Certified Pennsylvania Evaluator Exam
(CPE) Questions And Answers 2023
Assessor – Correct Answer-Any person responsible for the valuation of real property for
ad valorum taxation purposes
Duties and Responsibilities of an Assessor – Correct Answer-Discovering, Listing,
Valuing
Clean & Green – Act 319 – Correct Answer-Has two values, Value in Use and Value in
Exchange
An Assessor is accountable to whom? – Correct Answer-Himself, taxpayers and all
taxing authorities
In order for an assessor to accomplish the task of discovering property, the assessor
needs what? – Correct Answer-An adequate mapping system ( GIS) showing every
parcel of land.
Last day to submit an appeal – Correct Answer-September 1
All appeals must be heard and decided by what date? – Correct Answer-October 31st
Last day to apply for the Homestead/Farmstead Exclusion – Correct Answer-March 1st
Last day to apply for the Clean and Green program for the next tax year – Correct
Answer-June 1st
Date that public notice must be given that tax rolls are open for public inspection –
Correct Answer-July 1st
STEB must certify to all assessment Office their CLR’s by which date? – Correct
Answer-July 1st
All notice of appeal decisions must be mailed – Correct Answer-November 15th
Assessors Certification Date – Correct Answer-November 15th
Levels of appeal process – Correct Answer-1. County Board of Assessment Appeals, 2.
Court of Common Pleas of Pennsylvania, 3.Commonwealth Court of Pennsylvania,
4.Superior Court of Pennsylvania
Assessors are charged with the responsibility of administering what? – Correct AnswerA uniform and equitable assessment system
March 17th 1987 – Correct Answer-The Assessors Certification Act required that all
persons responsible for the valuation of real property for ad valorem taxation purposes
be certified to do so by he State Tax Equalization Board.
Has three years from the start of employment to become certified
March 17, 1992 – Correct Answer-The responsibility to certify assessors shifted from the
State Tax Equalization Board to the State Board of Certified Real Estate Appraisers.
State Board of Certified Real Estate Appraisers – Correct Answer-The state board
certification body
To be certified by the State Board of Certified Real Estate Appraisers, the assessor
must: – Correct Answer-1. Possess a high school diploma, or its equivalent, or two years
of assessing experience
- Shall be at least 18 years of age
- Shall be a resident of this Commonwealth for at least six months
- Successfully completed a minimum of 90 hours of the basic course of study of the
International Association of Assessing Officers (IAO) or the Assessors Association of
Pennsylvania (AAP) - This act does not apply to counties of the First Class (Philadelphia Counties)
How often must an assessor recertify? – Correct Answer-Every two years.
June 30 Odd number years (license runs out)
July 1 odd number of years (starts a new license year)
Example: July 1, 2009 to June 20, 2011
To become re-certified the assessor must accumulate how many hours of continuing
professional education credits? – Correct Answer-28 hours
7 hours must be on USPAP (Uniform Standards of Professional Appraisal Practice)
2 hours must be on Assessor’s Certification Act (Act 28 of 1992)
The State Board of Certified Real Estate Appraisers approves the courses or activities
necessary to comply with the re-certification requirements
ASB – Correct Answer-Appraisal Standards Board
An appraiser must perform assignments with what? – Correct Answer-Impartiality,
Objectivity and Independence, without accommodation of personal interest
How long must an appraiser retain his/her workfile? – Correct Answer-5 years after
preparation or 2 years after final disposition of any judicial processing.
Whichever expires last!
Workfile must include the following: – Correct Answer-1. Name of the client and the
identity, by name or type, of any intended users
- True copies of any written reports, documents on any type of media
- Summaries of any oral reports or testimony, or a transcript of testimony, including the
appraiser’s signed and dated certification - All other date, information, and documentation necessary to support the appraiser’s
opinions and conclusions and to show compliance with this Rule and all other applicable
Standers, or references to the location(s) of such other
To have a successful assessment office the assessor must have? – Correct Answer-The
trust of those he or she serves
The assessor and his staff should always consider themselves what? – Correct AnswerGood will ambassadors of the taxation process and county government
As assessment office must have which legally required materials readily available and
easily accessible to the public? – Correct Answer-1. property record cards - maps
- Tax duplicates
- alphabetical index
Title 53 Purdons – Correct Answer-The volume that has pertinent court cases and
taxation laws for Pennsylvania assessment.
