Uniform Residential Appraisal Report Overview
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Questions and Answers

What is the significance of the effective date of cost data in the cost approach?

  • It reflects the market conditions at the time of assessment. (correct)
  • It determines the depreciation rate used.
  • It indicates when the property was last sold.
  • It is irrelevant to property valuation.

    • Which factor is considered when calculating depreciation in the cost approach?

  • Square footage of the property.
  • Estimated remaining economic life. (correct)
  • Quality rating from the cost service.
  • Total estimate of cost-new.

    • In the income approach to value, what does the Gross Rent Multiplier represent?

  • The total cost of construction divided by total rent.
  • The estimated monthly market rent multiplied by a constant.
  • The ratio of property price to annual rental income. (correct)
  • The average rental price in the neighborhood.

    • What information is crucial for determining the 'As-is' value of site improvements?

    <p>Physical, functional, and external depreciation. (B)</p> Signup and view all the answers

    What does the summary of the income approach typically include?

    <p>Market rent and Gross Rent Multiplier support. (B)</p> Signup and view all the answers

    What percentage of one-unit housing is classified as built-up in urban areas?

    <p>Over 75% (C)</p> Signup and view all the answers

    What does a marketing time of over 6 months indicate about property conditions?

    <p>Over supply in the market (A)</p> Signup and view all the answers

    Which zoning classification indicates a use that is legal but not conforming to current zoning regulations?

    <p>Legal Nonconforming (C)</p> Signup and view all the answers

    In a neighborhood with a stable property value trend, which of the following conditions is most likely affecting the housing market?

    <p>Market balance (C)</p> Signup and view all the answers

    If a property is located in a FEMA Special Flood Hazard Area, what does that imply regarding insurance requirements?

    <p>Flood insurance must be purchased (D)</p> Signup and view all the answers

    What is a fundamental step required in the scope of work for this appraisal?

    <p>Performing a complete visual inspection of the property (B)</p> Signup and view all the answers

    What is the intended use of the appraisal report?

    <p>For the lender/client to evaluate the property for a mortgage finance transaction (A)</p> Signup and view all the answers

    Which of the following best defines market value in the context of this appraisal?

    <p>The most probable price for a property in a competitive and open market (D)</p> Signup and view all the answers

    What is the role of adjustments to comparable sales in the appraisal process?

    <p>To account for special or creative financing or sales concessions (C)</p> Signup and view all the answers

    Which statement reflects a limitation that does not require adjustments in the appraisal?

    <p>Costs typically paid by sellers as per market tradition (A)</p> Signup and view all the answers

    Who is considered the intended user of the appraisal report?

    <p>The lender/client who requested the appraisal (C)</p> Signup and view all the answers

    What is one requirement for the appraiser when modifying the scope of work?

    <p>The appraiser may research based on assignment complexity (A)</p> Signup and view all the answers

    In which situation would the appraiser need to describe the status of completion?

    <p>When the project is left incomplete (C)</p> Signup and view all the answers

    Which statement is true regarding the common elements in a PUD?

    <p>They may be leased to or by the Homeowners’ Association (B)</p> Signup and view all the answers

    What happens if modifications are made to the intended user of the appraisal?

    <p>This is against the rules of the appraisal report (D)</p> Signup and view all the answers

    Flashcards

    One-Unit Housing %

    The percentage of land in a neighborhood dedicated to one-unit residential properties.

    Commercial %

    The percentage of land in a neighborhood dedicated to commercial properties.

    Multi-Family %

    The percentage of land in a neighborhood dedicated to multi-family residential properties.

    Pred. Other %

    The percentage of land in a neighborhood dedicated to other types of land use besides residential, commercial, and multi-family.

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    2-4 Unit %

    The percentage of land in a neighborhood dedicated to properties with two to four units.

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    Cost Approach

    The cost of constructing a new building with similar size and features to the subject property. It's determined by calculating the cost per square foot of construction multiplied by the subject property's gross living area.

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    Gross Rent Multiplier (GRM)

    A factor used to estimate the market value of a property based on its rental income. It's calculated by dividing the market value of a property by its annual gross rental income.

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    Income Approach

    This approach estimates the value of a property based on the income it generates, such as rent. It's calculated by multiplying the estimated monthly market rent by the Gross Rent Multiplier.

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    Sales Comparison Approach

    This approach involves assessing the comparable properties that have recently sold in the market. It primarily compares the subject property with similar properties that have recently transacted, adjusting for any differences between them.

