Upgrade to remove ads
finance 353 final
Terms in this set (46)
What is the ABQ and ASB?
-AQB:(Appraisal qualification board) sets the minimum for licensing and certification
-ASB: (Appraisal standards board) responsible for establishing the rules for developing an appraisal and reporting its results
2. What is the purpose of the USPAP?
Uniform Standards of Professional Appraisal Practice:
established rules to assure users the appraisal will not be misleading but meaningful to clients
came from FIRREA
published by ASB
when private property is taken for public use on payment of just compensation
Process used to determine Eminent Domain compensation
general warranty deed
highest quality deed warrant against any and all claims that may arise from chain of title not spelled out in deed
deed of trust
used with mortgages, the trustor (owner) transfers title to trustee (impartial third party) to hold for the benefit of the beneficiary (lender) in the event that the trustor defaults before the underlying debt is paid
special warranty deed
limits warranties to time of ownership
no implied warranties
What is an arm's length transaction and *why is it important?
-buyer and seller are typically motivated
both parties are well-informed and well-advised and acting in best interest property has been on market for reasonable time payment is made in terms of cash in U.S dollars or equivalent price represents normal consideration with no special financing, concessions, or creative financing
What is creative financing?
is non-traditional or uncommon means of buying land or property. The goal of
creative financing is generally to purchase, or finance a property, with the
buyer/investor using as little of his own money as possible, otherwise known as leveraging, OPM (Other People's Money). Using these techniques an investor may be able to purchase multiple properties using little, or none, of his "own money".
What is limiting conditions
typically put in the report to protect the appraiser and inform the intended user or users what has or has not been completed, most of these are required by Fannie Mae and other government entities
Who is Ginne Mae? (look in book and notes also)
-Ginnie Mae guarantees the timely payment of principal and interest payments on residential mortgage-backed security (MBS) instruments to institutional investors worldwide. These securities, or "pools" of mortgage loans, are used as collateral for the issuance of securities on Wall Street.
Who is Fannie Mae ?
-FNMH (Federal Home Loan Mortgage Corporation)
-buys mortgages from primary lenders (such as banks) and sell them on publicly stock exchanges such as the secondary mortgage market
Fannie Mae mostly deals with commercial banks
Who is Freddie Mac?
-FHLMC (Federal Home Loan Mortgage Corporation)
-buys mortgages from primary lenders (such as banks) and sell them on publicly traded exchanges such as the secondary mortgage market
Freddie Mac most deals with smaller banks
Know the sales comparison approach and how to solve using adjustments to comparable properties.
Appraiser finds 3 to 5 properties that have sold recently and are similar to the subject properly
Sales price of comparable property +/- the adjustments = indicated value of subject properly -if inferior to the subject property you add to the comparable -if comparable are superior to subject you subtract from the comparable
Know what the cost approach is, it's components (reproduction, replacement, depreciation, economic life, effective age) and how and why it is used.
Reproduction or replacement cost of the improvements - depreciation on improvements + site value based on highest and best use principles
used primarily for special purpose properties such as churches, parks, gov. buildings
What is an interim use?
-some properties are appraised at a time when they are not yet at their expected highest and best use
-a tempoary property use awaiting transition to its highest and best use
Highest and Best Use? And the four test for highest and best use
-HBU: the legally and physically possible use of land that is likely to produce the highest land (or property) value, it considers the balance between site and improvements as well as the intensity and length of uses
1) Physically Possible
2) Legally Permitted
3) Financially Feasible
4) Maximally Productive
What is Allocation? Know how to compute it.
used when land value of improved property must be found
ratio of land value to building value typical of similar improved properties in the area is applied to the total value of the subject property to arrive at the land value of the subject
What is effective age, ?
-Reflects the quality of a structure's construction and the degree of maintenance and repair it has received
-the age of the building based on the actual wear and tear and maintenance, or lack of it, that the building has recieved
What is economic age or life?
