Valuation And Market Analysis (Appraisal) !previously Incorrect Answers! (Part 1/2)

Front 1

Amenities of residential real estate are?

Back 1

measurable on the market.

Hint 1

Amenities are the attractive or desirable features of a home or neighborhood. These may be physical attributes or perhaps the neighborhood's attitude toward schools, well-kept lawns, et cetera. These may be tangible or intangible qualities measurable on the market.

Front 2

Two houses were built on two adjacent lots of equal value. Construction costs and maintenance were the same. One house is appraised to be of higher value. What is most likely the reason?

Back 2

One house was considered to have functional obsolescence.

Hint 2

One house must have functional obsolescence. Since the properties are in the same location, the same age, and have been maintained the same, the difference in value cannot be attributed to economic obsolescence or wear and tear. As an example, one house may have only a single-car garage or only one bathroom or a less attractive floor plan.

Front 3

An appraiser determines the accrual for depreciation in the use of?

Back 3

the income approach.

Hint 3

An accrual for depreciation is a part of the income approach in appraisal. Appraisers describe remaining economic life as the period over which an investor would expect to recapture an investment in a property. An accrual for depreciation is a plan for recapture during this remaining economic life.

Front 4

Which criterion would NOT be used to determine net income for an income property?

Back 4

Mortgage interest

Hint 4

For determining net income in the income approach to appraisal, mortgage interest is a personal expense of the owner, not an operating expense of the property. Vacancies, management fees, and maintenance costs are all allowable deductions in establishing net operating income for appraisal purposes.

Front 5

An appraiser would consider all of these as contributing to the stability of a neighborhood EXCEPT?

Back 5

Contributing factors:residence in the path of urban directional growth, many families with children going to school , homogeneity of buildings, people, and uses.

Non-Contributing factor (EXCEPTION):

increased density and rapid turnover of population.

Hint 5

An increase in density and rapid turnover may occur from undesirable causes. The principle of conformity holds that maximum value is realized when a reasonable degree of homogeneity is present in buildings, uses of property, and income levels of residents.

Front 6

In order to arrive at an effective gross income for rental properties, an appraiser should deduct what from gross income?

Back 6

Vacancies and collection losses.

Hint 6

Effective gross income is that income remaining after deducting vacancies and collection losses from gross income.

Front 7

Productivity is a direct function of?

Back 7

value.

Hint 7

The productivity of real estate is the income it produces. Income and value will vary directly and proportionately. Thus, each is a function of the other.

Front 8

To find the details of the subfloor, such as size and dimensions of concrete piers, footings, and other detailed construction measurements, a real estate licensee would examine the?

Back 8

foundation plan.

Hint 8

A foundation plan will show all the details of the subfloor, such as the size and dimensions of concrete piers footings and other detailed construction measurements. A floor plan is a drawing made to scale showing floor dimensions, room sizes, placement of windows, doors, and partitions, and so forth. A plot plan is a drawing made to scale that reveals lot dimensions, placement of improvements, walks and driveways, and so forth. An elevation plan is a sketch that shows exteriors of a building as it will appear when completed.

Front 9

Usefulness of the cost approach is limited when appraising?

Back 9

an older property with many functional deficiencies.

Hint 9

The usefulness of the cost approach method of appraisal is limited when appraising an older property with many functional deficiencies because of the difficulty in determining all of the accrued depreciation. Appraising a new structure or for construction would probably have little, if any, functional deficiencies. In an unusually active real estate market the comparison approach would be the most significant approach to use, but the cost approach could still be useful.

Front 10

A prudent buyer would not pay more for a parcel of real estate than he would have to pay for another similar parcel based on the principle of?

Back 10

substitution.

Hint 10

The principle of substitution holds that when two or more substantially similar properties are available, the one with the lower price receives the greatest demand.

Front 11

An appraiser determines the accrual for depreciation in using?

Back 11

the income approach.

Hint 11

The term accrual for depreciation means to provide for future depreciation. This is done by setting aside funds or charging off against the future income an amount to eventually replace or recapture the investment in the improvements. This is usually provided for in the capitalization rate in the income approach. Accrued depreciation (past) is used in the cost approach.

Front 12

Appraisers have the most difficulty in determining the value of?

Back 12

accrued depreciation.

Hint 12

Depreciation is the difference between the replacement cost new of the improvements and their present value measured at the same date. The older the building, the more difficult it is to estimate replacement cost and depreciation accurately.

Front 13

Functional obsolescence would NOT be attributable to?

Back 13

Attributable:

eccentric design, lack of air-conditioning, items of surplus utility.

NOT Attributable:

proximity of nuisances.

Hint 13

Undesirable or unattractive nuisances outside a property would be economic obsolescence.

Front 14

In appraisal, all of these are recognized methods for the valuation of land EXCEPT the?

Back 14

Recognized Methods:

abstraction method,comparative method,development method.

Exception:

economic method.

Hint 14

There are four basic procedures for the valuation of land: comparative, abstraction, development, and land residual. The term economic is not used in designating a recognized method.

Front 15

In arriving at an estimate of value based on selling prices, the appraiser is most interested in the date the?

Back 15

sale went into escrow.

Hint 15

The buyer and seller agree on a price, and the contract is signed. This would indicate the market value of property on that date. Values taken at any later date would defeat the willing seller-willing buyer concept.