Exam (elaborations)
Real Estate Appraisals Exam 1
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Real Estate Appraisals Exam 1 Real Estate Appraisals Exam 1 Real Estate Appraisals Exam 1
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Real Estate Appraisals Exam 1What is an appraisal? An appraisal is an opinion or estimate of the value of a property.
Value the worth, usefulness, or someone for some purpose
Market Value most probable selling price of a property in a competitive and open market
Informal appraisal -normally make an informal appraisal to judge if the prices are reasonable for
items we purchase
-the market analysis made by brokers and salespeople when listing or selling a given property
formal appraisals a means of reaching an opinion of value by the methodical collection and analysis
of relevant market data most often reported in writing
Formal vs. Informal appraisals formal: more data less intuition
informal: more intuition less data
What is value? worth, usefulness, and utility
Market Transactions purchase, sale or exchange
financing
leasing
management
insurance coverage
remodeling and development
feasibility and highest and best use studies
exercise of purchase and lease options
Legal Transactions ( )- eminent domain- condemnor and condemnee; property tax assessment and
tax appeals cases; estate, inheritance, and gift taxes; income tax casualty loss, deprecation basis and
capital gains reporting; personal and corporate legal actions; environmental impact reports; fire or
title insurance claims; marital and partnership dissolutions; landlord-tenant and property damage
lawsuits; loan foreclosures; company liquidation or merger; bankruptcy; security for bail bonds
USPAP (Uniform Standards of Professional Appraisal Practice) places ethical obligations on the
appraiser and minimum appraisal standards that must be adhered to by all professional appraisers.
4 ethics rules of USPAP 1. Conduct
2. Management
3. Confidentiality
4. Record Keeping
Conduct impartiality, objectivity, and independence
, Management no undisclosed fees
no contingent values
Confidentialiy Report only to:
client and authorized users
state licensing agencies and third parties authorized by law
a duly authorized professional peer review committee
Record Keeping keep work file for 5 years
keep work file for 2 years after final disposition of any judicial proceeding where testimony was
given
Additional USPAP Rules The Competency Rule
The Scope of Work Rule
Jurisdictional Exception Rule
The Supplemental Standards Rule
The Competency Rule need to be competent to appraise the property by the time you complete the
appraisal report
The Scope of Work Rule The Appraiser Must:
Identify the Problem
Determine and Perform correct Scope of Work to produce Credible Assignment Results
Disclose in Report the Scope of Work
Jurisdictional Exception Rule Use when any part of USPAP is contrary to the law or public policy of
any jurisdiction
The Supplemental Standards Rule Added requirements issued as policy or regulation by Government
Agencies or similar bodies
Appraisals Standards Standard 1: real property appraisal development
Standard 2: Real property appraisal reporting
Summary of Chapter 1 - an appraisal is simply an opinion of value
-value generally means the worth or usefulness of something to someone for some purpose
- although there are many types of value, the purpose of most appraisals is to form an opinion of
market value, or the price at which something should sell.
Property Classifications Tangible- rights to physical objects
intangible- rights to non physical things
Real Property -land and everything attached to it
-rights associated with ownership
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