Podcast
Questions and Answers
Which property types commonly employ the income approach to ascertain value?
Which property types commonly employ the income approach to ascertain value?
- Commercial properties (correct)
- Triplexes
- Residential properties
- Single family homes
An investor group commissions an appraisal for an office building purchase. What value is the appraisal report most likely to emphasize?
An investor group commissions an appraisal for an office building purchase. What value is the appraisal report most likely to emphasize?
- Market Value
- Investment Value (correct)
- Value-in-use
- Assessed Value
When determining the highest and best use for a property, which of the following is NOT a standard test applied?
When determining the highest and best use for a property, which of the following is NOT a standard test applied?
- The use must be appropriate for the site
- The use must be allowed by a variance (correct)
- The use must be economically feasible
- The use must be physically possible
What term describes the sum of all expenses, including labor, materials, contractor profit, and entrepreneurial overhead, incurred during a construction project?
What term describes the sum of all expenses, including labor, materials, contractor profit, and entrepreneurial overhead, incurred during a construction project?
The sale price of a property at a foreclosure auction is MOST likely to represent its:
The sale price of a property at a foreclosure auction is MOST likely to represent its:
In a dynamic market environment, which factor is MOST likely to remain constant?
In a dynamic market environment, which factor is MOST likely to remain constant?
When is an appraisal required to establish value?
When is an appraisal required to establish value?
In the sales comparison approach, what aspect should be analyzed FIRST when making adjustments?
In the sales comparison approach, what aspect should be analyzed FIRST when making adjustments?
Which of the following is used to determine the highest and best use of a property?
Which of the following is used to determine the highest and best use of a property?
In a rapidly appreciating market, which of the following is LEAST likely to exhibit drastic changes?
In a rapidly appreciating market, which of the following is LEAST likely to exhibit drastic changes?
What term defines the value of an asset covered by an insurance policy?
What term defines the value of an asset covered by an insurance policy?
In which of the following cases appraisal approach value-in-use is used?
In which of the following cases appraisal approach value-in-use is used?
Which of the following does NOT indicate a depreciating market?
Which of the following does NOT indicate a depreciating market?
Before using the income approach to value a commercial property, what financial metric must be determined?
Before using the income approach to value a commercial property, what financial metric must be determined?
An appraiser's opinion of a property's worth is generally known as...
An appraiser's opinion of a property's worth is generally known as...
When valuing a property using the income approach, what must be determined first?
When valuing a property using the income approach, what must be determined first?
What items should be reviewed when conducting a residential market analysis?
What items should be reviewed when conducting a residential market analysis?
What indicates an appreciating market?
What indicates an appreciating market?
If offers are being made quickly on current asking prices, what might be happening in the market?
If offers are being made quickly on current asking prices, what might be happening in the market?
What approach would the appraiser use to best understand the value of the warehouse?
What approach would the appraiser use to best understand the value of the warehouse?
Which of the following is MOST likely to be used for residential properties?
Which of the following is MOST likely to be used for residential properties?
Which of the following should be accounted for to determine the market value of a property?
Which of the following should be accounted for to determine the market value of a property?
Who typically conducts comparative market analysis?
Who typically conducts comparative market analysis?
New inventions, design changes, and external factors causing loss of desirability and usefulness is known as?
New inventions, design changes, and external factors causing loss of desirability and usefulness is known as?
What describes a property evaluation that determines property value by comparing similar properties within the last year?
What describes a property evaluation that determines property value by comparing similar properties within the last year?
How will a real estate person know if real property residential market is depreciating?
How will a real estate person know if real property residential market is depreciating?
Which of the following indicates that a market is depreciating?
Which of the following indicates that a market is depreciating?
Which of the following is an example of a soft cost?
Which of the following is an example of a soft cost?
When can land have a negative value...?
When can land have a negative value...?
When may the cost of construction exceed the price of a property...?
When may the cost of construction exceed the price of a property...?
What is the primary focus when determining the market value of a property?
What is the primary focus when determining the market value of a property?
What type of depreciation is most likely to be incurable?
What type of depreciation is most likely to be incurable?
In a cost approach, what's the last step in estimating value?
In a cost approach, what's the last step in estimating value?
When is the cost approach most applicable?
When is the cost approach most applicable?
What reflects the relationship between supply and demand?
What reflects the relationship between supply and demand?
What's the primary reason for performing a market analysis?
What's the primary reason for performing a market analysis?
Which of the following market conditions indicates a buyer's market?
Which of the following market conditions indicates a buyer's market?