Ad valorem – Correct Answer-At value.
The ad valorem tax is one which is based on the value of tangible and intangible
property.
Article VIII Section 1 – Correct Answer-This is known as the uniformity clause of the
Pennsylvania constitution.
Provides that all persons and property (tangible and intangible) be assessed and taxed
uniformly as a class.
Uniformity!
Mill – Correct Answer-one dollar of tax per every one thousand dollars of assessed
value
Assessment X Millage Rate = – Correct Answer-Taxes to be paid by the taxpayer
Base Year Market Value X Predetermined Ratio= – Correct Answer-Assessment
Real Estate – Correct Answer-The physical land and everything permanently attached to
it.
Assessor
Any person responsible for the valuation of real property for ad valorum taxation purposes
Duties and Responsibilities of an Assessor
Discovering, Listing, Valuing
Clean & Green – Act 319
Has two values, Value in Use and Value in Exchange
An Assessor is accountable to whom?
Himself, taxpayers and all taxing authorities
In order for an assessor to accomplish the task of discovering property, the assessor needs what?
An adequate mapping system ( GIS) showing every parcel of land.
Last day to submit an appeal
September 1
All appeals must be heard and decided by what date?
October 31st
Last day to apply for the Homestead/Farmstead Exclusion
March 1st
Last day to apply for the Clean and Green program for the next tax year
June 1st
Date that public notice must be given that tax rolls are open for public inspection
July 1st
STEB must certify to all assessment Office their CLR’s by which date?
July 1st
All notice of appeal decisions must be mailed
November 15th
Assessors Certification Date
November 15th
Levels of appeal process
- County Board of Assessment Appeals, 2. Court of Common Pleas of Pennsylvania, 3.Commonwealth Court of Pennsylvania, 4.Superior Court of Pennsylvania
Assessors are charged with the responsibility of administering what?
A uniform and equitable assessment system
March 17th 1987
The Assessors Certification Act required that all persons responsible for the valuation of real property for ad valorem taxation purposes be certified to do so by he State Tax Equalization Board.
Has three years from the start of employment to become certified
March 17, 1992
The responsibility to certify assessors shifted from the State Tax Equalization Board to the State Board of Certified Real Estate Appraisers.
State Board of Certified Real Estate Appraisers
The state board certification body
To be certified by the State Board of Certified Real Estate Appraisers, the assessor must:
- Possess a high school diploma, or its equivalent, or two years of assessing experience
- Shall be at least 18 years of age
- Shall be a resident of this Commonwealth for at least six months
- Successfully completed a minimum of 90 hours of the basic course of study of the International Association of Assessing Officers (IAO) or the Assessors Association of Pennsylvania (AAP)
- This act does not apply to counties of the First Class (Philadelphia Counties)
How often must an assessor recertify?
Every two years.
June 30 Odd number years (license runs out)
July 1 odd number of years (starts a new license year)
Example: July 1, 2009 to June 20, 2011
To become re-certified the assessor must accumulate how many hours of continuing professional education credits?
28 hours
7 hours must be on USPAP (Uniform Standards of Professional Appraisal Practice)
2 hours must be on Assessor’s Certification Act (Act 28 of 1992)
The State Board of Certified Real Estate Appraisers approves the courses or activities necessary to comply with the re-certification requirements
ASB
Appraisal Standards Board
An appraiser must perform assignments with what?
Impartiality, Objectivity and Independence, without accommodation of personal interest
How long must an appraiser retain his/her workfile?
5 years after preparation or 2 years after final disposition of any judicial processing.
Whichever expires last!
Workfile must include the following:
- Name of the client and the identity, by name or type, of any intended users
- True copies of any written reports, documents on any type of media
- Summaries of any oral reports or testimony, or a transcript of testimony, including the appraiser’s signed and dated certification
- All other date, information, and documentation necessary to support the appraiser’s opinions and conclusions and to show compliance with this Rule and all other applicable Standers, or references to the location(s) of such other
To have a successful assessment office the assessor must have?
The trust of those he or she serves
The assessor and his staff should always consider themselves what?
Good will ambassadors of the taxation process and county government
As assessment office must have which legally required materials readily available and easily accessible to the public?
- property record cards
- maps
- Tax duplicates
- alphabetical index
Title 53 Purdons
The volume that has pertinent court cases and taxation laws for Pennsylvania assessment.
Ad valorem
At value.
The ad valorem tax is one which is based on the value of tangible and intangible property.
Article VIII Section 1
This is known as the uniformity clause of the Pennsylvania constitution.
Provides that all persons and property (tangible and intangible) be assessed and taxed uniformly as a class.
Uniformity!
Mill
one dollar of tax per every one thousand dollars of assessed value
Assessment X Millage Rate =
Taxes to be paid by the taxpayer
Base Year Market Value X Predetermined Ratio=
Assessment
Real Estate
The physical land and everything permanently attached to it.
Strictly Tangible
Tangible
What you can see and touch
Real Property
Sum of the tangible and intangible rights in lands and improvements to land. It refers to the interest, benefits and rights inherent in the ownership of physical real estate.
Personal Property
Moveable items not permanently affixed to, or part of, the real estate
Common Level Ratio
Weighted sales ratio that examines the relationship between the assessment and current sales price.
The ratio of the current existing assessments to the current validated sales price of properties that have sold. STEB sets this before July 1st.
STEB must certify the CLR by?
July 1st
STEB must certified the CLR on or before?
June 30th
Assessment/Sales Price
Common Level Ratio
Predetermined Ratio
A percentage of the appraised value set by the County Commissioners that determines the assessed value.
Methods used for discovery
- Deeds
- Subdivision Plans
- Aerial and Tax Maps
- GIS
- Building and Occupancy Permits
- Field Reviews
Plotting a deed
Adjusting a tax map according to the new deed involves reading the description on the deed, making calculations, measuring the existing map and drawing new lines.
Field Review
The most widely used system to validate current information and discover new physical characteristics.
Listing/Inventorying
You record the property components and description for future reference
Value
The present worth of future benefits arising from the ownership of real property
Cost
The sacrifice made (in terms of money, time or labor) to acquire property
Price
The quantity of one thing which is exchanged for another; the amount of money paid, asked or offered where sale is contemplated; the money consideration which is expected or given in exchange for commodities or services. Sometimes value expressed in terms of money.
Market Value
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer whereby:
- Buyer and seller are typically motivated
- Both parties are well informed or well advised, and asking in what thy consider their best interests
- A reasonable time is allowed for exposure in the open market
- Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto
- The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Market Price
The actual amount paid, or to be paid, for a property in a particular transaction
Deed
A written document under seal conveying real estate. Types: Warranty and Quit Claim
Warranty Deed
A deed in which the grantor warrants the title to be good and accurate and agrees to defend the title against all parties.
When a true owner of record transfers the ownership.
This is guaranteed.
- Grantor has the right to convey the real estate
- grantor is the owner of the real estate mentioned
- That the land is free and clear of all encumbrances, liens, bargains, sales, taxes
- That the grantee will have quiet enjoyment of the real estate and not be pout out by someone with a superior title
- That the grantee has legal recourse against the grantor should there be any problem with the title.
Quit Claim Deed
The deed by which the grantor conveys only the interest he or she may have in the property
Fee Simple Title
The greatest degree of ownership. It is title free and clear of all liens & encumbrances. …No taxes, no loans. Owner owns the bundle of rights
Ad Valorem
Latin for “according to value”.
Ad Valorem Taxation
Taxes are levied according to the value of the property
Base Year
The year upon which real property values are based for the most recent countywide reassessment or other prior year for which the market value of all real estate of the county is based.
Tangible Property
Can be seen and touched. Consists of actual physical things.
Intangible Property
Cannot be seen or touched; it is evidence of ownership rights. Examples: stocks, bonds, mortgages and copy rights…rights you have as a owner.
Property
Can be tangible or intangible, and can be real or personal
Personal Property
Property that is tangible; it can be moved by its owner.
Chattel or fixture
Chattel
Personal property not permanently affixed to land
Fixture
personal property is permanently affixed to the land
Bundle of Rights
S- Sell
L- Lease
U-Use
G-Give away
E-Enter/leave
R-Refuse to do anything
Public Limitations
P-police power
E-escheat
T-taxation
E-eminent domain
Police Power
The right of the government to regulate the use of property for the public welfare in areas of safety, health, morals, zoning, building codes, traffic and sanitary regulations
Escheat
The right to have property revert to the state for nonpayment of taxes or when there are no legal heirs or a decedent who dies “intestate.”
