Details Title: Appraising Description: basic appraising Total Flash Cards: 137 Created: 01/13/2006 12:30:23		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Real Estate & Planning Flashcards
Cards in this set: Term When calculating Gross Rent Multipliers you should use? Definition Gross Monthly Rent Term When calculating Gross Income Multipliers you should use? Definition Gross Annual Rent Term Maximum ownership in real estate is called? Definition Fee Fee Simple Fee Simple Absolute Term What is Contract Rent? Definition The amount of rent specified in a lease-it is also called schedule rent. Term What is Constructive Notice? Definition A legal doctrine that requires a potential purchaser to take notice of available evidence that someone other than the owner may have an interest in the property. Term What is a non-conforming use? Definition A property use that pre-dates current zoning. Term The cost approach tends to ________ in reliablity in the appraisal of older improvements and why? Definition Decrease Because of the difficulty in accurately estimating accrued depreciation. Term What is leased fee? Definition Owner's interest in a rented property Term What is a leasehold? Definition The tenant's interest in rental property. Term What is the criteria for highest and best use? Definition Physically possible Legal Economically feasible Maximum productivity Term Can highest and best use change over time? Definition Yes Term What is an Sandwhich Lease? Definition If a tenant sub-leases the property to another tentant, the orginal tentant holds the sandwhich lease. Term What is an Amortized Loan? Definition A loan that involves a periodic repayment of the debt in addition to the interest on the loan. Term What are the steps in the appraisal process? Definition Define the problem Form a plan Collect and analyze data Apply approach to value Arrive at conclusion Report conclusion Term Define and recognize examples of Physical Depreciation. Definition Wear and Tear from: Age Weather Lack of manintence Vandalism Term Define and be able to recognize examples of Economic Obsolence. Definition Loss in value that is caused by factors located outside the subject property. Economic hazards Changes in zoning Inharmonious nearby land use Dust and Freeway or airport Landfill Term Define and be able to recognize examples of Functional Obsolescenses. Definition Loss in function or use of utility Faulty building design Outmoded equipment Defect in structure Poor floor plan Housing lacking side yard Term What is the amount of mortgage loan or loan to value based upon? Definition Purchase price or market value whichever is less. Term What is encroachment? Definition When one property extends or trespasses onto another property. Term Who is Mortagor? Definition Borrower Term Who is Mortgagee? Definition Lender Term What are linkages? Definition how things hook together in a neighborhood Term What is Assemblage? Definition Combining together under one ownership of two or more parcels of property. Term What is Plottage? Definition Ifthe combined property, assemblage, is greater than the sum of the values of the individual properties. Term What do you do if comparables are superior? Definition Adjust down Term What do you do if comparables are inferior? Definition Adjust up Term What affects supply of real estate? Definition Volume of new construction Land use City growth Standing stock Term What are some economic princples that affect value? Definition supply and demand progression and regression subsitution contribution Term 3 approaches to value Definition Cost-best for new you can also use this approach when sales (no sales) income (no income) appraoches can't be used Seperate site is unique to this Based on principle of SUBSITUTION Sales-most direct used when there is market activity adjust on contributory value Income investment Based on principle of ANTICIPATION V=I/R Term The report according to USPAP is Definition any written or oral communication of an appraisal, review, or consulting service Term What is the Effective Date? Definition Last date of the inspection for a current appraisal or any other date required by client Effective date is specified in the report Term Income Approach Definition V=I/R Value =Interst divided by Rate Term Classification of Physical Depreciation and Functional Depreciation. Definition Curable:if economically feasible (not physically) Incurable: long lived components that are anticipated to last-framing short lived components that won't last life (roof, plumbing..) Term Private Involuntary Limitations Definition Encroachments Adverse Possession Mechanic's Lein Term Final reconciliation is performed Definition after the application to the 3 appraoaches of value Term Define appraisal Definition Process of estmating the value or report containing that estimate Term Define Market Value? Definition Value to the typical appraiser Term Cost approach formula Definition Establish market value as if land is vacant Total cost to build the existing structure figured at construction prices effect date of value Subtract depreciation Add value of land to depreciated replacemnt cost Term Demand for housing varies directly with? Definition Purchasing Power Term Assessed Value is primarily used for Definition Taxes Term Market Value is closely associated with Definition Value in exchange Term What is the most important consideration in the collection and analyzes of data? Definition Data should have relevance to the estimate of the subject's value Term Market Value is based on Definition Well informed buyers and sellers Typical finacing Typical motivate seller Term In estimating accrued depreciation the appraiser must know? Definition actual or chronical age Term Time adjustment to a comparable is made to adjust for Definition Market changes between the contract date of the comparables and the effective date of the report Term Which approach is most detailed and which report is most detailed? Definition Cost approach and Self Contained Report Term Give examples of Public Limitations Definition Subdivision regualtions Zoning Construction codes Term What is a distorted sale? Definition Sale of a house from one family member to another Term Adjustable rate mortgages change according to what? Definition Index of interest rate Term Police powers include? Definition Zoning Subdivision Regulations Building cost Term Why are Discount Points are charged by lenders? Definition To offset fluctuations in the interest rates in capital markets Term Market Value and the selling price are sometimes Definition equal Term Fixtures are treated as Definition Real Property Term Metes and Bounds is what? Definition Legal description and there must be a point of beginning Term The Effective Date of an appraisal may be Definition Current date Prospective Age (future date) Retrospective date (past date) Term Acomparable sale, which sold with a loan assumption and under conditions mmore favorable would require? Definition cash equivalency adjustments be made Term Adjustable rate mortgages change when? Definition According some index of interest Term What are the 