What would be the impact on real estate values if interest rates were to quickly and drastically increase?
What would be the impact on real estate values if interest rates were to quickly and drastically increase?
Which of the following is considered to be the MOST influential factor impacting real estate values?
Which of the following is considered to be the MOST influential factor impacting real estate values?
A real estate appraiser evaluating a residential property would be MOST concerned with
A real estate appraiser evaluating a residential property would be MOST concerned with
Flashcards
Investment Value
Investment Value
Value of property for income-producing properties.
Variance
Variance
An exception to the current zoning resolution, granted to the property owner.
Cost
Cost
The total expenditure for labor, materials, and other inputs.
Liquidation Value
Liquidation Value
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Cost
Cost
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Highest and Best Use
Highest and Best Use
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Insured Value
Insured Value
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Value-in-Use
Value-in-Use
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Depreciating Market Indicator
Depreciating Market Indicator
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Income Approach
Income Approach
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Appraisal
Appraisal
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Net Operating Income
Net Operating Income
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Trending Upwards
Trending Upwards
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Value-In-Use
Value-In-Use
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Price per sq.ft.
Price per sq.ft.
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Market Value
Market Value
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Comparative Market Analysis
Comparative Market Analysis
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Obsolescence
Obsolescence
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Comparative Market Analysis
Comparative Market Analysis
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Market Depreciating
Market Depreciating
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Market Depreciating
Market Depreciating
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Soft Costs
Soft Costs
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Environmental Hazard
Environmental Hazard
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Cost Exceeds Price
Cost Exceeds Price
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Study Notes
- The income approach is used to determine the value of commercial properties.
- An appraisal report for an office building will most likely yield the investment value.
- An office building is typically valued using the investment value because it is purchased for its cash flow and return on investment.
- A variance is an exception granted to the current zoning resolution, typically due to hardship for the owner, therefore, the use must be allowed by a variance is not a test used to determine the highest and best use for a property.
- Cost is defined as the total dollar expenditure for labor, materials, legal services, architectural design, financing, taxes during construction, interest, contractor's overhead and profit, and entrepreneurial overhead and profit.
- Liquidation value is most likely equal to the price that a property sold during a foreclosure auction.
- Cost may remain static despite a changing market, unlike price, value, and demand, which are directly related to supply and demand.
- An appraisal is used when determining the value of market value, value-in-use, and assessed value.
- The first step in the order of adjustments when utilizing the sales comparison approach is to analyze any rights conveyed.
- The tests used to determine the highest and best use of a property are if it is economically feasible, legally permissible, appropriate for the site, and physically possible
- Cost may not change drastically in a market trending upward, unlike price, value and demand which are directly related to supply and demand
- The value of an asset or asset group that is covered by an insurance policy is referred to as insured value
- An appraisal using the value-in-use approach would required for a warehouse, church, and a school
- Decreasing time on the market is not an indicator that a market is depreciating
- A property's net operating income (NOI) must be determined before a property can be valued using the income approach
- Appraisal refers to a property's value by an appraiser who is usually presumed to be an expert in his work
- Net operating income (NOI) must be determined first before a property can be valued using the income approach
- Reviewed when conducting a residential market analysis are recently sold properties, expired listings, and contracts of sale
- Decreasing time on the market, properties moving faster, and offering prices increasing are indicators of an appreciating market
- If offers are quickly being made on the asking prices, this suggests the market is trending upwards, indicating that offer prices may be increased.
- An appraiser would use value-in-use to better understand the value of Donald's warehouse in his conclusion
- Price per sq.ft. is an example of a common unit of comparison for residential properties
- Sales from the past 3 months, any current properties under contract, and any current listings should be considered when determining the market value of a property
- Appraisers, Brokers, and Developers typically conduct comparative market analysis
- Obsolescence is the loss of desirability and usefulness caused by new inventions, changes in design, improved processes for production, or external factors.
- Comparative Market Analysis refers to a property evaluation that determines property value by comparing similar properties sold within the last year
- As time on the market increases, prices generally decrease, indicating a depreciating market
- A market is depreciating when supply increases, time on the market increases, and offering prices decrease
- Architectural fees are an example of a soft cost
- It must be well-noted that outside encumbrances, such as an environmental hazard, can lead to a negative value of the property, or cause the value to depreciate
- The cost of construction may exceed the price of a property when demand is low, which causes prices to decrease
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Description
Explore real estate valuation focusing on the income approach for commercial properties and investment value. Understand variances, cost factors, and liquidation value in property appraisal. Learn how market dynamics affect price, value, and demand within the real estate sector.
