R E Ch 23

The approach to value that compares the subject property to similar properties that were recently sold, and makes adjustments on the basis of the date of the sale, the location, the physical features and/or amenities, is known as the:

Sales comparison approach.

Which of the following is not a type of appraisal report?

Detailed.

The principle of value that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property is called

Substitution.

Which of the following best describes a real estate appraisal?

An estimate or opinion of value

The principle of value that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from the whole is known as:

Contribution.

A loss of value of an improvement due to inadequacies, often caused by poor design, is known as

Functional obsolescence

The approach used to estimate the value of buildings that do not have market data because they are unusual properties is the:

Cost approach.

The principle of value that the possible use of a property that would produce the greatest net income and thereby develop the highest value is known as

Highest and best use

The principle of value that the combining of two or more adjoining lots into one larger tract to increase their total value is known as:

Assemblage.

An appraisal principle of value based on the concept that the more a property or its components are in harmony with the surrounding properties or components, the greater the contributory value, is called:

Conformity.

There are three main types of valuation that are used in the real estate business. These are:

• Comparative Market Analysis

• Broker’s Price Opinion

• Appraisal

A Broker’s Price Opinion (BPO) is

an assemblage of recent sales of comparable properties in the general location of the subject property, as well as estimated costs for such items as repairs to the subject property, and data on sales trends such as what types of properties are most in demand.

A BPO is

based on the characteristics of the subject property.