3 formats? Definition Narrative Form Restricted use-letter Term 4 methods to establish cost from least to most Definition Index Coparative Unit Quanitive Term 3 types accrued depreciation and 4 methods for accrued depreciation Definition physcial, economic,functional straight line-loss related to life expectancy sales data or market method-measured from market cost to cure-loss necessary to restore capitalized income or rental loss- loss in income Term The sales comparison approach is based on what principle? Definition Substitution Term What are the steps to sales comparison approach? Definition 1).i.d. ways sales differ in feature 2) compare differences in price 3) adjust for difference 4)est value Term When is date of sale? Definition date that sale was agreed upon Term The sales comparsion approach is Definition most direct easiest based on subsitution Term To qualify as a comparable a sale must Definition be competitive open market transaction recent time of sale Term USPAP requires prior subject be considered when Definition within 3 years for all property Term When you find a comp with below market price and find it was sold under special conditions you disgaurd because? Definition not open market transaction Term Number of comparable sales is dependent on Definition how good the comparables are reliablity of data intended use Term Required data of a comparable should include Definition sales transaction data physical characteristics legal characteristics Term What is a mortgage? Definition Promise to pay Term 4 elements of sales comparison approach Definition terms time location physical Term Direct comaparison is used in Definition Drive-bys Term In adjusting the sale the appraiser should adjust Definition sale to subject Term What is the most reliable method for estimating sales adjustment? Definition direct market or "matched pairs" Term What is linear regression? Definition technique to analyze relationship between price and single characteristic Term Name 3 units of comparisons Definition price per SF price per unit GRM Term Land residual method is based on what principle? Definition Surplus Term What is the most valid unit of comparison for vacant land? Definition considered imp. by market Term Name some direct cost Definition labor materials design cost Term Replacement cost Definition cost of a building that will serve the same purposes Term Which method is most used? Definition Comparative SF method Term When basic cost calculation is adjusted to relect extra features which method is used? Definition unit in place Term Estimating cost by detailed brakedown of labor, materials and indirect cost-use what method? Definition Quantity survey Term What is accrued depreciation? Definition total loss in value from all causes Term Misplaced improvement suffers from? Definition function obsolscene Term Economic or external obsolescene is found to be? Definition incurable Term Which value loss is inside property? Definition Functional Term An over improvement suffers from? Definition Functional obsoescence Term The cost to cure method is also called? Definition observed condition Term What is Effective Gross Rent? Definition Income remaining after vacancy and credit losses are deducted from gross rent Term When the GRM is lower what happens? Definition the higher the return on the investment Term What is Overage rent? Definition tenant pays minimum rent or % of gross sales which ever is larger Term GIM= Definition SP/GAI Term What is the most reliable technique in income capitalzation? Definition Direct capitalization Term What does income capitalization do? Definition converts income into curent value equivalent Term Leverage results from? Definition equity in a propery that is earning a greater return than the cost of money ability to trade on equity Term Interest rate is also called? Definition internal rate of return Term What is the difference between return on and return of investment? Definition return on is like interest return of is allowing investment funds to be recovered Term What are the principes that relate to capitalization? Definition anticipation- agents of production- contributory value- highest and best use Term What is the balance principle? Definition max value is to result from cost invested Term What is the principle of contribution? Definition How much it contributes to the value of the whole Term What is the principle of anticipation? Definition present value of future benefits Term Frontage Definition boundary line or lot side that faces street Term Components of Demand? Definition Demand Utility Scarsity Transferability Term Is there reversion in fee simple? Definition No Term Do you adverage the 3 approaches? Definition No Term What is the difference between Gross and Net lease? Definition Gross-landlord pays everything Net-tenant pays part Term When is there a reversion of property? Definition lease life estate altered deed Term Appurtenances? Definition legal rights that attach to ownership Term Grant? Definition government ownership to a private citizen Term Types of use restrictions Definition govt private market Term Neighborhood life cycle Definition development-vacant subdivided stable-development slow down maintance to keep up with deterioration decline-age, insect,pollution renaissance-new building or rennovate Term linear feet in mile Definition 5280 Term ad volorem Definition according to value Term Variance? Definition permission to use land outside of grandfathering Term For township to grow it must? Definition export Term USPAP big 4 Definition management-no undisclosed fees or contingent record keeping 5/2 year confidentiality-client, law enforcement, review board conduct-not impartial Term SQ FT in acre? Definition 43560 Term acres in a sq mile? Definition 640 Term Each 6 mile township is further subdivided into 36 parcels each being? Definition 1 sq mile Term Grantor? Definition person who transfers property by deed(seller) Term Grantee Definition buyer Term Real estate demand adjust Definition more quickly than supply Term Highest level of reliablity is found in what type appraisal? Definition complete Term Departure rule Definition invoke using limited appraisal Term loan t value ratio Definition amt mortgage company will lend Term Absorption rate Definition rate at which a type of real estate will be sold or occupied Term Dedication Definition voluntary transfer of title Term Test for fixtures Definition Manner of annex Adaptation Relationship of parties Intention Aggreement Term client? Definition person who engages appraisal process Term owner's equity Definition property worth - what owed Term Private limitations Definition adverse possession prescriptive easement deed restrictions Term appurtenant easement involves? Definition dominant estate-benefitted servient estate-burden Term Effective demand is tied to? Definition Purchasing power of consumer Term Listing agent Definition agent who list a property based on owner's own life or lifetime of another Term standard form is likely to be used for Definition summary appraisal report Term Georgia assesses taxes on Definition 40% of value