300 Quiz 2 Fundamentals of Mass Appraisal Course

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Questions and Answers

Additive models for the sales comparison approach assumes that the impact of property characteristics upon value is ___________ therefore can be added.

Interactive

Independent (correct)

Multiplicative

None of the above

The ___________ model is the most flexible model structure, but it is the most difficult to calibrate.

Hybrid (generic) (correct)

Additive

Multiplicative

None of the above

The most common approach to stratification in mass appraisal modeling is:

Cluster analysis

Global model with location adjustments

Location Value Response Surface Analysis (LVRSA)

Geographic stratification (correct)

Per unit value analysis requires the stratification of properties, the calculation of appropriate units of comparison and the selection of the most appropriate unit based on:

Measures of central tendency and dispersion Signup and view all the answers

One of the limitations to multiple regression analysis is that it _________.

Does not produce separate land and building values Signup and view all the answers

One of the strengths of "feedback" is that it ___________.

Produces separate land and building values Signup and view all the answers

In mass appraisal, cost models follow the structure of:

Hybrid (generic) models Signup and view all the answers

Mass appraisal cost models contain both direct and indirect costs. An example of a direct cost would be:

Construction supervision Signup and view all the answers

You have the historical cost of a building and want to trend it to current cost. The cost factor table you are using is based on 1960 = 100. The cost factor for the original cost is 150. The current cost factor is 180. What is the appropriate factor for trending the historical cost to current?

120% Signup and view all the answers

The most common method of estimating cost in mass appraisal is ___________.

Comparative unit method Signup and view all the answers

A desirable feature of a cost manual would be that it:

All of the above Signup and view all the answers

The comparative unit method of cost estimation tends to produce:

Replacement costs Signup and view all the answers

The structure of a net income model would be:

MV = NOI / OAR Signup and view all the answers

The structure of a gross income model would be:

MV = GI x GIM Signup and view all the answers

You have a current cost of a building of $200,000. You review the cost manual and the current cost factor is 180. The cost factor for three years ago is 150. The cost factor table you are using is based on 1960 = 100. What would the building cost for this building three years ago?

166,600 Signup and view all the answers

The following equation: MV = GQ x [(Pi x Qi) x (Pl x Ql)] + OA is a __________ model?

Generic Hybrid Signup and view all the answers

Ratio studies are helpful in:

All of the above Signup and view all the answers

Which of the following types of sales should NOT be automatically excluded from a sales ratio study?

Multiple parcel sales Signup and view all the answers

Study Notes

Additive Models and Property Characteristics

Additive models assume the impact of property characteristics on value is additive, allowing for simple summation.
The nonparametric model is highly flexible but more challenging to calibrate than other models.

Mass Appraisal Modeling

Common stratification approach involves per unit value analysis, requiring property classification, unit calculation, and appropriate unit selection.
Multiple regression analysis has a limitation in that it may overlook nonlinear relationships among variables.
"Feedback" in modeling enhances adaptability, allowing for continuous improvement.

Cost Models in Mass Appraisal

Cost models in mass appraisal reflect both direct and indirect costs, providing comprehensive value assessments.
Direct costs examples include materials and labor directly associated with construction.
Estimating current costs from historical data involves trending calculations based on cost factors.

Cost Factor Calculations

Historical costs can be trended to current values using cost factors based on a reference year (e.g., 1960 = 100).
Given a historical cost factor of 150 and a current cost factor of 180, the trending factor would be 120 (180/150).

Methods of Cost Estimation

The most common method for estimating costs in mass appraisal involves comparative unit methods.
A desirable feature of cost manuals includes clarity and accessibility, promoting consistent valuation practices.

Income Projection Models

A net income model typically encompasses revenue, expenses, and capitalization rates.
A gross income model primarily focuses on the total income generated without expense deductions.

For a building costing 200,000withacurrentcostfactorof180andahistoricalfactorof150,theestimatedcostthreeyearsagowouldbe200,000 with a current cost factor of 180 and a historical factor of 150, the estimated cost three years ago would be 200,000withacurrentcostfactorof180andahistoricalfactorof150,theestimatedcostthreeyearsagowouldbe133,333 (200,000 / 1.2).

Model Structure and Equations

The equation MV = GQ x [(Pi x Qi) x (Pl x Ql)] + OA represents a net income model, showcasing the calculation of market value through income generation metrics.

Ratio Studies in Sales Analysis

Ratio studies provide insights into property valuation accuracy and market trends.
Types of sales that should not be excluded from sales ratio studies include arms-length transactions, as they reflect true market conditions.

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