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15 HOUR NATIONAL USPAP/REAL ESTATE APPRAISAL FINAL
EXAM CHAPTERS ALL CHAPTER WITH ALL POSSIBLE
QUESTIONS AND VERIFIED CORRECT ANSWERS RATED A+
Appraisers must develop and communication their work in a manner that is meaningful and _____ to their clients. - ANSWER - >not misleading An appraiser must not advocate the cause or interest of any ____. - ANSWER - >party or issue At what point must an appraiser be competent regarding an appraisal assignment? - ANSWER - >at completion of the assignment The appraiser must be prepared to demonstrate that the type and extent of research and analyses performed in the appraisal is sufficient to produce ____ assignment results. - ANSWER - >credible an appraiser performing an assignment in an unfamiliar geographic location must spend sufficient time to understand the _____ of the local market. - ANSWER - >nuances FALSE - ANSWER - >T/F? A series of errors in an appraisal is acceptable as long as it does not significantly affect the value conclusion TRUE - ANSWER - >T/F? An appraiser must inform a client prior to accepting the assignment if he or she lacks the requisite knowledge and/ or experience to complete the assignment competently.
FALSE - ANSWER - >T/F?
A fee arrangement contingent on an appraiser's value conclusion will help the appraiser to maintain impartiality and independence. FALSE - ANSWER - >T/F? In an assignment that involves a dispute between two parties, it is the appraiser's duty to represent his client's position. TRUE - ANSWER - >T/F? The unethical practices of a few can sometimes damage public trust for an entire profession. one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective - ANSWER -
APPRAISER
- ANSWER - >COMPETENCY
- ANSWER - >ETHICAL PRACTICE
- ANSWER - >PUBLIC TRUST
- ANSWER - >SUFFICIENT DILIGENCE something added or appended to a property that then becomes an inherent part of the property; ... usually passes with the property when title is transferred - ANSWER - >APPURTENANCE total range of ownership interests in real property. an owner that possesses all the interests the bundle of rights has the most complete form of ownership
- transfer
- lease
is land and all things that are a natural part of the land such as trees and minerals includes appurtenances all real estate improvements were once personal property; when attached to the land, they become real estate - ANSWER - >REAL ESTATE the interests, benefits, and rights inherent in the ownership of real estate - ANSWER - >REAL PROPERTY these are rights pertaining to properties touching a body of water or a waterway such as a river or stream (generally interpreted as flowing waters) with an emphasis on the benefit and useful purpose to which the flowing water may be applied. - ANSWER - >RIPARIAN RIGHTS rights to the use and profits of the underground portion of a designated property right to extract coal, minerals, oil, gas and water right to construct and maintain tunnels, subways, sewers and basements solid mineral rights oil and gas rights - ANSWER - >SUBSURFACE RIGHTS include land, water, and anything attached to the land -- either naturally or placed by human hands - ANSWER - >SURFACE RIGHTS are articles placed in or attached to rented buildings by a tenant to help carry out the trade or business of the tenant are personal property - ANSWER - >TRADE FIXTURES TRADE FIXTURE - ANSWER - >Photographic printing equipment owned and used by a one-hour photo business that rents space in a mall
REAL ESTATE - ANSWER - >chain link fence REAL PROPERTY - ANSWER - >an estate PERSONAL PROPERTY - ANSWER - >portable dish washer REAL PROPERTY - ANSWER - >condominium REAL ESTATE - ANSWER - >swimming pool in the ground PERSONAL PROPERTY - ANSWER - >swimming pool above the ground TRADE FIXTURE - ANSWER - >air-handling systems and filters owned and installed by a tenant in lease space of an industrial park FIXTURE - ANSWER - >room air conditioner permanently mounted in a wall opening REAL PROPERT - ANSWER - >right to occupy FIXTURE - ANSWER - >portable hot tub permanently enclosed in a deck with underground plumbing REAL ESTATE - ANSWER - >shrubbery
- ANSWER - >DEED RESTRICTION the right to use another's land for a stated purpose - ANSWER -
EASEMENT an easement having both dominant and servient estates. the easement interest passes with title to the dominant estate and continues to burden the servient estate - ANSWER - >EASEMENT APPURTENANT
fee simple absolute fee simple defeasible leased fee interest
