PROPERTY VALUATION Flashcards

PROPERTY VALUATION Flashcards An expensive home in a development of lesser expensive

homes suffers from:

A misplaced improvement suffers from regression (economic obsolescence).Functional obsolescence is due to style or floor plan.Physical obsolescence is a result of wear and tear.**Plottage is the act of increasing value by combining several pieces of property into one large property.An insurance company might use an appraisal to

determine:

Replacement cost is used to determine the amount of insurance required on a structure.To compute the real property tax on a parcel of land:The fair market value (x) assessment rate (=) the assessed value.*Next, multiply the assessed value by the tax rate to compute the real estate tax. Remember to divide by 1000 for "mills." Tenancy by the entireties requires the couple to be married

and:

living in the home. Tenancy in common and tenancy in severalty do not have right of survivorship. Joint Tenancy An amenity's market value is a reflection of: The market value of anything is a reflection of what a typical buyer would pay. Its cost is unimportant.A home with a basement wall that is FAILING is best

described as suffering:

Major structural problems usually cannot be fixed at any cost that makes economic sense; this is incurable physical deterioration.Economic obsolescence is a form of incurable depreciation.When a property no longer returns an income attributable

to the structure itself, it has exceeded its:

economic life.ABC Remodeling, Inc. buys a new warehouse for their trucks and excess building materials. How will they take title?Since ABC Remodeling is the sole owner and cannot have a right of survivorship, it will most likely take title in

SEVERALTY.

According to USPAP, the definition of market value is:USPAP defines market value as the most PROBABLE price a property will sell for under open market conditions, without any undue stimulus. *NOT the highest price A (CMA) Competitive Market Analysis is prepared to estimate the likely sale price of a property. This analysis is

based on the:

A CMA compares recent data from the market. The GRM (Gross Rent Multiplier) approach is also known as the income approach.*The cost approach involves the cost of building the home new and depreciating it for age and condition.Since the pool is NOT actually ATTACHED to the property,

it would be considered:

personal property.*The key to the attic is considered constructive annexation because it is necessary to gain access to the attic.**The island in the kitchen is a man made attachment, and the pumpkin patch is natural attachment An INVESTOR buys an apartment building for $240,000 after estimating that it will have an annual net income of $40,000. Which value principle is at work here?Under the principle of investment, value is created today by the ANTICIPATION of FUTURE BENEFITS.

Which of the following would NOT be depreciated? Only improvements are depreciated, NOT land.Income capitalization is most likely to be used when the

subject property is:

Income capitalization is used on LARGE income-producing

properties: Like

The income cap technique uses:net annual income. *NOT monthly

The assessed valuation of property would best indicate its:Assessed value refers to the value of real property for purposes of computingtaxes (assessed value x tax rate = real estate tax) Nowhere City creates tax incentives to encourage the rehabilitation of property in a run-down neighborhood. This is an example of which Great Force?The government will often reduce taxes to encourage development of a depressed area.Fixtures and showcases attached to property in a store that

occupies rented space are considered:

Trade fixtures are fixtures that can be removed at any time; they are considered (ALL) personal property, or chattels, of the tenant.The inherent conflict between the appraiser and the listing

real estate agent is best described as:

A combination of these three factors leads to an inherent conflict between the appraiser and the listing real estate agent.1. what sell for future2. market value by past3. may NOT reflect market value When using the market data approach, which of these is true?ADJUSTMENTS are made to the COMPARABLES to reflect differences between the SUBJECT property and the COMPARABLE properties on the days they sold. *NOT typical home in area When underwriting a loan application, a mortgage company is usually interested in which of these values?The mortgage company needs to establishmarket value *NOT price in order to determine the LTV position it is in.Zoning ordinances set forth general uses for property in various areas of the community (e.g. residential, commercial, or industrial).*Setbacks require buildings to be

a specified distance from:

front and side property lines. Rights of way generally define land for public streets and future expansion of streets.**Building codes establish standards for the construction of private and public buildings.According to the principle of CONFORMITY, a residential

property maintains a HIGHER VALUE when it:

The principle of conformity states that the property will MAINTAIN its VALUE when it is located in an area with many similar properties.A garage door opener is often considered a fixture. As

such, it would be an example of:

Actual annexation occurs when personal property is physically attached to real property.Constructive annexation occurs when personal property is associated with real property in such a way that the law treats it as a fixture, even though it is not physically attached to the property.The COST APPROACH is a method used by insurance

companies; it computes:

replacement cost MINUS the value of the land. There is no "assessment approach," as assessed value is used for tax purposes, NOT appraisal purposes.A fee simple defeasible estate is automatically terminated and immediately reverts to the grantor or hi/her heir(s) upon the occurrence of the triggering event or condition.The beneficiary of the reversion is said to have a reversionary interest.*A fee simple absolute freehold estate would place no conditions on the use.**A fee simple conditional estate, upon the occurrence of the limiting condition, may or may not be terminated, at the option of the grantor.***Estates for years and periodic tenancies describe leasehold estates. A life estate implies exclusive use, which Bill does not have.

A method of appraisal based on (replacement cost -

depreciation + land value) is known as:

The income approach is a method based upon the income-producing capabilities of commercial property.*A comparative market analysis is based on recent sales of similar property.What is an example of a VOLUNTARILY specific lien?Mortgages are the most common type of voluntary lien According to the principle of CONFORMITY, a residential

property maintains a higher value when it:

The principle of conformity states that the property will maintain its value when it is located in an area with many similar properties. center of subdivision An expensive home in a development of lesser expensive

homes suffers from:

A misplaced improvement suffers from REGRESSION (economic obsolescence).Functional obsolescence is due to style or floor plan.Physical obsolescence is a result of wear and tear.**Plottage is the act of increasing value by combining several pieces of property into one large property.An AMENITIES MARKET VALUE is a reflection of: The market value of anything is a reflection of what a typical buyer WOULD PAY. Its cost is unimportant.Since the barbershop was built before the zoning laws

were enacted, it is now a:

non-conforming use.If it had been built after the zoning laws were established, a conditional use zoning certificate or a variance may have been required. The barbershop may or may not be a nuisance and/or an eyesore Through the government's power of eminent domain, a

public entity may decide to take private property for:

a public purpose.Condemnation is the actual act of taking of private property by a public entity.*Caveat Emptor is a Latin phrase for "let the buyer beware."***Dedication refers to a gift of private property to the public.As the discount increases on F.H.A. and V.A. mortgages, the differential between F.H.A. and V.A. base rates of

interest and the market rates of interest usually:

The FHA and VA base rate discounts drive a wider margin between these rates and the market rates. Market rates have a tendency to RISE orINCREASE as FHA and VA rates maintain some stability and do not fluctuate as drastically as the market rates, causing a larger gap in the difference between the rates.Setback requirements are usually dictated by: subdivision regulations and restrictions put on the property by the original developer. It would be up to the neighbors to enforce the requirements.Features which enhance the desirability of real estate are

known as:

amenities.*A defensible opinion or estimate of value of real property as of a certain date is an appraisal.APPURTENANCES are rights that go with:real property; they may be sold separately, and may be limited by a prior transaction.*Appliances are personal property (unless built-in or otherwise attached to real property).Tom inherits land from his Brother. Months later Tom sells half of his land to Judy. Months later she gives her land to Bill who then sells off the mineral rights. Which property right is represented in this series of events?The right ofDISPOSITION gives a property owner the right to sell or transfer all or part of their property and property rights A CMA compares recent data from the market. The GRM (Gross Rent Multiplier) approach is also known as the

income approach. *The cost approach involves the cost of building the home new and depreciating it for age and condition.A CMA is prepared to estimate the likely sale price of a

property. This analysis is based on the: