GA MLS 2nd half of Fundamentals
conformity - ANS-maximum value is created when a property is in harmony with its surroundings
Seller's Market - ANS-The best time for producers to sell; characterized by large demand, small
supply, and high prices
Physical Obsolescence - ANS-loss in value due to aging, decay, and ordinary use; property
which has deferred maintenance
Market value of real estate - ANS-the most probable price that a property should bring in a fair
sale
Conditions of market value (5) - ANS-1. Parties are unrelated and acting without undue
pressure
2. Parties are well informed
3. Reasonable exposure to market
4. Payment in cash or equivalent
5. Price is normal market price
Market price - ANS-the asking, offer, or sales price of a property
The purpose of the appraisal - ANS-determine the value
4 characteristics necessary for a property value to have - ANS-S-Scarcity
T-Transferability
U-Utility
D-Demand
The first step in the appraisal process is to - ANS-State the problem
Why is neighborhood analysis important to the licensee - ANS-Can help determine estimation of
value
What is specific data in the appraisal process? - ANS--Type and features of improvements
-comparable properties that are similar to and competitive with the subject property
What is general data in the appraisal process? - ANS--Nation, region, city and neighborhood
-physical, economic, social and political influences that affect value and potential
What is the most important in the appraisal process? - ANS-Highest and Best use of property
,Which properties are appraisals required for? - ANS--All properties valued at MORE than
$250,000
Stages through which a neighborhood passes: - ANS-1. Growth
2. Stability
3. Decline
4. Renewal
Calculating the dollar value for depreciation is necessary when using which approach to
appraising: - ANS-The cost approach
Which approach to appraisals require the value of the land to be calculated separately from the
value of improvements? - ANS-The cost approach
Basic principles that affect the value of a property in the appraisal: - ANS--Anticipation
-Change
-Competition
-Conformity
-Contribution
-Highest and Best Use
-Increasing and Diminishing Returns
-Plottage
-Regression and Progression
-Substitution
-Supply and Demand
Economic life - ANS-The period during which property is expected to remain useful for its
original intended purpose.
Depreciation - ANS-loss of value due to any cause
External depreciation/obsolescence - ANS-Reduction in a property's value caused by outside
factors (those that are off the property).
When determining the replacement cost of a commercial warehouse, an appraiser would most
likely be interested in: - ANS-cubic footage of the improvement
Three categories of deterioration - ANS--External obsolescence
-Functional obsolescence
-Economic obsolescence
In the cost approach to value, what kind of cost is considered when calculating? -
ANS-estimated replacement cost
, Elements of comparison for adjustments - ANS--Property rights
-Financing concessions
-Market conditions
-Conditions of sale
-Market conditions since the date of sale
-Location or area preference
-Physical features and amenities
USPAP - ANS-Uniform Standards of Professional Appraisal Practice. Appraisers must follow
these standards.
CMA analysis is based on these 3 things: - ANS--Recently closed properties (solds)
-Properties currently on the market (competition for the subject property)
-Properties that did not sell (expired listings in the area)
URAR - ANS-Uniform Residential Appraisal Report. form required by many government
agencies
Market Value considers 2 things: - ANS-Market price and Cost (may be the same as cost but not
always)
Which appraisal approach is considered the most reliable in appraising single family homes? -
ANS-Sales comparison approach
Which appraisal is most useful in newer or special purpose buildings such as schools, churches,
and public buildings? - ANS-The cost approach
What is the name of One method an appraiser can use to determine a building's reproduction or
replacement cost which involves:
-the estimated cost of the materials needed to build the structure
-labor and
-indirect costs - ANS-Quantity Survey method
This aspect of real estate NEVER depreciates - ANS-LAND
physical deterioration - ANS-The loss in value due to wear and tear of the structure. (Cost of
repair may not warrant the financial investment). A curable item would be painting. An incurable
item would be crack in foundation
Functional obsolescence - ANS-outmoded physical or design features no longer considered
desirable (curable or incurable)
Substitution - ANS-The maximum value of a property tends to be set by how much it would cost
to purchase an equally desirable and valuable substitute property
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