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The real Estate Market & Appraisal 13
Terms in this set (55)
demand for the item is increasing in relation to supply of the item
If the price of an item is increasing, one can usually assume that?
Supply and demand are equal, and price and value are equal
When the market for an item has achieved market equilibrium, which of the following statements is true?
the uniqueness of every parcel
As an economic product, real estate is distinguished by
The city of Stevensville has declared a moratorium on new construction. If demand is increasing, what will be the likely effect on real estate prices in the area?
an increase in demand for all types of real estate
If Okapi, Inc... a company that markets its sports clothing worldwide, moves into Stevensville and hires 100 employees, it is reasonable to expect that the town will experience
The number of available units that become occupied over a period of time
What is "absorption?"
When vacancies are declining in real estate market, It is common for the market to experience?
desire, utility, scarcity, and purchasing power
The price for any product is a function of four fundamental determinants of value. These are?
A town is rapidly growing, but all the buildable vacant lots in the most desirable are have already been occupied. In this case, it is likely that the price of existing homes in that are
the market tending toward equilibrium
If there is a significant undersupply of homes in a market, construction will tend to increase. This is an example of?
the market is over-supplied
If commercial real estate rental prices are failing in a market, it is likely that?
have been increasing
A construction boom in a market is an indication that prices?
It is often difficult to convert to cash
Why is real estate traditionally considered a relatively illiquid economic product?
The number of persons employed in base industries in an area
What does "base employment" refer to in the context of real estate demand?
The total existing space of a certain type that is unoccupied at a given time.
What is "vacancy" in real estate market economics?
local government influencing the real estate market, regardless of demand
A moratorium on new construction is an example?
In -and out-migrations of major employers
Of the following potential influences on a local real estate market, which one would be considered local, rather than regional, national, or global?
Vacancy rises and prices fall
There is lot of new construction going on in the town of Florence. Which of the following would most likely be the immediate effect on the real estate market?
What kind of real estate users are most concerned with neighborhood quality, access to services, property amenities, and quality of life in their demand for real estate?
Its susceptibility to swings in the local economy
One distinguished feature of real estate as an economic product is?
Bill Parsons paid $150,000 for house to operate as a rental property, figuring that he could rent it out at a rate of $900 a month. In paying a price based on the property's ability to generate a desired future income, Parsons was motivated by the economics principle known as?
A homeowner adds a third bathroom to a house and thereby increases the appraised value by $10,000
Which of the following situations illustrates the principle of contribution?
When property owner combines two adjacent properties to create a single property with a higher value than the sum of the values of the two separate properties, the applicable principle of value is called?
Market value is an estimate: market price is the price at which a property sold.
What is the difference between market value and market price, it any?
define the appraisal problem and the purpose of the appraisal
The first step in the appraisal process, regardless of the appraisal method, is to?
weighing the applicability of the approaches and considering the quality of data supporting each approach
In the final step of an appraisal, the appraiser reconciles the value estimates derived by the various appraisal approaches by?
Make dollar adjustment to the sale prices of comparable properties to account for competitive differences with the subject
Which of the following statements properly describes the central concept of the sales comparison approach?
takes into account the competitive value of specific amenities of the subject propery
One of the strengths of the sales comparison approach is that it?
adds value to a comparable that is inferior to the subject property
In making dollar adjustments in the sales comparison approach, the appraiser?
requires the most and largest adjusments
The best comparable property for use in the sales comparison approach is the one that?
A house is being appraised using the sales comparison approach. The house has three bedrooms, two bathrooms, and a patio. The appraiser selects a comparable house that has three bedrooms, 3 bathrooms, and no patio. The comparable house just sold for $200,000. A bath is valued at $7,000, and a patio at $2,000. Assuming all else is equal, what is the
Add the estimated land value and cost of improvements and subtract the accrued depreciation of the improvements
which of the following statements property describes the central methodology of the cost approach to appraisal?
is very accurate for a property with new improvements that represent the highest and best use
One of the strengths of the cost approach is that it?
a properly loses the same increment of value each year over the economic life of the property
The principle underlying depreciation from physical deterioration is that?
A property is being appraised by the cost approach. The appraiser estimates that the land is worth $30,000 and the replacement cost of the improvements is $95,00. Total depreciation from all causes is $10,000. What is the indicated value of the property?
Divide the income a property generates by a rate of return
Which of the following statements properly describes how to apply the income capitalization approach to appraisal?
uses a method that is also used by investors to determine how much they should pay for an investment property
A strength of the income capitalization approach is that it
A property is being appraised using the income capitalization approach. Annually, it has an estimated gross income of $60,000, vacancy and credit losses of $3,000, and operating expenses of $20,000. using a capitalization rate of ten percent,what is the indicated value (to the nearest $1,000)?
An apartment building that sold for $450,000 had monthly gross rent receipts of $3,000. What is its monthly gross rent multiplier?
A rental house has monthly gross income of $1,200.A suitable gross income multiplier derived from market data is 14.1. What estimated sale price (to the nearest $1,000) is indicated?
the state in which the appraiser operates
A certified appraiser is one who has received certification by?
The financial institutions Reform, Recovery and Enforcement Act (FIRREA).
The act that required federally-related appraisals to be conducted by a certified appraiser is known as?
if two similar properties are for sale, a buyer will purchase the cheaper of the two
As a component of real estate value, the principle of substitution states that?
is physically and financially feasible, legal, and the most productive
Highest and best use of a property is that use which?
Lynne just brought a house. She paid $187,500, for it, even though it had been listed at $195,000. An adjoining property owner, Ken, had tried to buy the property for $185,000, but had been refused. He now offers Lynne $190,000 for the house. Lynne is interested, so she hires an appraiser. The appraiser returns an estimate of value of $200,000. Which of these numbers can be called the market value?
there may be no recent sale price data in the market
A notable weakness of the sales comparison approach to value is that?
selects comparable properties, adjusts the comparable, and estimates the value.
In the market data approach, an appraiser?
the seller offers below-market seller financing
In the sales comparison approach, an adjustment is warranted if?
weights the comparables
To complete the sales comparison approach, the appraiser?
market value is not always the same as what the property cost.
One weakness of the cost approach for appraising market value is that?
The cost of constructing a functional equivalent of a subject property is known as?
An office building lacks fiber optic cabling to accommodate the latest communications equipment. This is an example of?
incurable economic obsolescence
A home is located in a neighborhood where homeowners on the block have failed to maintain their properties. This is an example of?
In appraisal, loss of value in a property from any cause is referred to as?
estimates depreciation, subtracts depreciation from cost, and adds back the land value
In the cost approach, after estimating the value of the land and the cost of the improvements, the appraiser?
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