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    Depreciation

    This refers to the physical deterioration, functional obsolescence, and external obsolescence of a property, which impacts its value. It's essential to consider these factors when estimating the property's worth.

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    Market Value

    The most likely price a property would fetch in a fair and competitive market, assuming both buyer and seller are knowledgeable, motivated, and acting in their own best interest.

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    Appraiser's Responsibilities

    The appraiser must visually inspect the subject property (inside and outside), the neighborhood, and comparable sales from the street. They must also research and analyze data from reliable sources.

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    Intended Use of Appraisal

    The appraisal report is intended for the lender or client to evaluate the property for a mortgage loan.

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    Fair Sale Conditions for Market Value

    This means the sale is typical, with a motivated seller and buyer, both well-informed and acting in their own best interest.

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    Normal Financial Arrangements

    The price should reflect normal financial arrangements, not special financing or discounts offered by the seller.

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    Adjustments for Special Financing or Concessions

    Adjustments are made for special financing or discounts offered by the seller. However, adjustments are not needed for costs usually paid by sellers due to tradition or law.

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    Appraisal Report Requirements

    The appraiser must provide a complete analysis, opinion, and conclusion in the appraisal report.

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    What is a Planned Unit Development (PUD)?

    A type of residential development where individual units are owned separately, but shared common areas are owned jointly as a collective.

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    Total Number of Units

    The total number of units that have been constructed in a planned unit development.

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    Number of Units for Sale

    The number of units that are currently available for sale in a planned unit development.

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    Number of Units Rented

    The number of units that are currently rented out in a planned unit development.

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    Common Elements

    This refers to the shared areas within a PUD, such as pools, parks, walking trails, or community centers.

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    Conversion of an Existing Building to a PUD

    The process of converting an existing building or buildings into a PUD.

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    Completion of Units, Common Elements, and Recreational Facilities

    This refers to the completion status of all units, common areas, and recreational facilities within a PUD.

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    Homeowners’ Association (HOA)

    An organization formed by homeowners in a PUD to manage the shared property and facilities.

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    Study Notes

    Uniform Residential Appraisal Report

    • This document is used to provide an accurate and supported opinion of the market value of a property.
    • It is used by lenders and clients for property valuation.
    • The document analyzes the property's location, neighborhood, features, conditions, and comparable sales to determine market value.
    • The report details property characteristics like location, neighborhood, property values, land use, zoning, utilities, site conditions, and the building's physical condition; number of bedrooms, baths, living area, and condition of features.
    • Comparisons of the subject property with similar properties (comparables) are highlighted to gauge the value.
    • Methods like sales comparison, cost approach, and income approach are sometimes used to estimate value.
    • Prior sales of both the subject property and comparables are often considered to analyze value trends over time, if any.
    • The report includes details regarding financing, special assessments, HOA fees, and any financial assistance provided.
    • The report identifies and explains any adverse site conditions or factors that could affect the property's value.
    • The report contains statements of assumptions and limiting conditions to outline the report's limitations and conditions under which the appraisal was performed.
    • Appraiser's certification is included, confirming that the appraisal adheres to standards and principles of practice, and that the details are accurate.
    • The report covers the specific scope of work performed to ensure accuracy and completeness.
    • It ensures a detailed analysis of property characteristics, location, comparable sales, and other factors relevant to determining market value.
    • Data sources and verification sources for the figures and data are essential to the study.
    • The document clarifies the intended use and intended user of the report, such as a mortgage appraisal.
    • The document clarifies the definition of market value to avoid ambiguity.
    • Additional comments, cost approach to value, or income approach to value are sometimes documented for completeness.
    • Additional information is provided for planned unit developments (PUDs), if applicable.

    Appraisal Report Instructions

    • The report form is for one-unit properties or properties with accessory units.
    • It is not designed for manufactured homes, condominiums, or cooperatives.
    • Modifications, additions, or deletions to the report are not permitted.
    • The scope of work for the appraisal is defined.
    • A street map and sketch should accompany the appraisal to show the subject’s location and dimensions in the neighborhood.
    • The appraisal should include clear photographs of the property and comparable sales, front, back, street scenes.

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    Related Documents

    Uniform Residential Appraisal Report PDF

    Description

    This quiz covers the key elements of the Uniform Residential Appraisal Report, including its purpose, analysis methods, and property characteristics. Participants will learn how lenders and clients rely on this report for accurate property valuations, utilizing comparable sales and various appraisal approaches. Test your knowledge on property valuation principles and practices.

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