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26 Cards in this Set

  • Front
  • Back

Reconciliation refers to

analyzing the results obtained by the three different approaches to value to determine a final estimate of value

One method to determine a buildings replacement cost uses the estimate cost of the raw materials needed to build the structure, plus labor and indirect costs This is called

quantity-survey method

If a property's annual net income is $24,000 and it is valued at $300,000 what is its capitalization rate

$24,000 / $300,000 = .08%

An appraiser needs certain financial figures in order to determine value by the income approach. Which one of the following number is NOT required for the income approach to value?

Accrued depreciation


Income approach = 1. Estimate annual potential gross income 2. deduct allowance for vacancy and rent loss to find effective gross income


3. deduct annual operating expenses to find NOI


4. Estimate rate of return (cap rate) for subject by analyzing cap rates of similar properties


5. Derive estimate of subjects market value by applying cap rate to annual NOI using NOI / cap rate = Value

The highest and best use of a property is the

Most return the owner can receive for use of the property

The income capitalization approach is given the most weight in the valuation of a

Office building

Capitalization is the process by which annual NOI is used as the basis to

Estimate value

The depreciation that an appraiser uses in the cost approach to value represents the

Loss of value due to any cause

The appraised value of a residence with four bedrooms and one bathroom would probably be reduced because of

Functional obsolescence

The reason for loss of value that is always incurable is

Economic obsolescence


Which appraisal approach makes use of a rate of investment return?

Income capitalization

Which of the following is NOT true about market value?

It is the highest price a property could bring in an open market

Developers have just announced a new championship golf course community. Property values in the area will tend to increase due to this announcement. This is an example of the principle of

Anticipation

Which of the following statements is TRUE of the income approach to value?

The cap rate must be estimated

In the cost approach to value, it is necessary to

Determine a dollar value for depreciation

The subject property has two bedrooms and the comparable property has three bedrooms. The estimate value of the third bedroom is $2500. According to the sales comparison method, the appraiser should

Deduct $2500 from the value of the comparable property...

All of the following should be deducted from gross income to compute NOI EXCEPT

Mortgage payments

If the appraiser decides to increase the cap rate, the market value of the property will

Decrease

The number of years a property is expected to remain useful for it's original purpose is its

Economic life

The formula for estimating value based on the gross rent multiplier is

rental income x gross rent multiplier = estimate market value

In estimating the value of real estate using the cost approach, the appraiser should

estimate the replacement cost of the improvements

Under the income approach to estimating the value of real estate, the cap rate is the

rate of return the property will earn as an investment

An example of economic obsolescence is

abandoned buildings in the area

A house located in a suburban community. A new expressway is being build a few blocks away that will reduce then commute time to the urban employment center by 30 minutes. The house is expected to increase in value based on the principle of

Anticipation

The subject property is a two-story home with three bedrooms, three baths, a fam room,a dining room, and an attached 2 car garage. Which of the following would be a legit comp sale?

neither :


a Two story home with 3 bedrooms and 2.5 baths in the same neighborhood that sold 18 months ago


NOR


one story home in a diff neighborhood with 3 bedrooms and 2 baths a detached one car garage, and no fam or dining room

which of the following statements is True of a comparative market analysis?

It can help the seller price the property