Unit 17: Quizes Flashcards

Unit 17: Quizes Flashcards

In the process of reconciliation, a broker should consider not only the number of adjustments made to comparables but also the monetary amount of the adjustments.TrueFalse TrueBefore determining how much weight to assign to comparables, brokers should review the number of adjustments made, as well as the monetary value of those adjustments. The greater the number of adjustments and/or the monetary value of those adjustments, the less meaningful the comparable is in estimated the probable sales price of the subject.An example of economic obsolescence, a type of depreciation, is a foundation crack.TrueFalse FalseAn example of economic obsolescence would be a landfill near a residential neighborhood. Economic obsolescence occurs outside the property boundaries but still affects the value of the subject. A foundation crack would be an example of physical deterioration that is ordinary wear and tear.Federally related appraisals must follow the guidelines stated in Uniform Standards of Professional Appraisal Practice (USPAP).TrueFalse TrueFederally related appraisals must follow the guidelines stated in Uniform Standards of Professional Appraisal Practice (USPAP).The formula for income capitalization is effective gross income divided by capitalization rate equals value.TrueFalse FalseThe formula for income capitalization is net operating income divided by capitalization rate equals value.In order to produce an appraisal, North Carolina individuals must be properly licensed by the North Carolina Appraisal Board.TrueFalse TrueNorth Carolina appraisers must be properly licensed by the North Carolina Appraisal Board before they provide appraisals to consumers.When using the comparable sales approach, a broker should always adjust the comparable property, never the subject.TrueFalse TrueA broker should always adjust the comparable property, never the subject property. For example, if the subject has a porch but the comparable does not, the comparable sales price should be adjusted upward.The principle of substitution suggests that buyers will go shopping for value, and if they can find a lower-priced product that is comparable to a higher-priced one, buyers will purchase the lower-priced item.TrueFalse TrueThe principle of substitution sets the upper limit of value for consumers; in other words, no one will pay more for a particular product if a lower-priced comparable item is available.The formula to arrive at a gross income multiplier is gross sales price of a comparable property divided by gross monthly income.TrueFalse TrueThe formula for the GRM is gross (or unadjusted) sales price divided by gross (or unadjusted) monthly income (or rent).Real estate brokers are licensed to provide appraisal services.TrueFalse FalseReal estate brokers can provide an estimate of probable sales price and can produce BPOs and CMAs, but they cannot provide appraisal services.To reconcile for differences in the adjustments of comparable properties, appraisers use the process of simple averaging.TrueFalse FalseTo reconcile those differences, appraisers use weighted averaging.A broker price opinion (BPO) can be provided by any properly licensed broker.TrueFalse FalseOnly active nonprovisional brokers can provide a BPO. Provisional brokers cannot.

The first step in the appraisal process is to establish the kind of value to be estimated, as well as the valuation approach most valid and reliable for the kind of property under appraisal.TrueFalse TrueThe first step in the appraisal process is to establish the kind of value to be estimated, as well as the valuation approach most valid and reliable of the kind of property under appraisal.The four factors that affect value are demand, utility, supply, and transferability.TrueFalse FalseThe four factors that affect value are demand, utility, scarcity, and transferability.In estimating land value, neither the cost nor the income approach can be used.TrueFalse TrueIn the steps in appraising, land must be appraised using comparable sales; land cannot be appraised using the cost or income approach.