ARE Unit 16 Flashcards

ARE Unit 16 Flashcards An appraisal is a conclusive statement of value based on supportable evidence and approved methods.False

• The characteristics of value include which of the

following?SCARCITY. The characteristics of value are remembered

by the acronym DUST: demand, utility, scarcity, and

transferability.Which appraisal method uses a rate of investment return?INCOME APPROACH. The income approach uses the rate of investment return, which is the relationship between the appraised value and the net annual income.

• All of the following are characteristics of value EXCEPTOBSOLESCENCE. To have value, there must be monetary

worth. Obsolescence is not a desirable trait and, therefore, is part of the lack of desirability of the property.Report based on sales, current listings, and expired listings.

CMA Property's usefulness for its intended purpose. utility Ease in which ownership can be conveyed. transferability Based on investment potential.income According to the principle of change, value is created by the expectation that certain events will occur.False A finite supply.scarcity The information used to perform an appraisal is divided into two basic classes-general data and specific data.True Comparable properties used.market Depreciated reproduction cost.cost

• From the reproduction or replacement cost of a building,

the appraiser deducts depreciation, which represents LOSS OF VALUE DUE TO ANY REASON. Depreciation is loss of value from any reason. Some examples of such causes are physical deterioration (wearing out and/or deferred maintenance), economic (external) obsolescence, and functional obsolescence (lack of modernity).Need or desire for possession or ownership backed by the financial means to satisfy it.demand

• An appraiser is responsible forESTIMATING VALUE. The appraiser does not make or

determine value. After appraisers complete their analysis and consider all the data, they will then provide an estimate of value.

• An appraiser asked to estimate the value of an existing

strip shopping center would probably give the MOST weight to which approach to value?INCOME APPROACH. The income approach will have the most weight in an analysis of income-producing property.

• A homeowner constructs an eight bedroom brick house

with a tennis court, a greenhouse, and an indoor pool in a neighborhood of modest two bedroom and three bedroom frame houses on narrow lots. The value of this house is

MOST likely to be affected by what principle?REGRESSION. The value of larger lavish homes in a modest neighborhood will be drawn down by the presence of modest less lavish homes; regression is the opposite of progression.

An appraiser using the cost approach method computes the reproduction or replacement cost of a building and would NOT employ the quantity survey method.False The sales comparison approach is also known as the market data approach.True Replacement cost.cost

• A federally related transaction is any real estate related

financial transaction

IN WHICH A FEDERAL FINANCIAL INSTITUTION OR

REGULATORY AGENCY IS ENGAGED. A federally related transaction is any real estate-related financial transaction in which a federal financial institution or regulatory agency is engaged.Extensive report prepared by the real estate professional including information about the neighborhood and a listing of comparable properties.

BPO An opinion of value based on supportable evidence and approved methods.Appraisal

• The market value of a parcel of real estate is AN ESTIMATE OF THE MOST PROBABLE PRICE IT

SHOULD BRING. An appraisal estimates market value: the

price a property would most probably bring.Maximum value is created when a property is in harmony with its surroundings under the principle of conformity.True