Module 1 Essential Terms

Question 1

refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof;

Answer 1

Actual Use

Question 2

Actually used is defined as an act or fact in reality; “Actual is something real or actually existing as opposed to something merely possible, or to something which is presumptive or constructive. Directly used is defined as that use without anything intervening proximately or without an intervening agency or person. Exclusively used means the primary or inherent use and does not preclude such incidental uses as are directly connected with, essential to, and in furtherance of the primary use. To illustrate, the primary use of a building may be for charitable or religious or educational purpose. The exemption is not wholly or partly lost because on occasion, the building or part of it is used for social purposes or let out to others for entertainment;

Answer 2

Actually, Directly and Exclusively Used

Question 3

is the act or process of determining the value of a property as of a specific date for a specific purpose. It may also be defined as the act of estimating the value of a property. It is an estimate or opinion of value, usually market value or value as defined by the appraiser. It is made as of a specific date and is a conclusion which results from a logical and orderly analysis of facts.

Answer 3

Appraisal

Question 4

a transaction freely arrived at in the open market, unaffected by abnormal pressure or by the absence of normal competitive negotiation as might be true in the case of a transaction between related parties;

Answer 4

Arm‟s Length Transaction

Question 5

is the act or process of determining the value of a property or proportion thereof subject to tax, including the discovery, listing, classification and appraisal of properties;

Answer 5

Assessment

Question 6

is the percentage applied to the market value to determine the taxable value of the property;

Answer 6

Assessment Level

Question 7

is the market value of the property multiplied by the assessment level. It is synonymous to taxable value;

Answer 7

Assessed Value

Question 8

is the process of converting into present value (or obtaining the present worth of) a series of anticipated future periodic installment of net income;

Answer 8

Capitalization

Question 9

refers to a document accompanied by maps and all the taxable improvements on such lands, a current and fair market value, and assessment level to be able to arrive at an assessed value for each land and each improvement.

Answer 9

Comprehensive Land Use Plan

Question 10

is also known as replacement or reproduction cost less depreciation. Under this approach to value, the land is appraised as vacant. The land value is then added to the depreciated cost of the improvements to arrive at an indication of value. It is based on the “Theory of Substitution”.

Answer 10

Cost Approach

Question 11

is a loss in value brought about by physical deterioration and/or obsolescence;

Answer 11

Depreciation

Question 12

is the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy; Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in arm’s length transaction (a transaction between independent, unrelated parties involving no irregularity) after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion;

Answer 12

Fair Market Value/Market Value

Question 13

the most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible and which results in the highest value of the property being valued;

Answer 13

Highest and Best Use

Question 14

an appraisal technique used to estimate the market value of a property on the basis of the income it produces or is capable of producing. The value is estimated by capitalizing the estimated future income, either gross or net. This approach is based on the theory that a property is worth what it will earn. Value is the present worth of future benefits arising from the ownership;

Answer 14

Income Approach

Question 15

described as the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation;

Answer 15

Just Compensation

Question 16

refers to the manner of utilization of land, including its allocation, development and management;

Answer 16

Land Use

Question 17

is also known as the Comparative Approach. Traditionally, an appraisal procedure in which the market value estimate is predicated upon prices paid in actual market transactions and current listings. It is a process of analyzing sales of similar recently sold properties in order to derive an indication of the most probable sale prices of the property being appraised. The reliability of this technique is dependent upon: a) the availability of comparable sales data; b) the verification of the sales data; c) the degree of comparability or extent of adjustment necessary for time differences; and d) the absence of non-typical conditions affecting the sales price;

Answer 17

Market Data Approach

Question 18

is the price agreed upon by the buyer and seller in the open market in the usual and ordinary course of legal trade and competition; the price and value of the article established or shown by sale, public or private, in the ordinary way of business; the fair value of property is between one who desires to purchase and one who desires to sell; the current price; the general or ordinary price for which property may be sold in that locality.

Answer 18

Market Value

Question 19

the physical land and all those items, which are attached to the land. It is the physical, tangible entity which can be seen and touched, together with all the additions on, above, or below the ground;

Answer 19

Real Estate

Question 20

includes all the rights, interests, and benefits related to the ownership of real estate. Ownership of real estate is evidenced by a Certificate of Title, Free Patent or Tax Declaration in the absence of Certificate of Title;

Answer 20

Real Property

Question 21

is the assigning of new assessed values to property, particularly real estate, as the result of a general, partial, or individual reappraisal of the property;

Answer 21

Reassessment

Question 22

refers to the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, commercial or industrial, as embodied in the land use plan, subject to the requirements and procedures for land use conversion. It also includes the reversion of nonagricultural lands to agricultural use.

Answer 22

Reclassification of Agricultural Lands

Question 23

is the cost of constructing a similar property which is equally desirable and has the same utility as the one under appraisal;

Answer 23

Replacement Cost

Question 24

is the cost of constructing an exact replica of the building being appraised based on current prices of labor and materials and contractor‟s practices;

Answer 24

Reproduction Cost

Question 25

is a graphic representation of a portion of the earth‟s surface drawn to scale on standard size drawing material, having property lines and jurisdictional boundaries delineated showing all parcels of real property and identifying each separate real property ownership by a unique number. A tax map is also referred to as Property Identification Map; 

Answer 25

Tax Map

Question 26

is a highly accurate method of field operations for identifying real property units, defining property boundaries, determining actual use, and discovering undeclared properties for taxation purposes. 

Answer 26

Tax Mapping

Question 27

is the period of time over which the property may reasonably be expected to perform the function for which it was designed or intended; 

Answer 27

Useful Life

Question 28

the date the conclusion or opinion rendered in an appraisal is applicable and valid. The date of appraisal identifies the market conditions that existed when the appraisal was made; 

Answer 28

Valuation, Date of

Question 29

is the delineation/division of a city/municipality into functional zones where only specific land uses are allowed. It directs and regulates the use of all lands in the community in accordance with an approved or adopted land use plan for the city/municipality. It prescribes setback provisions, minimum lot sizes, building heights and bulk; 

Answer 29

Zoning