FIN 433 Real Estate Appraisal Practice Questions

Vocabulary practice flashcards generated from the FIN 433 real estate appraisal study questions.

Principle of Anticipation

The core real estate principle that serves as the basis of the income capitalization approach.

Trade Fixture

Personal property that is installed in a permanent way for use in a business on leased property.

Real Property

All interests, benefits, and rights inherent in the ownership of real estate.

Real Estate

The physical land and appurtenances affixed to the land.

Three Approaches to Value

The three valuation methodologies in appraisal: sales comparison, cost, and income capitalization.

Leased Fee Interest

The ownership interest held by the landlord when a lease is in effect.

Four Forces Influencing Real Estate Values

The four categories of value influence: social, economic, governmental, and environmental.

Externalities

Factors outside the property that can affect the property value.

Four Agents of Production

The four required components of real estate production: land, labor, capital, and entrepreneurship.

Use Value

The value of a property to a particular user.

Market Area Life Cycles

The four sequential stages of a market area: growth, stability, decline, and revitalization.

Elements of Comparison

The characteristics, features, sizes, or attributes of properties and transactions that cause the prices paid for real estate to vary.

Leasehold Estate

The real property interest held by a lessee that conveys the right of use and occupancy for a stated term and under certain conditions.

Fifth Amendment

A provision in the U.S. Constitution that requires the government to pay just compensation for land taken for the common good.

Bundle of Rights Theory

The concept comparing property ownership to a bundle of sticks, where each stick represents a distinct right of the property owner (e.g., to use, sell, lease, or give away real estate).

Basis Point

One one-hundredth of one percentage point ($0.0001$ or 0.01\text{\null}%), where $100$ basis points equals 1\text{\null}%.

Progression

In appraisal, the concept that the value of an inferior property is enhanced by its association with better properties of the same type.

Regression

In appraisal, the concept that the value of a superior property is adversely affected by its association with an inferior property of the same type.

Neighborhood

A group of complementary land uses.

District

A type of neighborhood that is characterized by homogeneous land use.

Fee Simple Interest Limitations

The four powers of government that limit a fee simple estate: taxation, eminent domain, police power, and escheat.

Property Sale Prices

Real estate transaction prices that are negotiated directly between buyers and sellers.

Units of Comparison

Items that represent a breakdown of the price based on a significant variable.

Acre

A unit of land measure containing $43{,}560\text{ square feet}$.

Building Floorplan Size

The total area of the floorplan diagram calculated as $672\text{ square feet}$.

Triangular Area

The total surface area of a triangle with base $18'\text{}$ and height $16'\text{}$, calculated as $\frac{1}{2} \times 18'\text{} \times 16'\text{} = 144\text{ square feet}$.