REAE 4334 Mid Term

The intended use of an appraisal is
Click the card to flip 👆
1 / 98
Terms in this set (98)
An appraiser from Smallburg was asked to do an appraisal of an improved, now-vacant industrial property in Bigville. This property has significant environmental problems that were reported several times in the local newspaper and on the local TV news. The client is a lender who agreed to use this appraiser because he was reported to have specific knowledge about industrial properties. The appraiser drove 75 miles from Smallburg to Bigville to do the inspection. He spent one hour viewing and measuring the buildings. The appraiser contacted a local appraiser for comparable sales and leases in the industrial market in Bigville. He prepared an appraisal report without acknowledging or compensating for the environmental problems, and the value was overstated by plus or minus $2 million. Which of the following statements is correct?
A lender asked an appraiser to prepare an appraisal report on a 2.2-acre site with a proposed single-tenant industrial building. The lender requested a value estimate as of today, which the appraiser provided via comparison with vacant land sales. The lender also requested a value opinion as if the structure were completed. This is an example of
An appraiser is asked to prepare a market value appraisal report of the local publicly owned library facility. The client specifically stated that the value opinion must be of the market value as of today. The appraiser spent a great deal of time researching comparables and found no comparable sales of public library facilities. Which of the following statements is correct?The appraiser must develop an opinion of highest and best use considering the subject's place in the market, such as the office market or retail market, where buyers are available and other highest and best use constraints are met.Which type of value reflects how much a property is bound by a lease agreement, what property interest would represent the marketable interest? a specific component of a property contributes to the property's overall value?Which type of value reflects how much a specific component of a property contributes to the property's overall value?Which type of value reflects how much a specific component of a property contributes to the property's overall value?If a property is bound by a lease agreement, what property interest would represent the marketable interest?The leased feeAn ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others is a(n)Leased feeThe right to use, occupy, and control real estate that is limited by the life of a designated party is referred to as aLife estateWhich party does the landlord look to for payment of rent in a sublease arrangement that does not have any other agreement in place?The lesseeWhich term describes the landlord in a lease arrangement?LessorThe leasehold refers toThe rights of the lesseeThe right to use land owned by another can be called a(n)EasementThe identification of the property rights appraised includesRecognizing interests created by leasesThe owner of a "condominium" ownsA three-dimensional defined unit and an undivided interest in the projectCondominium ownership is limited to which type(s) of property?There are no limitationsA form of property ownership in which the buyer receives a proprietary lease and a share of stock in a corporation that owns the fee simple interest in the property is calledA cooperativeLimited ownership in a property in which the owners' rights in realty are defined as fee simple with a defined time window is known asTimesharingAbsolute ownership that is unencumbered by any other interest or estate and subject only to the limitations imposed by governmental powers is known as theFee simple estateThe scope of work in an appraisal report is acceptableIf it meets or exceeds the expectations of parties who are regularly intended users for similar assignments and what the appraiser's peers' actions would be in performing the same or a similar assignmentThe scope of work decisionIs an ongoing process that can change as the appraisal process proceedsThe scope of work of an appraisalMay or may not include an inspection of the subject or comparable salesScope of work Correct AnswerDefines the extent of research and analyses of the appraisal processAn appraiser is asked to prepare an opinion of market value for a property without having access to the interior of the residence. This appraisalIs limited by the scope of workAn appraiser was asked to prepare an appraisal report on a residential property located at Lot 44 in Greenwater Estates. When the appraiser was doing research, she found that the house improvement had been built on leased property 12 years before. The appraiser shouldReopen the scope of work discussion and ask the client what interest is to be appraisedAn appraiser was asked to review an appraisal report of a multitenant office building. The appraiser has never appraised this type of property before. Which of the following statements is correct?This appraiser cannot accept a review appraisal assignment if he or she is not competent in terms of property type, valuation techniques, or geographic consideration. The appraiser can either become competent or should not accept the assignmentThe level of detail in the scope of work discussionDepends on the intended use and intended usersImprovement cost data can be obtained fromAll of the aboveDemand for housing is affected whenA new factory opens and several hundred new employees are hiredCompetitive supply sources for housing includeAll of the aboveIf the subject property is 10% superior to Comparable Sale I and the comparable sold for $100,000, what is the indicated value of the subject?$100,000 x 1.10 $110,000If a comparable property is 10% superior to the subject property and the comparable sold for $100,000, what is the indicated value of the subject?$100,000/1.10 = $90,909The assessment ratio isThe ratio of assessed value to market valueTen mills equals0.0100/ or 2.If the assessment ratio is 25% and the millage rate is 120 mills, what is the tax rate?3.0%In the appraisal of a one-unit residence, a significant attribute isThe size and age of the houseIf a comparable sold for $100,000 and is identical to the subject property except that the subject has more living area,The subject should be worth more than $100,000 if the extra area is recognized in the market as adding more value.Macro-level data isItems of information on value influences that derive from social, economic, governmental, and environmental forces and originate outside the property being appraisedIn the sale of residential properties, the amount of property taxes isImportant because the ability to qualify for a mortgage loan includes principal, interest, taxes, and insurance (PITI); lenders compare the buyers' income amounts with the required payment, including taxes and insuranceFor appraisal purposes, a household is best described asAll persons, related or unrelated, who occupy one housing unitA real estate multiple listing service (MLS) system isA system that realtors use to distribute, publish, and advertise properties for sale and sometimes to compile sales data on properties after sales occurWhich of the