unit 19 real estate exam

What is an appraisal?

An estimate or opinion of value based on supportable evidence and accepted appraisal methods.

What is USPAP?

Uniform Standards of Professional Appraisal Practice.

Who must be licensed or certified for an appraisal in a federally related transaction?

A state-licensed or certified appraiser.

Is a CMA an appraisal?

No. A CMA is a report of market statistics used to assist consumers in buying or selling.

What is a BPO?

A broker's price opinion used in certain non-federally related transactions.

What are the four elements that create value?

Demand, Utility, Scarcity, and Transferability (DUST).

What is market value?

The most probable price a property should bring in a fair sale under normal conditions.

Is market value necessarily the same as the price paid?

No.

Is market value necessarily the same as construction cost?

No.

What are the three approaches to value?

Sales comparison, cost, and income.

What is the sales comparison approach?

Comparing the subject property with comparable properties and adjusting for differences.

What is the cost approach?

Estimating construction cost of improvements, adjusting for depreciation, and considering land value.

What is the income approach?

Estimating value based on the present value of future income.

What is the formula for NOI?

Effective Gross Income − Operating Expenses = NOI.

What is the capitalization formula?

Value = NOI ÷ Capitalization Rate.

What is the formula for cap rate?

Cap Rate = NOI ÷ Value.

What is the formula for NOI?

NOI = Value × Cap Rate.

What is GRM used for?

Estimating the value of single-family residential rental properties.

What is GIM used for?

Estimating larger residential and commercial properties using gross annual income.

What are the three types of depreciation?

Physical deterioration, functional obsolescence, and external obsolescence.

What law regulates Illinois appraisers?

The Real Estate Appraiser Licensing Act of 2002, as amended in 2009.

Who may be certified as an Illinois appraiser?

Individuals; corporations, partnerships, firms, and groups cannot be certified as appraisers.