- life estate - ANSWER - >FREEHOLD ESTATE is an ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others - ANSWER - >LEASED FEE INTEREST estates for years estate from period to period estate at will estate at sufferance - ANSWER - >LEASEHOLD ESTATE are NOT encumbrances revocable oral or written agreement grating privilege to use property not an estate or an interest in land not assignable and can't be sold a personal agreement usually granted for a specified period of time - ANSWER - >LICENSE rights of use, occupancy, and control, limited to the lifetime of a designated party. sometimes referred to as the life tenant - ANSWER -
LIFE ESTATE a future interest held by someone other than the grantor entitling a person (remainderman) to an estate after a prior estate or interest has expired. - ANSWER - >REMAINDER INTEREST a clause found in legal instruments and conveyances that creates a new right or interest on behalf of the grantor. while title passes to the grantee, some use or income is reserved for the grantor. reservations
may include mineral rights, rental income, or easements. - ANSWER -
RESERVATION A systematic procedure used in the valuation of real property - ANSWER - >Valuation process the party or parties who engage, by employment or contract, an appraiser in specific assignment - ANSWER - >Client the client and any other party as identified, by name or type, as users of the appraisal or appraisal review report by the appraiser on the basis of communication with the client at the time of the assignment - ANSWER
the use or uses of an appraiser's reported appraisal or appraisal review assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment - ANSWER - >intended use the objective of an assignment--e.g., in an appraisal assignment, to develop an opinion of the defined value of any real property interest. - ANSWER - >purpose of an appraisal current/ retrospective/ propspective - ANSWER - >effective date extraordinary assumption/ hypothetical condition - ANSWER -
assignment conditions this is an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusions - ANSWER - >extraordinary assumption
Alternatively, the probable use of land or improved property - specific with respect to user and timing of the use - that is adequately supported and results in the highest present value. - ANSWER -
HIGHEST AND BEST USE improve leave vacant - ANSWER - >LAND AS THOUGH VACANT OPTIONS leave as is alter demolish - ANSWER - >PROPERTY AS IMPROVED OPTIONS a systematic procedure used in the valuation of real property
- identification of the problem
- scope of work determination
- data collection and property description
- data analysis
- land value opinion
- application of the approaches to value
- reconciliation of value indications and final opinion of value
- report of defined value - ANSWER - >VALUATION PROCESS
- identify CLIENT and INTENDED USER
- identify the INTENDED USER
- identify the PURPOSE of the assignment (type and definition of value)
- identify the EFFECTIVE DATE of the opinion
- identify the RELEVANT CHARACTERISTICS of the property
- identify ASSIGNMENT CONDITIONS - ANSWER - >IDENTIFICATION OF THE PROBLEM
- market area data
- subject property data
- comparable property data - ANSWER - >DATA COLLECTION AND PROPERTY DESCRIPTION
- market analysis
- highest and best use analysis - ANSWER - >DATA ANALYSIS
- sales comparison approach
- income capitalization approach
- cost approach - ANSWER - >APPLICATION OF THE APPROACHES TO VALUE
- demand studies
- supply studies
- marketability studies - ANSWER - >MARKET ANALYSIS
- land as though vacant
- ideal improvement
- property as improved - ANSWER - >HIGHEST AND BEST USE ANALYSIS A tax appeal assignment will commonly involve a ___ effective date. - ANSWER - >retrospective intended use affects both appraisal ___ and reporting. - ANSWER -
developement a systematic procedure appraisers can employ to provide the answer to a client's question about the value of property is called the ___. - ANSWER - >valuation process in ___ analysis, the appraiser analyzes the ideal improvement for the property. - ANSWER - >highest and best use
- real property rights conveyed
- financing terms
- conditions of sale
- expenditures made immediately after purchase
- market conditions
- location
- physical characteristics
- economic characteristics
- use
- non-realty components of value - ANSWER - >elements of comparison direct capitalization yield capitalization - ANSWER - >income capitalization approach T - ANSWER - >T/F? a hypothetical condition is contrary to what exists but is supposed for the purpose of analysis T - ANSWER - >T/F? the valuation process provides a framework for deriving an opinion of market value as well as other types of value F client and intended users intended use - ANSWER - >T/F? the first two elements of problem identification are identifying the real estate and the real property rights to be appraised F - ANSWER - >T/F? comparable sales having a different highest and best use than the subject should be used if similar in other characteristics
T - ANSWER - >T/F?
