ownership rights
210
An appraiser is valuing a proposed new building with a prospective effective date. In this assignment, the appraiser is utilizing a(n):
Extraordinary assumption
211
An appraisal organization performed a study which concluded that that spending more hours working on an appraisal assignment results in higher client satisfaction. In this situation, client satisfaction is the _________ variable.
Dependent
212
An appraiser is applying statistical analysis in the study of vacant land values. What might the appraiser use to explain the extent to which individual data values have departed from the mean?
Measures of dispersion
213
The property rights conveyed of a comparable sale are different from those of the subject, and the appraiser is unable to extract a reliable adjustment from the market. What is the appraiser's best course of action at this point?
Discard the sale and do not use it in the analysis
214
Which of the following is another name for the market survey method of extracting adjustments?
Contingent valuation method
215
When adjustments based on elements of comparison are used, the appraiser adjusts the sales prices of the comparable sales by:
Either a dollar or percentage adjustment
216
Benefits or features of a property, both tangible and intangible, which increase its value would be considered ___________.
Amenities
217
An appraiser develops the Income Approach as the only valuation approach in an appraisal. The indication of the Income Approach is $1,422,550. Why is it important that an appraiser round this number when expressed as a final value conclusion?
To avoid misleading the client and intended users
218
Communication of the results of a real property appraisal assignment is governed by which part of USPAP?
STANDARD 2
