The person who engages the appraiser for an assignment.
Client
A Valuation service that results from an agreement between an appraiser and a client.
Assignment
An assignment of value for a specific moment in time based upon historical data.
A. Retrospective Appraisal
B. Prospective Appraisal
C. Future Value
Retrospective Appraisal
An assignment for a future value of a present interest.
A. Retrospective Appraisal
B. Prospective Appraisal
C. Future Value
Prospective Appraisal
The type and extent of research necessary to produce credible results in an assignment.
Scope of work
The assignment of value for a prospective or hypothetical appraisal.
Future Value
The rate of interest used in the process of determining value based upon net income.
1. Gross rate
2. Specialization Rate
3. Interest Rate
4. Capitalization Rate
Capitalization Rate
A comparable listing service conducted by a group of brokers (usually members of a real estate association) tp provide an inventory of all available properties in an area.
MLS (Multiple listing service)
An appraisal method based on the principles of substitution that compares similar properties, which have recently sold, to the subject property.
Sales comparison approach
Adjustments made because of changing market.
Time adjustment
An analysis of competitive rents used to identify the amount of income the subject property might generate.
A. Rental income
B. Rental Survey
C. Market Sales Analysis
D. Market Trend Analysis
Rental Survey
A method of estimating the amount of adjustment for the presence or absence of any feature by pairing the sales prices of otherwise identical properties with and without that feature.
Paired sales analysis
The identication, research, and analysis of market sales within the location of the subject property.
A. Market trend analysis
B. Trend analysis
C. Market sales analysis
D. Research analysis
Market sales analysis
The adjustment process of weighing results of the three appraisal methods to arrive at a final estimate of the subject property's market value
A. Reconciliation
B. Time adjustment
C. Regression
D. Bracketing
Reconciliation
The selection of market data so that the subject is contained within a range of data sales.
Bracketing
What does the first step in the appraisal process involve?
Conversing with the client.
Jon is interviewing a client to get the details for an appraisal assignment. The client is requesting that Jon find the future value for a new property, which has yet to be built. What type of appraisal is the client requesting?
Prospective Appraisal
A source of gathering information is a group of brokers who collectively provide an inventory of sales listings in a specific area.
An appraiser using the sales comparison approach would verify market data by:
D. Finding the motivating factors of buyers and sellers.
Other than using sales comparables with similar attributes, what are other factors to consider when making adjustments to value in the sales comparison approach?
A. Special financing arrangements
In order to determine whether a location is superior or inferior, an appraiser:
A. performs a market sales analysis
The sale of a property that was several months ago would require a time adjustment through a:
C. paired sales analysis
What is the primary difference between a paired sales analysis and a market sales analysis?
D. A paired sales analysis examines two identical properties.
An appraiser is using the sales comparison approach to examine two properies in two different neighborhoods. A comparable sales int he subject property's neighborhood was $250,000 and in a sale from a competing neighborhood, the price was $225,000. What is the % difference in the prices?
B. 10%
An appraiser conducts a rental survey by:
B. identifying non owner-occupied properties using public or private sources.
An appraiser, estimating a rental schedule for a subject property, can use it to:
D. all of the above. pg 15
After an appraiser analyzes the data, what is the next step?
C. Reconciliation
After completing the adjustments, the appraiser decides on which appraisal method will bring the best results. The next step is to develop a(n):
C. opinion of value
The idea that the price of comparable sales will not all be more or less than the subject property's value is:
C. bracketing
Appraisers should review their reports for accuracy and avoid violations under the:
USPAP
Uniform Standards Professional Appraisal Practice
Accepted Standards of right and wrong, moral conduct, behavior, or duty.
Ethics
Mnemonic (assisting or intended to assist the memory.) for compliance with USPAP
CARL
Choice, Agreement, Regulation, Law
Lenders refusing to make loans in certain geographic areas.
redlining
Market in which the original lender resells a packaged loan in a bundle with other loans or individually to another investor.
D. Secondary mortgage market.
Direct or indirect pressure by a lender on an appraiser to estimate a property's value at a certain amount.
lender pressure
Skill set of experience of knowledge
Competency
Necessary understanding of local market conditions
D. Geographic competency
The best use of the land.
Highest and best use
The magnitude of the use of the land.
Feasibility.
Temporary committee formed for a particular need.
A. Ad hoc committee
B. Appraisal committee
A. Ad hoc committee
The framework of USPAP document.
1. STANDARD FORM I
2. STANDARD FORM II
3. PREAMBLE
4. CARL
3. PREAMBLE
Opinion issued to illustrate the applicability of appraisal Standards in specific situations and to offer advice from the Appraisal Standards Board (ASB) for the resolution of appraisal issues and problems.
A. Advisory Opinion
Standard that covers the requirement to developing a real estate appraisal.
Standard Form I
A series of Rules that specific what appraisers must do.
C. Standards Rules
Process of buying a property at one price and quickly selling it to another at an inflated price.
Flipping
All parties involved are acting in their own self-interest and are under no undue influence or pressure from other parties.
Arms-length transaction
The Standard that covers the requiements for reporting a real estate appraisal.
Standards II
The most details appraisal report.
C. Self-contained Appraisal Reportb.
The least detailed appraisal report.
C. Restricted Use Appraisal Report
The appraisal report that fulfills the m inimum requirements for lenders to process their loans.
