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Chapter 21 Introduction to Real Estate Appraisal questions with accurate answers.
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Chapter 21 Introduction to Real Estate Appraisal questions with accurate answers.
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Chapter 21 Introduction to Real EstateAppraisal questions with accurate
answers.
The _________ method of appraisal bases the value of the subject property on the _________ of similar
properties which have _____ recently. ANS - The comparative method of appraisal bases the value of
the subject property on the price of similar properties which have sold recently.
What is latent value? ANS - Latent value is the value possessed by a property which has potential for
redevelopment because it is currently not employed as its highest and best use.
Define ceiling price. ANS - The ceiling price is the maximum price that a purchaser is willing to pay for a
property.
An estimate of the value of an interest in real property is called... ANS - an appraisal (or property
valuation).
Appraisers are typically called upon to estimate objective values, which are categorized into the
following: ANS - insurable value, lending value, taxable value, actual value, and market value.
The direct comparison approach is based on the principle of __________. ANS - The direct comparison
approach is based on the principle of substitution.
Define cost approach ANS - A method of appraisal which determines the value of a property by adding
the market value of the site to the cost of replacing the existing building.
Ceiling price = ? ANS - Highest price the buyer will pay
Sale Price = ? ANS - Negotiated price between the buyer and the seller
, Floor Price = ? ANS - Lowest price the seller will accept
Objective Value ANS - A value that can be verified by a third party and is determined based on market
evidence. The objective values commonly estimated by appraisers may include market value, insurable
value, lending value, and actual value.
Market Value ANS - Most probable price the property will sell for in a competitive and open market
under all conditions requisite to a fair sale
- value at a point in time
- Reasonably expected price
- No undue influence
(arms length transaction- between two unrelated parties)
- Adequate time and exposure to market
(advertising)
What are Factors affecting value? ANS - - House, lot, location
- Neighbourhood
- Local economy (city)
- Regional economy
- Provincial/National economy
Real property is said to be more subject to the effects of externalities than most assets. The vulnerability
is principally due to:
1. The relatively high cost of real property
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