55 Questions
What type of valuation is based on the cost of constructing an exact duplicate of the subject property's improvements?
Reproduction Value
Which value represents what taxing authorities use as the basis for ad valorem taxation?
Assessed Value
What is the estimated price at which a property will sell at a particular time?
Market Value
Which value considers how much it would cost to construct a functional equivalent of the subject property's improvements?
Replacement Value
What value represents how much money owners have invested into their properties?
Book Value
Which type of valuation represents income properties using capitalized cash flow generated by them?
Investment Value
What is the face amount that an insurance policy will pay if the property becomes unusable?
Insured Value
Established by subtracting accumulated depreciation from the purchase price of a property is the:
Depreciated Value
What value is a nominal estimate when a structure has reached its economic life?
Salvage Value
What influences the value of a property according to the text?
Improvements and neighboring properties
What is the purpose of applying a suitable capitalization rate in real estate valuation?
To derive the property value after calculating the NOI
What is the main difference between Gross Rent Multipliers (GRMs) and Capitalization Rates in real estate valuation?
GRMs focus on gross rent estimates, while Capitalization Rates focus on net operating income
In a Comparative Market Analysis, what role do adjustments play when comparing properties?
Adjustments compensate for any differences between the subject property and comparables
What is the main requirement set by FIRREA for appraisals in federally-related transactions?
The appraisal must be conducted by competent and supervised individuals
Which organization establishes competency standards for appraisers through USPAP?
The Appraiser Qualifications Board of the Appraisal Foundation
What specific requirement does USPAP set for appraisers regarding reporting?
Accurate reporting of outcomes
In real estate valuation, what does the Gross Rent Multiplier (GRM) formula involve?
Dividing the property price by the monthly rental amount
What is one of the steps involved in determining an estimated value output during a Comparative Market Analysis?
Reconciling all adjusted values with those of different subjects
What does FIRREA stand for?
Financial Institutions Reform, Recovery and Enforcement Act
What factors are included in the requirements for market value?
Cash transaction, reasonable market exposure, unrelated parties
Which area is considered in the Gross Living Area (GLA) measurement?
The total area of all rooms above grade excluding stairwells
What is the minimum required ceiling height for a space to be included in GLA measurements?
7 feet
Which area is typically excluded from Gross Living Area (GLA) measurements?
Garage areas
Which of the following is an essential element of depreciation?
Loss of value from wear and tear
What distinguishes between curable and incurable functional obsolescence?
Cost to cure compared to the resulting contribution to value
What does the Cost Appraisal Approach involve?
Calculating replacement costs for enhancements and adding back land value
Which type of valuation represents the face amount that a casualty or hazard insurance policy will pay if the property becomes unusable?
Insured Value
What value is established by subtracting accumulated depreciation from the purchase price of a property?
Book Value
Which value represents an estimate for what price someone could buy a structure for if they dismantled and moved it elsewhere?
Salvage Value
What type of valuation considers how much it would cost to construct a functional equivalent of the subject property's improvements?
Replacement Value
Which value is used as the basis for ad valorem taxation by taxing authorities?
Assessed Value
What value represents the cost of constructing an exact duplicate of the subject property's improvements?
Reproduction Value
What value is based on the income properties generate and is calculated using capitalized cash flow?
Investment Value
Which value considers how much it would cost to construct a functional equivalent of the subject property's improvements, assuming current construction costs?
Replacement Value
Which type of valuation is an estimated price at which a property will sell at a particular time, generally sought in appraisals?
Market Value
What is the main purpose of applying a suitable capitalization rate in real estate valuation?
To determine the estimated value of a property
What is the main requirement set by FIRREA for appraisals in federally-related transactions?
State-certified appraisers to perform appraisals
What represents how much money an investor is willing to pay for a property based on the expected future income stream?
Anticipation
What does the Gross Rent Multiplier (GRM) formula involve in real estate valuation?
Multiplying the property price by the monthly rental amount
Why may Gross Rent Multipliers (GRMs) not always produce precise value estimates?
Because they are based on market data
What is the main focus of utilizing acknowledged appraisal techniques according to USPAP?
Achieving precision in value estimates
Which principle states that investors won't pay more for a property with a certain income stream than for another with similar returns?
'Substitution' principle
What regulation requires that all appraisals used in federally-related transactions be performed by state-certified appraisers?
'FIRREA' regulation
How do investors determine the value of a property using Gross Rent Multipliers (GRMs)?
Multiplying the property price by the monthly rental amount
What is one of the steps involved in identifying comparables for a Comparative Market Analysis?
Never make any changes to the subject property itself.
What is a key requirement for market value according to the text?
The transaction must be conducted at arm's length.
What does Gross Living Area (GLA) measure in a property?
Only above-grade rooms with exterior walls included.
In cost appraisal, what is the difference between Reproduction and Replacement costs?
Reproduction involves creating an exact replica, while Replacement generates a functional equivalent.
What does depreciation in real estate valuation involve?
Loss of value from physical wear and tear, functional obsolescence, or economic obsolescence.
What should an appraiser consider when selecting comparables for adjustments?
Avoid adjusting superior comparables but adjust those inferior.
Which aspect is necessary for a space to be included in Gross Living Area (GLA) calculations?
At least 50% of ceiling area with a height of 7 feet or more.
What is considered an essential element of depreciation in real estate valuation?
'Functional obsolescence' due to outdated features.
What role do adjustments play in the Sales Comparison Approach?
'Add if Superior, Subtract if Inferior' rule applies to adjustments.
'Curable' and 'Incurable' distinctions are related to which type of depreciation according to the text?
'Functional Obsolescence'.
'Land worth', 'Replacement costs for enhancements', 'Overall depreciation', and 'Depreciated improvement costs' are stages in which real estate appraisal approach?
'Cost Appraisal Approach'.
Learn about different types of property valuation such as Market Value, Insured Value, Reproduction Value, and Replacement Value. Understand the definitions and uses of each valuation type.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
