An estimate or opinion of market value supported by an analysis of relevant property data
At what level are appraisals regulated?
State and federal
How long is an appraisal good for?
Only the day of inspection
What is the standard form for Appraisals?
Uniform Residential Appraisal Report URAR
Appraisers are expected to follow what?
USPAP, Uniform Standards for Professional Appraisal Practice
Appraisals are required on what?
All federally related loans
What is a CMA?
Comparative Market Analysis
A CMA is not a?
What is market value?
The most probably price a property will bring
Market value may not be the same as the ?
In general the listing price is somewhat ___ than the market value to allow for negotiations?
What is the market price?
The actual sales price. What someone paid
While there may be only one highest and best use of a property, it may what?
Change over time
In real estate, when demand goes up, price goes ?
What is the most important principle in appraisal?
What does substitution do?
The buyer looks at the cost of acquiring an equally desirable substitute which meets the same criteria of time, function, and utility
What is conformity determined by?
How does conformity work?
Values change with properties are different in the same area. (A big house is worth less in a neighborhood of smaller houses)
The value of an improvement not adding to the market value the same amount that it costs to build is called?
Increasing returns occur when it cost less to?
Build the improvement that what you get in return. Vice versa for decreasing returns
A reasonable amount of competition will drive values up because?
of the increase in demand
In a sales comparison approach, you are estimating the value of the subject based on?
recently sold similar properties
How is square footage of improvement determined?
Sales Comparison approach
In accordance to the NCREC, a living area is as follows?
Walls and floors must be finished
Space is directly accessible
In order for the sales comp to be as accurate as possible, what should you use?
The most recently and accurate properties sold as possible
Adjustments in Sales comparison are always made to the?
Sales comparables, never the subject
If a comparable is better than the subject, you
Subtract the value from the comparable
What is the most appropriate method of appraisal for new construction or special construction such as church or schools?
What does the cost approach in appraisal do?
estimate the cost of replacement as if new and built today
What are the 3 steps in cost approach?
Estimate the cost to build improvements
Estimate and deduct all accrued depreciation of improvements
Determine the value of the land using the sales comparison approach
What is the method of estimating the cost of building new?
Square foot method
What is a depreciation?
A loss of value
How do you find the depreciation?
Effective age minus economic life
What are the classes of depreciation?
Functional obsolesence (Outdated lighting or plumbing)
Economic obsolescence (property in flight path)
Which of the classes of depreciation is totally uncurable?
What is the formula for calculating appreciation an depreciation?
Amount = Base x Rate
What is income or income cap approach used for?
properties that generate income. Uses IRV (income rate value) formula. Net Op Income x Cap rate = Present value of property
The process of converting estimated future income in to present value is?
Net Operating Income
What is the formula for NOI?
Potential Gross Income -Collections/Vacancy Rate =Effective Gross Income- Operating Expenses=NOI
What is potential gross income come from?
What is used to give a quick estimate of the value of a residential property that is also used to estimate income but not vacancies or bad debts or expenses from that property?
Gross Rent Multiplier
What is the gross rent multiplier method?
Take the comparative properties and divide the property price by the rent being charged. (100,000 price / 830 rent = 120GRM ; Therefore if the rent on the subject is $1000 you would multiply that by the GRM.
When an appraiser reconciles the 3 approaches, sales comparison, cost, and income, what is it called when he gives the most weight to the most appropriate method of valuation?