Basic Appraisal Procedures Ch 8: Sales Comparison Approach Adjustment Procedures
Terms in this set (62)
Sequence of Adjustments
The order in which quantitative adjustments are applied to the sales price of comparable properties.
Example of acceptable sequence
Property rights conveyed
Financing terms w/cash equivalency
Conditions of sale
Expenditures made immediately after purchase
Non realty components of value
Standards 1 - 7
Applies to all properties
Standards 8 - 10
Applies to income producing properties
FHA & VA, Fannie Mae, Freddie Mac
Uniform Appraisal Dataset (UAD)
Created in 2011 by Fannie Mae & Freddie Mac. A set of reporting protocols that apply to the USAR Form and three additional standardized appraisal report data
When adjusting a comp for financing terms in an FHA appraisal, FHA instructs the appraiser to adjust ___________.
Are dollar for dollar adjustments based on strict cash equivalency appropriate for sales concessions according to the Fannie Mae Selling Guide?
Comp adjustments that reflect the difference between what the comp sold for with the sales concessions and what it would have sold for without the concessions
According to the Fannie Mae Selling Guide, how should an appraiser made adjustments for sales concessions?
A VA mortgage is an example of a ______________.
When valuing real property, the value of the whole may be equal to, greater than, or less than the sum of the estates or parts.
Changes in RE market
Cyclical, One-time only, Seasonal, Exponential
Market areas 4 phases of their life cycle
Growth, Stability, Decline, Revitalization
What and where?
Evaluation the market
4 year supply of standing inventory
Quick way to examine the market: If 20 houses are on the market and 5 sold in the last year.
6 month supply
If 40 houses sold in the last year and 20 houses are on the market now. How much standing inventory?
Market conditions are sometimes referred to as ___________.
Chronological age of the subject
C1 (best) to C6 (worst)
Condition rating for Fannie Mae/Freddie Mac.
Count rooms that are above grade (all rooms except bathrooms, foyers, and utility rooms).
A room should be an area with a specific purpose
When appraising a room should be what?
Single family residents
Used for 2-4 family properties (can include below grade area)
Is a busy street a physical characteristic for adjustment?
Fannie Mae states that below grade areas cannot be included in GLA even if they area is heated and the quality of finish is sufficient.
A comp sale ____________ always have to be located in the same market area as the subject.
Manufactured home or a unit in a condo or cooperative
URAR form is not designed to report an appraisal of a ___________________.
Commercial or income producing properties
Adjustments in the sales comparison approach for economic characteristics are typically only made for ___________________.
How much is Fannie Mae's guidance for adjustments to the sale price of the comp?
The third step in the life cycle of a market area is ___________.
Contract, effective date of appraisal
Market conditions adjustments to comps should always be calculated from the time of the ______________ to the _________________.
Conditions of sale
An element of comparison in the sales comp approach; comp properties can be adjusted for differences in the motivations of either the buyer or a seller in a transaction, e.g. When the comp transaction is not an ARMs length sale.
The total adjustment to each comp sale price calculated in absolute terms.
Property rights conveyed
The first element in the sequence of adjustments.
When there is a significant, measurable difference between the subject property and a comparable sale
When do adjustments need to be made?
UAD-compliant report MM/DD/YYYY
How should dates be reported on the URAR form?
Appendix D: Field Specific Standardization Requirements www.efanniemae.com/sf/lqui/umdp/uad/index.isp
Where can protocols for the UAD be found in detail?
Full bundle of riths
Sell an interest; lease an interest; exclusively occupy the property; mortgage an interest; give an interest away (through a will or trust); the right to do any or none of the above
Divided or undivided rights in real estate that represent less than the whole (a fractional interest)
If a property has a mortgage does it have a fee simple ownership?
Although, a property has a mortgage and not technically fee simple ownership, does an appraiser appraise the property as fee simple?
Life estates, leased fee estates, leasehold estates
Rights of use, occupancy, and control, limited to the lifetime of a designated party, sometimes referred to as the life tenant.
Life estate example
An elderly person transfers ownership of a property to another party, perhaps a relative, but retaining the right to live in the property for the rest of his/her life.
Estate in Remainder
During the life of the holder of a life estate, the interest is called _____________.
Leased fee interest
A freehold (ownership of interest) where the possessory interest has been granted to another party by creation of a contractual landlord-tenant relationship (i.e. a lease)
The tenant's possessory interest created by a lease.
If a property is leased, the value of the leasehold may be calculated __________ from the leased-fee ownership of the property itself.
When was the URAR appraisal form (1004) updated to include the selection of "other"
Leased fee estate
When appraising a multi-unit property where at least one unit is rented, the property rights appraised consist of a ______________.
Easements, encroachments, transfer of subsurface rights, transfer of air rights, exercise of Transferable Development Rights (TDRs); private restrictions; deed restrictions; conditions, covenants, restrictions (CC&Rs)
Partial interests are created when some part of the fee simple estate is take away by:
Condos, coops, PUDs, timeshares
Specialized forms of ownership in which you may own something in fee simple along with shared rights of certain common properties
Tenancy in common, joint tenancy, tenancy by the entirety
Land trusts, partnerships, corporations, sydications
Real property can be owned by various legal entities, including
A pledge of a described property interest as collateral or security for the repayment of a loan under certain terms and conditions.
A mortgage that is neither insured nor guaranteed by an agency of the government, although it may be privately insured.
One percent of the amount of a mortgage loan
A percentage of the loan amount that a lender charges a borrower for making a loan; may represent a payment for services rendered in issuing a loan or additional interest to the lender payable in advance; also called points.
The most probable price, as of a specified date, in cash, or in terms equivalent to cash. Stated as an opinion.
A lump-sum payment to the lender that reduces the interest payments of the borrower. The cost of the buydown is usually reflected in the price paid and can be expressed as a percentage of principal.