Valuation and Market Analysis Flashcards
(21 cards)
When the appraiser goes out to look at a home Sandy has just purchased, they makes a $3,000 upward adjustment on their sales comparison approach worksheet, because it has a fireplace and the comparable homes do not. The $3,000 adjustment is based on what appraisal principle?
Contribution
Replacement of a building best describes:
Building the functional equivalent of the original structure
Gross income best describes:
Income before expenses
Which of the following would be the best example of functional obsolescence?
Walking through one bedroom to reach another
Staff appraisers might be used by:
A large corporation with many properties to manage and a large mortgage company reviewing hundreds of appraisals a year
A 10 unit apartment building has a net income of $ 5,000 annually, per unit. If the purchasers wish a 10% return on their investment, how much should they be willing to pay for the property?
$500,000. The value of the property = net income /rate of return. Thus value = $50,000 ($5,000 per unit x 10 units) / .10 = $500,000.
Net operating income best describes:
Effective gross income after expenses
An appraiser has been requested to appraise a residential home. Although the home is actually 10 years old it is in excellent condition, so the appraiser places its age at 6 years. This would be known as:
effective age.
If a property has been renting for $750 per month and, based on comparables, the GRM is 110, what is the indicated value of the property?
The indicated value using a GRM (Gross Rent Multiplier) is the (monthly rent x 12 (months)) x GRM. In this case, ($750 X 12) x 110 = $990,000.
Reproducing a structure best describes:
Building an exact replica of the structure
What is market price?
The price the property actually sold for
An investor buys a single family rental property with an initial basis of $150,000. Assuming 30 year straight-line depreciation, what is the basis of the property after 10 years?
The annual depreciation would be $5,000 ( 150,000 / 30 ), thus 10 years would be $50,000 ( 10 x 5,000 ). Therefore the basis after 10 years is 150,000 - 50,000 = $100,000.
A home with a basement wall that is failing is best described as suffering:
Incurable physical deterioration
A broker has 1.65 acres of land listed at $.205 per square foot. The total listing price is:
$14,734.17
What is assessment value?
The value the property taxes are based on
The subject property is next to a sewage treatment plant. What could this situation be causing?
Economic obsolescence
An appraiser has selected 3 comparable sales for the property they are appraising. After making adjustments, they have adjusted sales prices of $100,000, 107,000 and $110,000. How do they reconcile these 3 different numbers.
Use a weighted average, giving the most weight to the most similar property
Effective gross income best describes:
Gross income minus a figure for vacancy and collection losses
While determining the net operating income of an investment property, an appraiser will take into account all of the following except:
Interest expense
What is market value?
The price the property is likely to bring in an arms length transaction
An investor buys an apartment building for $240,000 after estimating that it will have a net income of $40,000 annually. Which value principle is at work here?
Principle of anticipation