non-realty components of value are an element of comparison considered within the sales comparison approach T - ANSWER - >T/F? extraction is a land valuation procedure that can be used when a comparable sold property has improvements on the site. F report of defined value - ANSWER - >T/F? the final step in the valuation process is the reconciliation of the value indications. F - ANSWER - >T/F? an appraiser must use all three approaches in every assignment T - ANSWER - >T/F? the first step in the cost approach is to value the land F - ANSWER - >T/F? purpose defines the intended use of the appraisal the conversion of income into value - ANSWER - >CAPITALIZATION the total potential income attributable to real property at FULL OCCUPANCY before and operating expenses are deducted. - ANSWER -
POTENTIAL GROSS INCOME the anticipated income from all operations of the real property after an ALLOWANCE is made for VACANCY AND COLLECTION LOSSES - ANSWER
the capitalization rate for DEBT; ratio of the ANNUAL DEBIT SERVICE to the PRINCIPAL AMOUNT OF THE MORTGAGE LOAN. also called annual constant or mortgage constant. - ANSWER - >MORTGAGE CAPITALIZATION RATE (R_m) the rate of return or yield rate ON debt capital, usually expressed as the nominal annual percentage of the amount loaned or invested. the cost to borrow funds - ANSWER - >INTEREST RATE an interest rate used to convert future payments or receipts into present value - ANSWER - >DISCOUNT RATE the additional amount received for use of the investor's capital until it is recaptured. - ANSWER - >RETURN ON CAPITAL the recovery of invested capital - ANSWER - >RETURN OF CAPITAL the probability that foreseen events will not occur - ANSWER - >RISK a stated or contract rate; an interest rate, usually annual, that does not necessarily correspond to the effective or compound interest rate. - ANSWER - >NOMINAL INTEREST RATE a method used to convert an estimate of a SINGLE YEAR'S INCOME expectancy into an indication of value in one direct step, either by dividing the net income estimated by n appropriate capitalization rate or by multiplying the income estimate by an appropriate factor.l direct capitalization employs capitalization rates and multipliers extracted for developed from market data. only a single year's income is used. yield and value changes are implied, but not identified. - ANSWER - >DIRECT CAPITALIZATION
a method used to convert future benefits into present value by
- discounting each future benefit at an appropriate yield rate
- developing an overall rate that explicitly reflects the investment's income pattern, holding period, value change, and yield rate. - ANSWER
YIELD CAPITALIZATION highest and best use analysis anticipation and change supply and demand substitution balance externalities - ANSWER - >economic principles relate to the income capitalization approach the type and definition of value used in the assignment - ANSWER - what does the purpose of an appraisal assignment define? a hypothetical condition - ANSWER - >a value opinion of a proposed office building based on a current effective date would generally require what kind of assignment condition morgage capitalization rate - ANSWER - >the ratio of annual debt service to the principal amount of the mortgage loan is called the 187,500/7.5%=2,500,000 - ANSWER - >if the net operating income of a property is $187,500 and the market indicates an overall capitalization rate of 7.5%, what is the indicated value using direct capitalization? cost sale comparison income capitalization - ANSWER - >what are the three traditional approaches to value
this is a similar ratio to GIM, BUT IT applies to rental income only. this multiplier is applied in less complex properties such as rented one-unit residential homes and two-to=four units small residential income properties. - ANSWER - >GROSS RENT MULTIPLIER (GRM) a contract in which the rights to use and occupy land or structures are transferred by the owner to another for a specified period of time in return for a specified rent. - ANSWER - >LEASE the landlord (lessor) pays all the operating expense - ANSWER - >GROSS LEASE the tenant (lessee) pays all of the operating expense - ANSWER - >NET LEASE flat rental graduated rental revaluation lease index lease percentage lease - ANSWER - >Lease types an amount paid for the use of land, improvements, or a capital good - ANSWER - >RENT the actual rental income specified in a lease - ANSWER - >CONTRACT RENT income due under existing leases. - ANSWER - >SCHEDULED RENT the most probable rent that a property should bring ina competitive and open market reflecting all conditions and restrictions of the specified lease agreement - ANSWER - >MARKET RENT
the rental rate net of financial concessions such as periods of no rent during the lease term - ANSWER - >EFFECTIVE RENT the amount by which market rent EXCEEDS contract rent at the time of the appraisal; created by a lease favorable to the tenant, resulting a positive leasehold - ANSWER - >DEFICIT RENT the amount by which contract rent exceeds market rent at the time of the appraisal; created by a lease favorable to the landlord (lessor) - ANSWER - >EXCESS RENT rental income received in accordance with the terms of a percentage lease - ANSWER - >PERCENTAGE RENT the percentage rent paid over and above the guranteed minimum rent or base rent - ANSWER - >OVERAGE RENT this is the total rent possible if the property is 100% occupied. - ANSWER - >POTENTIAL GROSS INCOME (PGI) derive by subtracting an allowance for vacancy and collection loss from PGI - ANSWER - >EFFECTIVE GROSS INCOME (EGI) the periodic expenditures necessary to maintain the real property and continue production of the effective gross income, assuming prudent and competent management. - ANSWER - >OPERATING EXPENSE operating expense that generally do not vary with occupancy and that prudent management will pay whether the property is occupied or vacant.
- Taxes
- Insurance - ANSWER - >FIXED EXPENSEs
