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26 Cards in this Set
- Front
- Back
Reconciliation refers to |
analyzing the results obtained by the three different approaches to value to determine a final estimate of value |
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One method to determine a buildings replacement cost uses the estimate cost of the raw materials needed to build the structure, plus labor and indirect costs This is called |
quantity-survey method |
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If a property's annual net income is $24,000 and it is valued at $300,000 what is its capitalization rate |
$24,000 / $300,000 = .08% |
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An appraiser needs certain financial figures in order to determine value by the income approach. Which one of the following number is NOT required for the income approach to value? |
Accrued depreciation Income approach = 1. Estimate annual potential gross income 2. deduct allowance for vacancy and rent loss to find effective gross income 3. deduct annual operating expenses to find NOI 4. Estimate rate of return (cap rate) for subject by analyzing cap rates of similar properties 5. Derive estimate of subjects market value by applying cap rate to annual NOI using NOI / cap rate = Value |
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The highest and best use of a property is the |
Most return the owner can receive for use of the property |
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The income capitalization approach is given the most weight in the valuation of a |
Office building |
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Capitalization is the process by which annual NOI is used as the basis to |
Estimate value |
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The depreciation that an appraiser uses in the cost approach to value represents the |
Loss of value due to any cause |
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The appraised value of a residence with four bedrooms and one bathroom would probably be reduced because of |
Functional obsolescence |
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The reason for loss of value that is always incurable is |
Economic obsolescence
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Which appraisal approach makes use of a rate of investment return? |
Income capitalization |
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Which of the following is NOT true about market value? |
It is the highest price a property could bring in an open market |
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Developers have just announced a new championship golf course community. Property values in the area will tend to increase due to this announcement. This is an example of the principle of |
Anticipation |
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Which of the following statements is TRUE of the income approach to value? |
The cap rate must be estimated |
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In the cost approach to value, it is necessary to |
Determine a dollar value for depreciation |
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The subject property has two bedrooms and the comparable property has three bedrooms. The estimate value of the third bedroom is $2500. According to the sales comparison method, the appraiser should |
Deduct $2500 from the value of the comparable property... |
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All of the following should be deducted from gross income to compute NOI EXCEPT |
Mortgage payments |
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If the appraiser decides to increase the cap rate, the market value of the property will |
Decrease |
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The number of years a property is expected to remain useful for it's original purpose is its |
Economic life |
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The formula for estimating value based on the gross rent multiplier is |
rental income x gross rent multiplier = estimate market value |
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In estimating the value of real estate using the cost approach, the appraiser should |
estimate the replacement cost of the improvements |
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Under the income approach to estimating the value of real estate, the cap rate is the |
rate of return the property will earn as an investment |
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An example of economic obsolescence is |
abandoned buildings in the area |
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A house located in a suburban community. A new expressway is being build a few blocks away that will reduce then commute time to the urban employment center by 30 minutes. The house is expected to increase in value based on the principle of |
Anticipation |
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The subject property is a two-story home with three bedrooms, three baths, a fam room,a dining room, and an attached 2 car garage. Which of the following would be a legit comp sale? |
neither : a Two story home with 3 bedrooms and 2.5 baths in the same neighborhood that sold 18 months ago NOR one story home in a diff neighborhood with 3 bedrooms and 2 baths a detached one car garage, and no fam or dining room |
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which of the following statements is True of a comparative market analysis? |
It can help the seller price the property |