Intestate
A person who dies having made no will.
Eminent domain
The right to take property for public use provide that just compensation is paid.
Taxation
The right to tax property for the support of the government
Private Limitations of Ownership
- rights of other co-owners
- condominium and subdivision restrictions
- covenants, conditions and restrictions in the chain of title
- easements and rights of way
- liens and judgements
- leases
Concepts of Value
Scarcity, Utility and Desirability
Utility
Subjective quality of property to instill a desire in someone’s mind to own it.
Scarcity
Think of supply and demand. When there is an over supply, demand is small and the value will decrease.
When supply is scarce, and there is a large demand for that commodity, value will increase.
Desirability
A desire and means to own the property
Highest and Best Use
Use of a property that will generate the highest net return to the property over a reasonable period of time
Highest and Best Use Criteria
- Legally permissible
- Physically possible
3.Financially feasible - Most productive
Principle of Anticipation
Implies that market value is the present worth of the anticipated future benefits derived from property.
The assessor should look at current actions of buyers to determine anticipated future benefits and not speculate.
Principle of Balance- Individual Property
Maximum market value is attained when the four agents of production attain a state of equilibrium
- Land
2.Labor
3.Capital
4.Management
Agents of Production
- Labor
- Management
- Capital
- Land
Principle of Balance- neighborhood
Maximum value is reached when the uses of land are perfectly complimentary. It works together with the principles of contribution, increasing and decreasing returns and surplus productivity
Principle of change
Market value is never constant because of the effect of PEGS
P- Physical
E- Economical
G- Governmental
S- Social
This principle also impacts the Principle of Anticipation
Principle of Competition
Excess profits breed ruinous competitions. Any neighborhood will only support a certain number of one type of support facility. Example: in any neighborhood, several gas stations can operate and be successful, but when one more gas station opens business, all the gas stations begin to suffer
Principle of Conformity
Maximum market value is attained when there is a reasonable amount of social and economic similarity in a neighborhood.
Example: if a neighborhood is predominantly well kept and two story Victorian homes with one small fair condition ranch style house in the middle of the neighborhood, the ranch style house will not achieve maximum market value.
Principle of Consistent Use
When valuing a property the appraiser must value the property as a unit and not value the components separately. It is improper to value the land for one use and the buildings for another use.
Principle of Contribution
Implies that value of individual property improvements depends on their contribution to the whole property. “Cost does not equal value”
Example: a property owner spends $15,000 to build a garage on his property and the assessor values the garage at $10,000, because the value of the entire property was only increased by $10,000
Principle of Increasing and Decreasing Returns
Implies that when successive increments of one agent of production are added to fixed amounts of the other agents of production, future net benefits (income or amenities) will increase to a certain point (point of decreasing returns), after which further increments of hat agent of production will decrease future net benefits
Principle of Progression and Regression
States that the values of properties with a lesser value are enhanced when associated with properties of a greater value (progression) and values of properties of a greater value will decrease when associated with properties of a lesser value (regression).
Principle of Substitution
Implies that the value of a property is set by cost of acquiring an equally useful and desirable substitute, providing no costly delay is experienced. No prudent buyer would pay more for a property when he could purchase an equally useful and desirable substitute, as long as he wasn’t delayed in doing so.
Serves as the basis for cost, sales comparison and income–the approaches to value.
Principle of Surplus Productivity
net income remaining after the cost of the other agents of production have been satisfied is the income of the land .
Life cycle of a neighborhood
- Growth
- Stability
- Decline
- Rehab
Trend
A series of changes that can be identified
Location
Most important physical force affecting neighborhoods
Physical Forces
Location, size of the neighborhood, topography, appearance, size, shape and lot area, street pattern, soil and subsoil conditions, drainage, hazards, climate, utilities, conformity of house, proximity to supporting facilities, nuisances, waste disposal, transportation and location of labor force
Economic Factors
Population growth, shifts and declines patterns of use, amount of vacant land, new construction, employment of resident, family income, ownership-tenancy ratio, turnover and vacancy, price levels, rent levels, lender attitudes and policies, foreclosure rate, insurance rates, competing commercial neighborhoods, business failure and turnover, and union attitudes.
Legal/Governmental Factors
municipal services, planning, zoning, building codes, deed restrictions, development regulations, taxes and special assessments
Social Forces
crime, population densities and characteristics of the residents
Sales comparison (market ) approach to value
Is an appraisal procedure where the market value of a property is estimated based on the concept of value in exchange. It is the process of analyzing sales of similar recently sold properties in order to derive an indication of the most probable sale price of the subject property.
The reliability of this approach is contingent upon:
- the availability of comparative sales
- the verification of the sales data
- the number of adjustments necessary for different physical characteristics
- the amount of non-typical conditions that affect the comparable sales
cost approach to value
this approach estimates value based on the proposition that the informed buyer would pay no more than the cost of producing a substitute property with the same utility as the subject providing no delays would be experiences. This approach to value generally sets the upper limit of value and is best suited to specialized or unique properties for which there are no comparable sales to use as a comparison
Income approach to value
the approach to value that converts anticipated benefits of ownership in real estate into a value estimate. This approach is widely used in appraising income producing properties. The anticipated future income is discounted to a present worth by the capitalization process
Appraisal Process
a systematic, logical method of collecting, analyzing and processing data into an intelligent, well-reasoned value estimate
How properties are identified
street address, legal description, and parcel number
Several forms of legal description
rectangular survey, lot and block, geodetic survey or metes and bounds
General Categories of Data Collected
General, specific, comparative
General Data
General trends that will affect the value of the subject on a regional and neighborhood basis. The four great forces on the subject.
Examines PEGS & entire neighborhood
Specific Data
Physical characteristics of property. Examines the site/subject property
comparative data
consists of recent sales, costs and income information. What are the rents in the neighborhood and what properties have recently sold for.
Comparable sales market approach
comparing similar properties sold in the recent past to the subject property
The four steps in this approach:
- discovering and analyzing the data
- selecting units of comparison
- making adjustments based on the market
- applying those adjustments to the subject
The assessor evaluates the income stream in terms of what??
Quantity, quality and duration
Form appraisal
fill in the blank type prompting the appraiser for pertinent data and value conclusions
narrative appraisal
leads the reader through the process to a convincing estimate of value
unit of comparison
the reduction of a sold property’s physical characteristics into components, which are used as comparisons to dissimilar properties when valuing property.
gross rent multiplier
a unit of comparison that is used to estimate value. It is determined by dividing the annual gross rent of properties into the sales prices of the properties.
interest rate
the percentage of money paid for the use of capital or money
effective tax rate
expresses the relationship between the market value of a property and the established tax rate. it can be expressed as:
actual tax rate (or total millage) X CLR or PDR
economic rent
the rental income that property should command on the open market
value in exchange
Market value. The amount of money an informed purchaser would offer in exchange for any economic goods under any given market condition.
Value in use
C & G, Act 319. The amount of money an economic good is worth to its owner considering its productivity. This may or may not represent market value.
Depreciation
the loss of utility and therefore value, for any cause, deterioration or obsolescence of property.
In determining value and assessor must consider what?
All three approaches to value
7 Steps in the appraisal process
- Define the problem
- identify the scope of work
- preliminary survey and planning
- data collections and analysis
- highest and best use analysis
- application of the date and the approaches to value
- reconciliation
Rectangular survey
Most popular way land is described west of the Ohio river
lot & block
method used in the US and Canada to locate and identify land, particularly for lots in densely populated metropolitan areas, suburban areas
ex: lot no 184 in section 15 of the survey
metes and bounds
e.g. North 40 degrees, 41 minutes 22 second east…at a place of beginning
state plane
is a set of 124 geographic zones or coordinate system designed for specific regions of the US
geodetic survey
formerly called the U.S. coast and geodetic survey, is a united states federal agency that defines and manages a national coordinate system, providing the foundation for transportations and communication/ mapping and charting; and a large number of applications of science and engineering
Types of data collected
Primary- Personally collected
Secondary- Data obtained from another source of 3rd party.
Primary Data
Personally collected
Secondary Data
Data obtained from another source of 3rd party.
Land
surface of the earth, including land and water and minerals, everything under the surface including natural resources in their natural state.
