Module 1

Question 1

Desirability:

Answer 1

want the product for it to have value

Question 2

Utility:

Answer 2

ability to satisfy a human: want, need, or desire

Question 3

Scarcity:

Answer 3

present supply relative to the demand for it

Question 4

Transferability:

Answer 4

ability to purchase the property

Question 5

In order to have value, the property must have ____

Answer 5

DUST:

Desirability,
Utility,
Scarcity,
Transferability:

Question 6

Fee Simple Title:

Answer 6

rights of ownership enjoyed by the owner of real estate.

Question 7

There are six rights in the Bundle of Rights:

Answer 7

S – Right to Sell
L – Right to Lease or Rent
U – Right to Use
G – Right to Give Away
E – Right to Enter or Leave
R – Right to Refuse to do any of these

Question 8

Real Estate:

Answer 8

the physical land and any structure attached to it

Question 9

Real Property:

Answer 9

(bundle of rights) rights of ownership enjoyed by the owner of real estate.

Question 10

Four (4) rights which government has retained for itself:

Answer 10

T.E.P.E.

1. Power of Taxation
2. Power of Eminent Domain
3. Police Power – power to regulate
4. Escheat

Question 11

Supply:

Answer 11

the amount of a product available for sale

Question 12

Demand

Answer 12

the amount of a product consumers are willing & able to buy at a given time for a specified price.

Question 13

Supply is dependent on what 5 things:

Answer 13

1. Number of sellers in the market,
2. Expectations of the future economy,
3. The cost of production,
4. The price of other goods available
5. ^ principle of competition

Question 14

5 Demand factors:

Answer 14

1. Price asked for the commodity
2. Expectations
3. Price of related commodities
4. Income
5. Preferences (tastes)

Question 15

Four external factors affect supply and demand, and
therefore value (PEGS):

Answer 15

1. Physical
2. Economic
3. Governmental
4. Social

Question 16

Anticipation:

Answer 16

worth of all future benefits expected by market participants.

Question 17

The basis of the income approach to value.

Answer 17

Anticipation

Question 18

Substitution

Answer 18

an equally desirable substitute.

Question 19

This principle applies to all three approaches to value.

Answer 19

Substitution

Question 20

“the reasonably probable and legal use of
vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.”

Answer 20

highest and best use

Question 21

four tests of highest and best use are:

Answer 21

1. Legally permissible
2. Physically possible
3. Financially feasible
4. Maximally productive

Question 22

Cost approach is used when:

Answer 22

1. estimate the cost of constructing improvements to the land.
2. you do not have sufficient sales to compare
3. the structure has just been built
4. you are doing mass appraisal. It can be used on all property types.

Question 23

Cost approach formula:

Answer 23

L + (RCN - dep) = Value

Question 24

The cost to reproduce all components of the building with the same materials and same labor as found in the current structure.

Answer 24

Reproduction Cost:

Question 25

Determines the cost to construct a building of similar utility using modern materials and methodologies.

Answer 25

Replacement Cost:

Question 26

Three Methods of estimating cost new (RCN):

Answer 26

1. Quantity Survey Method (Trend) 2. Unit-in-Place Method 3. Comparative Method

Question 27

RCN stands for

Answer 27

Replacement Cost New

Question 28

Depreciation is the loss in value from RCN due to:

Answer 28

1. Physical wear and tear 2. Effects of nature 3. Changing tastes and preferences 4. Changing technology 5. Forces outside the property reducing its value

Question 29

Three types of Depreciation:

Answer 29

1. Physical Deterioration 2. Functional Obsolescence 3. External/Economic Obsolescence

Question 30

Sales Comparison Approach:

Answer 30

(a.k.a. market approach) Sc +/- adj = Value similar sold properties compared, adjusted for differences = market value is estimated.

Question 31

Sales Comparison Approach (a.k.a. market | approach) formula:

Answer 31

Sc +/- adj = Value

Question 32

Verification of sales determines:

Answer 32

arms-length sales transaction

Question 33

The most common types of ownership are:

Answer 33

1. Fee Simple 2. Partial Estate 3. Life Estate

Question 34

Fee simple:

Answer 34

the highest degree of ownership

Question 35

Partial estate:

Answer 35

leased property

Question 36

Life estate:

Answer 36

right to use, occupy, and control a property for the length of the lessee’s life

Question 37

Value in exchange:

Answer 37

amount of money or goods you can receive if you sell the property.

Question 38

Value in use:

Answer 38

the value property has in a specific use.

Question 39

Personal Property:

Answer 39

All Property that is not real

Question 40

Tangible:

Answer 40

Physically exists; car, desk, tools, etc

Question 41

Intangible Property:

Answer 41

No physical existence; stocks, bonds, bank accounts etc.

Question 42

Three approaches to value:

Answer 42

1. sales comparison 2. income 3. cost

Question 43

Cost approach: four situations when to use

Answer 43

1. structure has just been built 2. estimate the cost of constructing improvements to the land 3. not sufficient sales to compare, 4. doing mass appraisal.

Question 44

This approach is based on the principle of substitution.

Answer 44

1. Cost approach 2. Sales comparison approach 3. Income approach

Question 45

Used to value the income stream of a property.

Answer 45

Income approach

Question 46

This approach to value uses the principles of substitution and anticipation.

Answer 46

Income approach

Question 47

Tax Day:

Answer 47

December 31st

Question 48

Ad Valorem:

Answer 48

At or according to value

Question 49

TCV:

Answer 49

True Cash Value

Question 50

MV:

Answer 50

Market Value

Question 51

AV:

Answer 51

Assessed Value

Question 52

SEV:

Answer 52

State Equalized Value

Question 53

CV:

Answer 53

Capped Value

Question 54

TV:

Answer 54

Taxable Value

Question 55

Mills:

Answer 55

1/1000

Question 56

Property Taxes:

Answer 56

TV x Mills

Question 57

ECF:

Answer 57

Economic Condition Factor

Question 58

IRM:

Answer 58

Inflation Rate Multiplier

Question 59

CPI:

Answer 59

Consumer Price Index

Question 60

CV formula:

Answer 60

CV = (last yr TV - losses) x (IRM) + AV Additions

Question 61

An appraisal is:

Answer 61

An expert estimate of something to attain its value.