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Related Flashcards
Cards In This Set
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What are hypothetical conditions and what is their significance?
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1. They are conditions known to be false, but are presumed to be true so that a value may be determined by the appraiser.
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What is scope of work?
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1. The type and extent of research to be done in an appraisal analysis.
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What is the difference between general and specific data?
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1. General data relates to the broad economic and environmental forces that may affect a property’s value, whereas specific data relates directly to the property.
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What is the most reliable way to estimate land value?
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1. The sales comparison approach.
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What method of valuation is most useful when a number of similar properties has been recently sold?
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The sales comparison approach.
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How does the sales comparison approach work?
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1. It finds similar properties then determines the degree of similarity and difference between them based on factors such as physical characteristics, location, market conditions, financing, etc.
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What is the underlying assumption of the cost approach?
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1. Market participants relate value to the cost to reproduce.
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What is the underlying assumption of the income capitalization approach?
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1. It is based on the present value of future income produced by the property. There are two methods to this approach. The yield method considers multiple years discounted to a present value whereas the direct method considers one year’s income based on the value of the property.
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What is the final step of the appraisal process?
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1. The values derived from the various approaches are reconciled into either a range of values or a single value.
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What does “ad valorem” mean?
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It means according to value, and is approximately related to market value. It is a concept used in taxation.
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Name five commonly used sources of general data.
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1. (1) Council of Economic Advisors (2) Federal Reserve Board (3) U.S. Department of Housing and Urban Development (4) Chambers of Commerce (5) National Vital Statistics System
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What is another name for an active market and a depressed market?
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1. A seller’s market and a buyer’s market respectively.
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Is historical data an absolute predictor of the future?
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No.
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What are off-site improvements?
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Drainage, utilities, roads, sewer, etc.
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What are on-site improvements?
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Improvements, driveways, landscaping, etc.
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