Valuation and Market Analysis Flashcards
(14 cards)
Which of the following is not a true statement regarding the cost approach to appraisal?
it tends to set the lower limit for property values
Which of the following issues would have the largest impact on economic obsolescence?
Economic obsolescence (a category of external obsolescence) reflects a loss in value because of changes that are external to the property itself. If the economic conditions of the surrounding neighborhood are poor, then the value of the property might be hurt; this would be an example of economic obsolescence.
The present worth of a property’s future benefits is most important to what approach to value?
The income approach (capitalization approach) bases the present market value of a property on the future benefits of ownership.
A comparable property has a feature that the subject property lacks. Under the market data approach, how will an appraiser treat this feature?
The value of the feature is subtracted from the value of the comparable. Since the subject property does not have the feature, the adjusted comparable value will more closely reflect the value of the subject.
What principle states that homogeneity in a neighborhood increases the value of an individual house?
According to the principle of conformity, a reasonable degree of homogeneity within a neighborhood has a positive effect on property values.
Replacement cost, as opposed to reproduction cost, is:
Replacement cost refers to the cost of replacing a building with another of equal utility. Reproduction cost refers to the cost of replacing a building with an exact replica.
The principle of substitution may be applied to which of the following appraisal methods?
The principle of substitution applies to all three appraisal methods. (Income, Sales Comparison, Cost Approach)
The period of time during which an income producing property generates income in excess of its expenses is known as:
Economic life is the estimated period over which a building may be profitably used.
The method used to convert gross income into value in one operation is called:
The gross rent multiplier (or gross income multiplier) method converts gross income into value in a one-step operation.
Under normal market conditions, an apartment building’s vacancy rate is determined by:
The supply of and demand for housing in that particular area will have a significant effect on the apartment building’s vacancy rate.
In real estate appraisal, “improved value” refers to:
Improved value is the combined value of the land and its improvements.
When performing an appraisal, an appraiser takes into account:
The land residual technique is used to determine:
Appraisers use the land residual technique to determine land value.
The term “fee appraiser” refers to:
