Real Estate Appraisal Flashcards

Flashcards about Real Estate Appraisal

What is an appraisal?

An estimate or opinion of value as of a specific date.

What three elements determine the accuracy of an appraisal?

Skill, Experience, and Judgment of the appraiser

What California bureau licenses and certifies appraisers?

California Bureau of Real Estate Appraisers (BREA)

What are the three license options for appraisers?

Trainee Appraiser, Licensed Appraiser, Certified Residential Appraiser, and Certified General Appraiser

What is Value in Use?

Utility Value = Worth to an Owner

What is Market Value?

Value in Exchange “Highest price in terms of money for which a Property would sell in an open market, The seller not being obligated to sell, The buyer not being obligated to buy, Allowing for a reasonable length of time to effect the sale”

What does DUST stand for regarding elements that affect value?

Demand, Utility, Scarcity, Transferability

Name four forces that change value.

Political, Economic, Physical, and Social Forces

Name ten principles of valuation.

Highest and Best Use, Change, Balance, Supply and Demand, Contribution, Substitution, Progression – Regression, Competition, Conformity, and Anticipation

Name the three types of depreciation.

Physical Deterioration, Functional Obsolescence, and Economic Obsolescence

Is Economic Obsolescence curable or incurable?

Incurable

List the steps in the appraisal process.

Define the Problem, Preliminary Survey and Appraisal Plan, Collect Data, Data Classification and Analysis for Highest and Best Use, Reconciliation/Correlation of Value, Final Estimate of Value, and Written Report

Name the three types of appraisal reports.

Form Report, Summary Report, and Narrative Report

When is the Cost Approach to Value primarily used?

New construction, special purpose property, and public buildings

List the steps in the Cost Approach to Value.

Estimate the land value, as if it were vacant. Estimate the current replacement cost of the improvements. Estimate and subtract depreciation of the improvements. Add back the value of the land.

What is the formula for the Income Approach?

Net Operating Income / Cap Rate = Value

What is the effect of high risk on the capitalization rate?

The higher the risk, The higher the capitalization rate.

Define Gross Rent Multiplier

A gross rent multiplier is a calculation of how many times the property’s rent goes into the price. It can be based on the monthly or annual rent.

What type of property is the Market Value Approach best used for?

Existing one-to-four unit residential property, vacant land and condominiums

What is an, "Arm's Length Transaction?"

Neither party is under duress, The property is on the market for a reasonable time, Both parties have full knowledge of the property’s assets and defects, No unusual circumstances exist, and The price was not affected by special financing.