Module 3 Flashcards
(35 cards)
The estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design, layout, and quality of workmanship and embodying all the deficiencies, super adequacies, and obsolescence of the subject building is called ______________.
Reproduction Cost
The estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvement, using modern materials and current standards, design, and layout is called ________________.
Replacement cost
This cost estimating method is designed to be fairly rapid and uses square foot costs for typical buildings. The costs are averages of detailed estimates, actual breakdowns, and total end costs of many actual construction projects. The costs are classified by class and quality of construction with buildings typical of a certain quality have many characteristics in common.
The Calculator Method
This cost method divides or segregates the building improvements into sections and the manual gives cost per unit of the major building components (foundation, frame, floor, walls, etc.). The cost of each component item is built-up or totaled along with the component costs for miscellaneous items.
The Segregated Cost Method
Found in Appendix B of the Assessor’s Manual, these tables give indexes and multipliers by which known historical costs may be converted directly to present-day costs.
Comparative Cost Indexes and Multipliers
Land that is not needed to serve or support the existing use. The highest and best use of ________ land may or may not be the same as the highest and best use of the improved parcel. This type of land has the potential to be sold separately and is valued separately.
Excess land
Land that is not currently needed to support the existing use but cannot be separated from the property and sold off for another use. This type of land does not have an independent highest and best use and may or may not contribute value to the improved parcel.
Surplus land
______________ is information gathered in its original form by the analyst. Sources include public records such as deeds and recorded transfer documents, commercially available data from multiple listing and subscription services, published articles, credible online sources and interviews with market participants (e.g., the parties to transactions, attorneys, appraisers, counselors, brokers, property managers, lenders).
Primary data
Information that is not gathered in its original form by the analyst is known as ____________. This type of data only confirms its existence and does not verify the transaction. These sources do not typically provide enough information about transaction related items such as any usual conditions of sale, sales concessions, if the sale included multiple properties, if other non-realty items were included or other items.
Secondary data
The components into which a property may be divided for purposes of comparison, e.g., price per square foot, front foot, cubic foot, room, bed, seat, apartment unit.
Units of comparison
The characteristics or attributes of properties and transactions that cause the prices of real property to vary; include real property rights conveyed, financing terms, conditions of sale, expenditures made immediately after purchase, market conditions, location, physical characteristics, and other characteristics such as economic characteristics, use, and non-realty components of value.
Elements of comparison
_______________ with a party to the transaction is an important step in the sales comparison approach. Regardless of the number of sales analyzed, appraisers must understand each sale used for comparison to draw credible conclusions.
Personal verification
Assume Sale A is superior to the subject property. The price of Sale #A woud need to be adjusted _________ to liken it to the subject.
Downward
The total adjustment to each comparable sale price calculated by adding the absolute values of all positive and negative adjustments is known as:
Gross adjustment
The sum of the positive and negative adjustments made to a comparable sale price is known as:
Net adjustment
Which appraisal principle states that the perception that value is created by the expectation of benefits to be derived in the future.
Anticipation
The income approach can be broken down into three components; income, rate and value. In direct capitalization, the basic formula for calculating property value is sometimes called the____________ because it uses I = Income, R = Rate, and V = Value. The Income is the income that is generated by the property. The Rate is the capitalization rate. The Value represents the property value.
IRV formula
Potential gross income (PGI) estimates the amount of rent a property could command if rented at market rent at ______________ occupancy. PGI equals the total rental income generated from all units at a property
100%
The most probable rent that a property should bring in a competitive and open market is known as:
Market rent
The actual rental income specified in a lease is called __________.
Contract rent.
Potential gross income is estimated using _________. To estimate __________ for a property, you analyze the income of comparable properties and the past, present, and future projected income for the subject property.
Market rent
True or False Market rent is used rather than contract or actual rent because the subject property may be rented for more or less than the rent that could be commanded on the open market. The use of contract or actual rent in that case would distort the income and in turn the market value of the subject property.
True
_______________________________is income generated by a property that is not directly attributed to the rental of the real property. This income may be obtained from the use of personal property or the profit from services supplied to the tenant.
Miscellaneous income also known as Other Income
____________________________is defined as the potential gross income less the vacancy and collection loss plus other income also called miscellaneous income.
Effective gross income