-also called useful life, the period during which it can be used for its original and intended purchase
-the period during which a structure may reasonably be expected to perform the function
for which it was designed or intended
What is remaining economic life?
-is the estimated number of years that an improvement will continue to contribute to property value
What is non-conforming use?
-an existing property that would not be allowed under the site's present zoning
a building with nonconforming use may still be a legal use of property, however, only if the structure was in-conformance with applicable zoning at the time it was erected
-a once lawful property use that is permitted to continue after a zoning ordinance
prohibiting it has been established for the area; a use that differs sharply from the prevailing uses in a neighborhood
What is functional obsolescence?
-takes place when a building's layout, design, or other features are considered undesirable in comparison with features designed for same functions on never properties
depends on changing requirements of home buyers
-defects in a building or structure that detract from its value or marketability, usually the
result of a layout, design or other feature that are less desirable than features designed
for the same functions in newer property
can be curable or incurable deepening of if it is important to the support of the house
What is physical deterioration?
What is external obsolescence?
loss of value from forces outside the building or property, such as changes in optimum land use, legislative enactments that restrict or impair property rights and changes in supply demand relationships,
always considered incurable
Know reproduction cost and when they are used.
Know replacement cost and when they are used.
Know the components of the cost approach and how it is calculated.
-components of the cost approach:
19. Know how to calculate depreciation using age-life method- know the pros and cons of using this method.
20. What is physical deterioration-curable and incurable?
Be able to calculate value of a property using the sales comparison approach, income approach and the cost approach.
Know how to calculate a GRM and GIM I have power point examples on chp 13
-gross rent and -gross income
Know what IRV is and how to calculate Value, capitalization rate and the NOI based on IRV.
Know the 4 methods used to calculate the reproduction cost - square foot method, index method, unit-in- place method and quantity survey method
What is a leased fee interest and how is it calculated?
-represents the lessor's interest and rights in the property (ownership)
-value of the rental payments+reversion=leased fee interest
- value in a leased fee interest: scheduled (contract) rent>market rent
market rent=scheduled rent
What is a leasehold interest and how is it calculated?
-the lessee's interest and rights in the real estate/property
-Market rent-scheduled rent=wether or not leasehold interest
-Value in leasehold interest:
market rent>scheduled (contract) rent
What is scheduled rent
rent paid by agreement between the lessor and lessee also referred to as contract rent
What is market rent
the amount for which the competitive rental market indicates property should rent; an estimate of a property's rental potential
Know the styles of reporting - narrative and form styles
Form or summary appraisal reports: are more similar to a property report card, provides a few pages of a synopsis of the data supporting the conclusion of value, can be classified as either a summary or restricted use report depending on detail
-Narrative or comprehensive report types: are more similar to a thesis or detailed overview of the property and appraisal, gives the clients the facts and the way they found the appraised value of the property usually classified as a self contained report
What is joint tenants?
share the unities of title, time, interest, and possession, cannot have unequal interest, also includes the right to suvivorship which means that a joint tenant cannot convey the property interest without destroying the joint tenancy (commonality, title, time possession)
What is tenants in common?
each tenant has the right to use the entire property regardless of the fractional interest owned. the value of the tenant in common's interest is based on that fraction(split goes by will, can't take a fraction of property)
When is the sales comparison approach best used?
-ussually in residential areas where the properties are very similar and have been sold close together
When is the cost approach best used?
When is the income approach best used?
THIS SET IS OFTEN IN FOLDERS WITH...
GB 370 Final Review
Social Work 315 Midterm; Prof. Buford, Ole Miss
GB 370 Final Exam Ole Miss
Econ 202 Bolen Test 2
YOU MIGHT ALSO LIKE...
NEW YORK REAL ESTATE UNIT 16: VALUATION PROCESS
appraisal 5 & 6 & 8 & 9
OTHER SETS BY THIS CREATOR
338 test 3
Fin 353 test 4
351 chapter 16