C. Summary Appraisal Report
To promote and preserve the public trust inherent in professional appraisal practice, an appraiser must:
B. observe the highest standards of professional ethics
An appraiser took a market value assignment for an older California Bungalow style, single-family home. After researching the neighborhood, the appraiser discovered that the residential properties could be rezoned for commericla use. In fact, several homes had already been rezoned, renovated, and turned into office space for attorneys and other professionals. The appraiser gave the completed report to the client, the report was for residential use, which was much lower than for commercial use. Then, the appraiser told the client about a buyer for the property if the client was interested. The buyer (Tom) was the brother of the appraiser. Tom purchased the property at the lower value, had the property rezoned commercial, renovated the property, and sold it at a much higher price for a huge profit that he shared with his brother. In this situation, the appraiser:
C. acted unethically
Appraiser cannot be advocates for:
A. anyone's cause
An appraiser must not misrepresent his or her role when providing valuation services that are.
A. outside appraisal services
An appraiser must not accept an assignment that includes the reporting of:
C. predetermined opinions and conclusions
The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is:
A. unethical
Appraiser pressure comes from:
D. all of the above
Ethics is a mindset whereas competency is:
C. a skill set.
An appraiser who is not competent to take an assignment must do all of the following, except:
B. disregard his or her lack of competency and accept the assignment
Which statement is correct regarding highest and best use and feasibility?
A. The highest and best use refers to the use of the land while the feasibility of such a study is the magnitude of that use.
The basic steps that have always been necessary int he development of an appraisal report are covered in:
C. Advisory Opinions
All appraisals performed in connection with federally-related transactions must:
A. be in written form
An oral report:
C. must at least meet the requirements for a sumamry report
Which appraisal report option would not be used for the common lender appraisal?
C. Restricted Use Appraisal Report
If the client does not specifically state the desired report format, the report should at least meet the requirements of a(n):
D. Summary Appraisal Report.
The monetary relationship between properties and those who buy,sell, or use those properties.
D. Value
The most probable price real estate should bring in a sale occurring under normal market conditions.
Market Value
The desire to purchase a commodity
Demand
The ability of a property to satisfy a need or desire, such as shelter or income
Utility
The combination of adequacy, usefulness, and desireability in the interior planning of a structure
A. functional utility
The lack of supply of some type of real property resulting in increased value when demand exceeds supply.
A. scarcity
The element of value that allows a person to transfer ownership of the property to someone else.
Transferability
The principle that indicates the value of a property cannot exceed the value of equivalent properties in a give market area.
B. principle of substitution
The principle which states that supply and demand fluctate up or down in response tot eh economic, social, or other influences affecting value.
A. Principle of change
The second stage of a neighborhood life cycle, which is also known as maturity or equilibrium. (extra note - Gentrification - is a form oa revitalizationa nd occurs when run down properties in a lower income area are renovated or rehabilitated.)
C. stability
A form of revitalization and occurs when run-down properties in a lower income area are renovated or rehabilitated.
Gentrification
The principle that states value is affected by the expectations of buyers of future benefits of a property.
D. Principle of anticipation
The principle stating that property value is created and maintained when the characteristics of a property conform to
the demand of it's market.
D. Principle of conformity
The theory which states that the excess lot utility of a property results in a lower value.
C. Diminished value of excess
The principle that indicates that factors outside the property can have a positive or negative effect on the subject property.
D. Principle of externalities
A part of the principle of externalities, which suggests that a much larger or over-improved property compared to the homes in the same area would result in a lower value.
D. regression
A part of the principle of externalities, which states that a home that is smaller or of lower quality than the other homes in a given area would have an increased value.
D. progression
The principle that state the value of an individual component is measured with regard to its contribution to the whole value.
Principle of contrubution
The net income to the land that remains after the costs of the other agents of production have been paid. (A way to measure the value of an improved land)
D. surplus productivity
The total amount of a given type of property for sale or lease, or various prices, at any given point in time.
Supply
According to the DEFINITIONS of USPAP, what is the monetary relationship between properties and those who buy, sell, or use those properties?
B. Value
The most common type of appraisal is primarily aimed at estimating.
A. market value
Which is the following is not an element of value?
A. Scalability
The Smith Family is eager to purchased a new home in a rapidly developing community. They have been pre-qualified for a loan that demonstrates their ability to purchase. This is an example of:
C. effective demand
The four factors that influence real property values include:
D. all of the above
Land, topography, and soil are examples of which type of factor that influence real property values?
D. Environmental
A buyer is looking at two homes located on the same block, which have similar qualities, conditions, and amenities. The buyer decides to purchase the home that is priced $21,000 lower. This is an example of the principal of:
B. substitution
According to the principle of ______, if a recent manufacturing company that supplied many jobs to a nearby neighborhood went out of business, there would be negative and positive impacts to consider when developing market value.
A. change
In a neighborhood life cycle, what occurs after growth and development?
D. Equilibrium
Local zoning regulations help enforce the principle of:
C. conformity
The principle of _____ is used to describe the effect on value when a property does not conform to the level of the surrounding properties.
D. both progression and regression
A parcel of land has 10 acres with local zoning laws that prohibit subdividing farming, or ranching. The owner of the land decides to build a house on the parcel, which decreases the lot utility. This is due to the:
C. diminished value of excess theory.
_____ measures the value of land with an improvement and is obtained by determining the net income of the land after the costs for the other agents of production.
B. Surplus productivity
An item will become more valuable if there is a shortage of that particular item combined with:
