Appraiser Self-Study

Appraisal is…..p1

the process of estimating the value of a specific property at a stated time and place

Which prerequisites are required for goods to have value? p1-2

Capacity for private ownership, demand of effective purchasing power, scarcity, utlility

Market value, the price that a property will bring when it is sold in a market, is determined only by the demand for the property. p3

False

When the quantity demanded and the quantity supplied are equal, there is a state of balance known as

equilibrium

If the market demanded increases, the price will

increase

Use value is the value a specific property has for a specific use

true

Expenditures for labor materials are known as

direct cost

It is the amount actually paid for a property in a particular transaction

price

It is the expenditure required to produce property

Price

It is the expenditure for labor and materials, sometimes called hard costs, or brick and mortar costs

direct cost

The expenditure for items other than labor and materials

indirect cost

The all inclusive cost necessary to develop the property

development cost

Value is the present of future benefits T/F

True

What types of value may a property tax appraiser encounter [Mark all That Apply]

Assessed value

insurable value

going-concern value

book value

economic value

all of the above

All of the Above

Which of the following is true regarding the concept of value in the Revenue and Taxation code section 110?

[Mark all that apply]

1. All property is taxable and shall be assessed at different percentages of fair market value

2. Property must be exposed for sale in the open market

3. Both the buyer and seller must have knowledge of all the uses and purposes of the property.

4. Neither the buyer nor the seller should be able to take advantage of the exigencies of the other

5. All of the Above

2, 3, 4

Section 110 establishes a rebuttable presumption that “full cash value” or fair market value’ shall be the ctual purchase price is the terms were negotiated under specified conditions reflecting an open market transaction. T/F

True

The appraisal unit is referred to as the “unit to be appraised,” “unit to be valued,” “unit of appraisal” or “unit of value.” It is the unity that people in the market buy and sell for single-family residences it includes the combination of land and buildings. T/F

True

The principle of unit valuation presumes that value accrues to assets because of their ability to generate benefits as a team member rather than as a sum of the parts. T/F

True

When using the principle of unit valuation, the team assets are called “non-unitary” property and are appraised as separate appraisal unit, while unrelated assets are called “unitary’ and are appraised as a whole. T/F

False

The development process of finished goods can be divided, into states, or levels of production. At each stage, utility is added to the goods. Economists call this production. The state of production concept applies equally to real and personal property until the final form of production is achieved. T/F

True

A limited-market property is a property that has relatively few potential buyers at a particular time. What are examples of limited property? [Mark all that apply]

Large manufacturing plants

railroad sidings

research and development properties

unique design features or changing market conditions

All of the above

All of the above

If an appraiser determines that the use for a limited-market property would likely remain unchanged, the market value for property tax purposes should be estimated upon the present use. If, however, the property’s use would likely change to an alternative use, the value for property tax purposes should be based upon the alternative use. T/F

true

Property must be appraised for assessment purposes at its current use. T/F

False

Restricted value means the property value is premised on the restricted use rather than the most profitiable or productive use. T/F

True

Which of the following property types would be assessed under the restricted value concept? [Mark all that apply]

1. Properties restricted for agricultural purposes for a specified number of years under a Williamson Act contract

2. properties where the owner must enter into a contract with the city or a county that provides for the preservation of the property for a specified period of time

3. Golf courses that have real property which consists of parcels of 10 acres or more and has been used either for non-profit or for-profit purposes for at least 24 consecutive months before the lien date

4. lands within a Timberland production zone which is restricted to growing and harvesting timber and compatible uses approved by the country

5. All of the above

1, 2, 4

The appraisal of a golf course is based upon its use as a golf course even if the property has realistic potential at a higher and better use. The assessor may not consider the value of any rights to mineral upon the property. T/F

False

Includes the posession of, the claim to, the ownership of, and the right to possession of land and improvements.

Real Property

Includes all property except real propery

personal property

Property that is owned and controlled by individuals or groups for their exclusive use

Private property

property that is owned and controlled by the government vesting no exclusive use in any individual or group

public property

Which of the following statements is true regarding the concept of property, rights and ownership [ mark all that apply]

1. property is used to indicated one’s exclusive right, title, or control of a thing to the exclusion of others

2. property is the highest right an individual can have to lands or tenements, goods or chattels which does not depend on another person’s courtesyt

3. ownership is the collection of rights to use and enjoy property, including the right to transfer it to others

4. all of the above

all of the above

Which of the following properties are included in real property?

1. office equipment

2. land

3. machinery

4. improvements

5. all of the above

2, 4

For property tax purposes, which of the following are classified as land?

1. natural vegetation

2. quarries

3. wells

4. mines

5. felled timber

6. all of the above

1,2,3,4

The California constitution requires that land and improvements be assessed together. T/F

False

In some instances, special taxes may apply to improvements but not land. T/F

True

The tests applied in determining if a fixture should be classified as real property or personal property include physical annexation, constructive annexation and the intent of the owner. T/F

True

Examples of fixtures include which of the following items?

1. A huge printing press, so large that it cannot be moved without substantial damage to the building

2. a vault door in a bank

3. A walkway or stairs permanently bolted to a large machine

4. all of the above

4

Improvements placed on governmentally owned tax exempt land for a private individual’s use and purposes are taxable. An exception is public property on land that is recognized as a federal enclave; such property is exempt regardless of ownership or use. T/F

True

For property tax purposes, a taxable possessory interest is a right to possess or use publicly owned real property. T/F

True

Mineral rights held as possessory interests are not taxable real property T/F

False

Mines, minerals, quarries in the land, and all standing timber are all real property. T/F

True

Standing timber is generally exempt from an ad valorem property tax. T/F

True

What types of water rights are recognized under California law?

1. Riparian

2. Appropriative

3. Pueblo

4. All of the above

4

A development right that is separated from a landowner’s bundle of rights and transferred, generally by sale, to another landowner in the same or a different area is known as a

Transferable development right

The Legislature has the power to exempt personal property from taxation or to allow differential taxation of personal property T/F

True

All property that may be seen, weighted, measured, felt or touched, or which is in any other manner perceptible to the senses—except land and improvements—is defined as intangible personal property. T/F

False

All tangible personal property is taxable T/F

False

Examples of intangible assets and rights that are exempt from taxation include notes, debentures, shares of capital stock, bonds, deeds of trust, mortgages, and money kept on hand to be used in the ordinary and regular course of a trade or business. T/F

True

Generally, intangible assets and rights are exempt from taxation, and the value of intangible assets and rights shall not enhance or be reflected in the value of taxable property. T/F

True

Section 201.5 provides that a possessory interest in property acquired by or California Pollution Control Financing Authority shall be subject to taxation. Of the following, which properties could be subject to taxation

Real property

Personal Property

Real and personal property

The United States Constitution grants the state the power to tax federal property. T/F

False

Ownership may take many forms and may be divided and shared under a number of possible arrangements. However, the rights constituting the full bundle of rights may not be split off or conveyed separately. T/F

False

Rights to use the earth and everything attached it; rights in land, buildings and other improvements, and crops.

Surface area

Extends from the surface upward into space; also known as air rights.

Above surface area

Area encompassed by lines drawn from the property’s surface boundaries to the center of the earth; mineral and petroleum rights.

Sub-surface area

Ownership or beneficial interests in land are referred to as estates in land and are classified into three major categories: freehold, possessory, and non-possessory T/F

True

Limitations imposed by government of fee simple estate (4)

Taxation, eminent domain, police power, escheat

Power or right to tax real property

Taxation

It serves the interest of public health, safety, morals and/or general public welfare in the development and utilization of real estate.

Police powers

The right to acquire private property for such public purposes as public buildings, parks, streets, and other public uses.

Eminent domain

It applies only when property is unclaimed after a reasonable period of time

Escheat

In a life estate, generally, the grantor conveys a qualified fee simple interest to the grantee for the grantee’s lifetime. When the grantee’s life expires, the fee simple interest passes to which of the following persons?

1. Heir

2. Remainderman

3. Income Beneficiary

4. Any other person

Remainderman

The grantor of a leasehold estate is known as the

Lessor

Other property interests involve lesser interests than either freehold estates or possessory estates (5)

1. Licenses

2. Profits

3. Easements

4. CC&Rs

5. Liens

It is the revocable right to use the land of another for a specific purpose

Licenses

It is an interest in real property that permits the holder to remove something from the land, such as soil, minerals, or oil and gas

Profits

It is the right of use over the real property of another

Easements

Contractual promises made by property owners to restrict the use of property in some way

CC&Rs

It is the right held by a creditor to secure payment of a debt from the debtor’s property

Liens

The property tax appraiser, with few exceptions, must estimate the fair market value of the unrestricted fee simple estate, unencumbered by liens or leases, based on the highest and best use of the property

True

What are the primary ways that an ownership in real estate can be held?

1. Tenancy in common

2. Joint tenancy

3. Single ownership

4. Community property

5. All of the above

5

In which of the following forms of ownership is there a right of survivorship?

Joint tenancy

The creation or transfer of a joint tenancy or tenancy in common may involve a change in ownership for property tax purposes, requiring the reassessment of the fraction interest transfered. T/F

True

A __________ is a form of concurrent ownership in which ownership is divided according to specific time periods.

Timeshare ownership

Market can be defined as the organized action between buyers (demand) and sellers (supply) that permits trade T/F

True

Real estate markets may be classified by geographic boundaries, by property type, or by scope of their participants T/F

True

The basic function of any market is to _____.

affect exchange

Price is established in a competitive market through market transactions; through the interaction of demand and supply. T/F

True

What are the characteristics that distinguish real estate from other economic goods? (5)

immobility, uniqueness, durability, large transaction time, long development or production period

From conception to completion, real estate projects often take months to complete. Therefore, supple of real estate is typically slow to adjust to both an increase and decrease in demand

False

Real estate markets are subject to broad forces that affect supply and demand (4)

1. Physical forces

2. demographic forces

3. economic forces

4. governmental forces

Topography, soil, climate, infrastructure, scenic beauty or view, size and shape of a parcel, etc

Physical forces

Population trends, household characteristics, changes in lifestyles and living standards, neighborhood characteristics, etc

Demographic forces

Trends in employment and income, availability of financing, level of interest rates, rental and price patterns of existing properties

Economic forces

Zoning and building codes, developmental regulations, police, fire, and health protection, etc

government forces

The primary determinants of real estate demand are population, income, buyer’s tastes and preferences, price changes of other goods, the cost and availability of financing, and the expectations of buyers and sellers about the future. What are the three strongest determinants of demand?

1. Population

2. Income

3. Buyers tastes and preferences

4. Advances in technology know-how

5. Availability of financing

1, 2, 5

Which of the following is not a determinant of real estate supply?

1. Costs of production inputs

2. Advances in technological know-how

3. Price changes of other goods

4. Expectations regarding future demand

3

Which of the following is a significant determinant of supply as well as of demand?

1. Expectations regarding future demand

2. Income

3. Cost Availability of Financing

4. All of the above

3

In the context of real estate, _______ can be used as a synonym for utility.

Productivity

The physical aspect of real estate productivity concerns the natural characteristics of the land itself and man-made improvements. T/F

True

Sewage, water, and drainage systems, facilities for electric and gas power and telephonic communication

off-site improvements

The following are examples of: landscaping, retaining walls, walkways, driveways, and other paved areas, utility connections

On-site improvements

Which of the following are often termed “infrastructure”

off-site improvements

The facilities for electric and gas power and telephonic communication are usually the most important on-site improvements. T/F

False

The three categories that the value-generating characteristics of a building are grouped into are functional efficiency, durability, and attractiveness. T/F

True

Recurring interactions between different land uses at different geographic points are referred to as _______.

linkages

The productivity or benefits derived from real property depend on its value. Since value is a function of the present worth of the anticipated future benefits, value also depends upon use. T/F

True

If land are contiguous, they will always have the same use T/F

false

In The Appraisal of Real Estate, a property's highest and best use is defined by which of the following?

1. Legal

2. Physically possible

3. Most productive

4. Financially feasible

5. Reasonably probable

6. All of the above

6

A property should not be appraised on the basis of a use that is illegal. T/F

True