Includes air above the surface to the height of the airspace reserved by the government.
Four disciplines of land
- Geography – physical characteristics of land
- economics- one of the four agents of production
- law- deals with ownership. focuses on the rights and obligations accompanying the various ownership interest in land.
- sociology- approaches land as a resources shared by people and a commodity individuals can own, sell or trade
Five attributes of land
- Is permanent and durable
- Is unique in both location and composition
- there is a finite supply
- functional
- stationary
subdivision
a tract of land which has been divided into smaller pieces ( called lots), usually for the purpose of constructing residences which will be sold individually.
Principle of Conformity
assemblage
the combining of two or more parcels, usually but not necessarily contiguous, into one or more ownership or use.
Process to create plottage
plottage
the process of combining two or more parcels of land into single ownership with the result that the value of the combined parcels is worth more than the sum of the individual sites
negative plottage
combination of sites in the creation of a new site which is less utility which normally results in a lower value.
unimproved land
raw land in its natural state, prior to grading, construction and/or subdividing
Improved land
land that is developed to the extent that it is ready for the structure and has its utilizes in place is referred to as a site.
Improvement to Land
Prepare land for development
- Off-site
streets, sidewalks, curbing, traffic lights and street lights - on-site
paving, grading, driveway, landscaping, sewers and utility hookups
improvement on land
structures or buildings place or erected on the site
Site Data Collection
frontage, width, depth, shape, area, topography, soil & subsoil conditions, off site improvements
Approaches to value used exclusively for land
market and income
Units of comparison
- front foot
-square foot
-acres
-site per lot - buildable units
sale price/unit of comparison
front foot
fronts on a street, road, railroad or body of water.
Popular for downtown business districts, because it provides displays and customer access
square foot
Used with Irregular shape parcels and when frontage is not a dominating factor in valuation.
Used to value small industrial, residential and commercial sites.
acre
used in valuation of large industrial sites, shopping centers, rural properties and agricultural properties
site or lot
Used when the market does not indicate a significant difference in value even when there is a difference in size.
Typically used in large developments for residential, commercial or industrial plans.
buildable units
Used when the market indicates the site sold on a per unit basis.
Typically used for parking lots and priced per parking spot
Used more prevalent when dealing with improvements such as apartments and hotels.
typical adjustments in sales comparison approach
Adjust sales prices of comparable properties to subject.
(Funny Children That Love People)
F- Financing
Seller finances at interest rate above or below market would need to be adjusted
C- Condition
Property condition is different today compared to date of sale
T- Time
When market value increases or decreases over the time period between the sale of the comparable and the date of appraisal
L-Location
The physical location of the comparable
P- Physical Characteristics
lot size, topography, and shape
Principle of Contribution
Most closely related to the adjustments of the comparable during the sales comparison approach, because the amount of the adjustment is its contributory value to the total property rather than its cost
Depth Tables
measure changes in value caused by variations in lot depth where land is typically purchased on a front foot basis (4-3-2-1 rule)
Irregular Lot Valuation Tables
Convert the actual frontage of irregularly shaped parcels to effective front foot (65/35 rule)
corner-influence tables
constructed on the premise that the greatest value is at the corner of the two streets and the values decrease with the distance from the corner
Paired Sales (Matched Pairs)
Uses data from 2 sales where only one difference is present or the process of finding 2 sales that are very similar in all aspects except one item being compared. The difference is the amount of adjustment.
Always compare what to what for sales comparison approach?
Sale to the subject
If the comparable property is inferior to the subject the adjustment is made how?
Upward (increase)
If the comparable property is superior to the subject the adjustment is made how?
