.png){kind=logo}
Chapter 1 - Real Estate Appraisal Flashcards Highest and best useThe legal use for property that gives the greatest return in money and/or amenities.USPAPStandards that have been established by the Appraisal Standards Board of the Appraisal Foundation Reconciliation is the final step in the appraisal process.True External obsolescenceThe loss in value of a property caused by factors outside of the property itself.URARFannie Mae Form 1004
The appraised value of a property is:An opinion of value
A field review, which has an exterior only, or drive-by, inspection is deemed acceptable for low LTV or low-risk loans.False AppraisalAn appraiser's opinion of value Functional ObsolescenceRefers to the loss in desirability of the style, layout, or function of an element of a property over time.ScarcityIf a type of property in a market area is too abundant, it has reduced value Principle of substitutionAccording to this principle, the value of a commodity is influenced by the cost of acquiring a substitute or comparable item Principle of conformitySuggests that value is maximized when there is a reasonable degree of homogeneity, or sameness, in a neighborhood Principle of progressionThe value of a subject property is increased by the value of surrounding properties Theloan-to-value ratio(LTV) is the percentage of value or sales price that a lender is willing to finance.True The three approaches to value are the sales comparison approach, the cost approach, and capitalization.False In the appraisal report, the property being appraised is referred to as the _______ property.Subject Property The principle of conformity suggests that the value of a property is equal to the sum of the contributory value of each of its component parts.False Appraisals are a critical part of any transaction where financing is involved because lenders use them to determine the market value of the property being used to secure the loan.True GRM = Sales Price ÷ Monthly RentTrue Most lenders, especially for conforming loan programs, do not normally conduct simple desk reviews at their desks.False
Field ReviewMany lenders, especially when dealing with high-LTV loans, will order this type of appraisal Market valueThe most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale The value of a property may be affected by social, economic, governmental, and environmental influences.True Market value is not one of the concepts that are typically misunderstood in an appraisal.False Sales ComparisonThe approach used as the best indicator of value for existing properties.The comparable sale can differ from the subject property in two ways. It can have features that are superior or inferior.True Market valueThe price a willing seller will sell for, and the price a willing buyer will pay.Ad valoremAccording to value Chronological age is the actual age of the property in years.True The appraiser will gather at least three comparison sales known as "comparables".True For tax purposes the _______ is determined by the taxing authority.assessed value External obsolescence is the loss in desirability of the style, layout, or function of an element of a property over time.False ValueThis does not always equal price Principle of anticipationStates that the purchase price is affected by the expectation of future appeal and benefits Fannie Mae and Freddie Mac have been instrumental in standardizing residential appraisal reporting through the widespread adoption of the Uniform Residential Appraisal Report.True Functional obsolescence refers to the loss in value of a property caused by factors outside of the property itself.False Deterioration is the reduction in value of property from causes such as deterioration or obsolescence.False The principle of anticipation states that the purchase price is affected by the expectation of future appeal and benefits.True Highest and best useThe legal use that gives the greatest return in money and/or amenities
.png)