Downward (subtract)
GIM (gross income multiplier)
Relationship between gross annual income and the value of property
GIM (gross income multiplier)
Property value or selling price/gross income at time of sale
GMRM/GRM (Gross Rent Multiplier)
Relationship between monthly rental income and the value of property
GRM
Sale price/monthly rent
Mean
Add up all the numbers and then divide by the number of records
Median
First, list the numbers in numerical order
If odd number of records
(N+1)/2=
If even number of records
Median is mean of the two middle numbers
Mode
The number that is repeated more often than any other number
Bimodal
A dataset that contains two data values that have the highest frequency
Historical Cost
cost at the time a property was originally constructed and placed into service
Trended historical cost
historical cost factored by reference to some current index for property components
reproduction cost
exact replica using same materials, design & workmanship
replacement cost
producing building or improvement having the same utility, but using modern materials, design and workmanship
quantity survey
-most accurate (aka engineered breakdown)
-itemized invoice
-complete cost itemization of all direct and indirect costs incurred
unit-in-place
segregated cost
dollar amount to do plumbing system/electrical system
estimate
comparative unit
cost per square foot
least accurate
factored historical cost
cost to bring it up today
Direct Costs
Labor and material
AKA Hard Costs
sticks & bricks & labor to install
Indirect Costs
Other than labor and materials
AKA Soft Costs
Taxes, electricity, insurance, realtor fees, engineering fees and legal fees
entrepreneurial profit
investor or entrepreneur receives money for contribution to the project and risk; the difference between the total cost of a property (cost of development) and its market value (property value after completion)
what profit is from project vs what I actually put in my pocket
entrepreneurial incentive
forecasted reward entrepreneurs expect and is projected before completion of the construction
“what I want to make”
Contract Rent/Actual Rent
Rent that is set forth in the terms of a lease. Contract rent may or may not be considered market or economic rent
Overage Rent/ Percentage Rent
Extra rent received over and above the lease agreement for a basic contract rent.
Normally, this is an additional rent based on a percentage of gross business volume clause included in the contract lease agreement
Excess Rent
The dollar amount received in the contract rent that is over and above market or economic rent
Fixed Expenses
Items over which a property owner has no control, such as insurance and real estate taxes, which are both, regulated by governmental agencies.
Operating expenses
Expenses necessary to operate the property, and not included in the lease agreement to be paid by the tenant.
Examples: management, personal liability insurance and major maintenance
Reserves for replacement
Short lived components of the property that require replacement, due to a short life span.
Examples: roof cover, appliances, redecorating, air conditioner units
Three Categories of Expenses
FOR
- Fixed Expenses
- Operating Expenses
- Reserves for Replacement
Potential Gross Income (PGI)
This is the estimated rent roll at 100% occupancy of all rentable space using Economic or Market rents.
Other Income
This is supplementary income derived from paid amenities located on the property, such as, swimming pool fees, garages, health clubs, coin operated washers and dryers, etc
Economic Rent/Market Rent
The amount of rent that a property would bring, if vacant and available for rent, as of the date of the appraisal, based on market experience of competitive, substitute properties
Vacancy and rent loss
the most probable loss due to periods of vacancy based on experience of the subject property and or competitive properties, expressed as a percentage against potential gross income
effective gross income
The 100% potential gross income, minus allowance for vacancy and rent loss, plus other income (if any)
lessor
owner of the property giving the right to use the property through the lease document
lessee
person or tenant given the right to use through a lease document
gross rental lease
lease agreement by which the lessor (land lord) pays most, or all the operating expenses
net lease
lease by which the lessee (tenant) pays most, or all the operating expenses and some of the fixed expenses
net, net, net lease
lease by which the tenant pays most or all the operating and fixed expenses
Income
Rate X Value
Rate
income/value
value
income/rate
1 mill
.001 in mills
10 mills
.010 in mills
100 mills
.100 in mills
Loan to Value Ratio
Relationship between the value of the property and what the bank is willing to lend you.
State Board of Certified Real Estate Appraisers
What is the name of the certifying and recertifying board?
Tax Bills
What is not legally required to have readily available and easily accessible in the assessment office?
Expense Cap
Tenant (lessee) pays until a certain amount
Expense Stop
Landlord (lessor) pays until a certain amount
escalation clause
helps landlord offset increases in operating expenses.
ownership in severalty
individual property ownership
pre fabricated material
fire resistance material
act 28 of 1992
The act the certified assessors
90
Minimum number of class hours to sit for the CPE test
Foundation
what plan do you find footers
foundation
what plan do you find sub-floor
R Value
What do you use to measure insulation heat loss
maximum productivity
what is the last step in finding highest and best use
30
How many days to file appeal to common please court after board’s decision?
Reconciliation
Last step after considering all three approaches to value
land lord (lessor)
who holds a leased fee?
to the point of beginning
what is the last sentence on a metes and bound deed?