following is an example of micro-level data?Property deedsA property that has taxes of $2,500 and an assessed value of $100,000 has a taxation rate of25 millsThe subject is an improved property located in a market where the cost of construction is increasing by 3% per year, but the loss in value per year due to all forms of depreciation (physical, functional, and external) is 2%. The site values (VL) have been stable for the last three years and should remain stable in the near future. This market is in balance without significant pressure on sellers or buyers. Which of the following statements is correct?This market should have sale prices that are increasing by 1% of the cost of the improvements per year.The pledge of collateral for a loan is called theMortgageA lender has a first mortgage ifThe lender has first priority in the event of a forced sale of the assetThe Federal Housing Administration (FHA)Insures mortgage loansIn a deed of trust, the title isConveyed to a third partyLeverage refers toThe use of borrowed funds to increase equity returnWhat is the monthly mortgage payment for a 25-year loan (end of period) with an initial loan amount of $425,000 and an annual interest rate of 8.75%?$3,494How many years will it take to amortize a $200,000 loan at a nominal annual interest rate of 12% if monthly payments are $2,064.72?29What is the annual debt service on a $75,000 loan with monthly payments over 20 years at a nominal annual rate of 9%?$8,098What is the calculated payment for an amortized mortgage with a term of 40 years, annual payments, an interest rate of 7.0%, and an original loan principal amount of $250,000? Round your answer to the nearest $1,000.$19,000An efficient marketHas buyers and sellers who are knowledgeable and informed about the market, the behavior of others, and historical activityAll other things being equal, an adjustable-rate mortgage carries more risk than a fixed-rate mortgageFor the lender or investor who holds the mortgageThe subject was purchased by a buyer who financed the purchase by signing a conditional sales contract with the seller. The seller did not pay off the existing mortgage on the property at the time of the contract sale. Two years later, the property was foreclosed by the existing mortgage holder because the contract buyer was paying the prior owner, but the prior owner did not pay the existing mortgage. Which of the following statements is true?The first mortgage lender's interest will take priority over the contract buyer's interest.The fundamental real estate market consists ofUsers of physical real estateAn arrangement in which a seller finances a property sale by allowing the buyer to make payments over a specified period of time and the title is delivered once all the payments are made is known as aContract for deedHard money loans are made byPrivate individuals or companiesMost secondary mortgage market activity is generated byFannie Mae, Freddie Mac, and Ginnie MaeWhich of the following is the typical life cycle of a market area?Growth, stability, decline, and revitalizationWhich of the following is an important governmental influence in neighborhood analysis?Tax leviesNatural or man-made features that are contained in or affect a market area and its location are known as __________ influences.EnvironmentalWhich of the following is an important consideration in the analysis of an apartment district?Access to shoppingThe process of identifying the most probable users of a property from the general population is known asMarket segmentationThe area of a site measuring 75 feet by 135 feet isThe area of a site measuring 75 feet by 135 feet isA site isLand that is improved so that it is ready to be used for a specific purposeA full section of land (not a fractional section)Includes 640 acresFrontage refers toThe linear distance along a street, river, highway, etc.A legal description in which the surveyor describes the real estate beginning with base lines and principal meridians, sections, township, and range lines follows theRectangular survey systemLand that is not needed to serve or support the existing improvement and that can be separated and sold off for another use is calledExcess land"Lot 4 of the Blue Bell Subdivision" is an example of a land description using the __________ system.Lot and blockThe east half of the southeast quarter of the southwest quarter of Section 27 (not a fractional section), Township 17 North, Range 3 East contains20 acresThe northeast quarter of the southeast quarter of Section 27 (not a fractional section), Township 17 North, Range 3 East contains40 acresAn appraiser was asked to prepare an appraisal report on a 1.5-acre parcel of real estate improved with a two-story home that is reportedly near Mill Stream on Outer Road. The appraiser asked the client for a survey of the parcel, the legal description, or the parcel number, but received none of these. The client only gave the appraiser the address of the property, "P.O. Box 333, Springfield." The client stated that the property was owned by John Jones but the county records did not verify that ownership. The post office indicated that the address is associated with another property adjacent to Outer Road near Mill Stream. In this case, the appraiser shouldTurn down the assignment until the client can exactly determine the property to be appraisedGross living area in single-family residencesFormal architecture isArchitecture identified by its conformity to aesthetic and functional criteria recognized by experts trained in architectural historySubstructure refers to a building'sFoundation structureAn approach to building that looks at all of the functional components of a building as a single system is known asThe whole building approachThe subject is located in a market that currently has 875,000 square feet of space for lease. There are 11,560,000 square feet of competing properties under lease. The occupancy rate is92.96%The final step of the market analysis process is known asSubject capture analysis or marketability analysisAn appraiser performs botThe type of market analysis that is often required when the real estate market being studied is unstable and unpredictable is ah primary and secondary research as part of the market analysis for a particular assignment. This is an example of aLevel C or D marketability analysisThe type of market analysis that is often required when the real estate market being studied is unstable and unpredictable is aLevel C fundamental demand analysisThe type of market analysis that is often appropriate for appraisal assignments involving a simple property type in a stable and predictable market is aLevel B inferred demand analysisOne of the criteria for determining highest and best use isPhysical possibilityIn the analysis of the highest and best use of land as though vacant, one important consideration isA reasonable probability of rezoningThe first step of the highest and best use analysis process isProperty productivity analysisAn appraiser is analyzing a vacant parcel of land that is zoned for general business. This zoning classification allows for almost any business enterprise, including some industrial uses. The appraiser believes the following values per acre are accurate:All three uses support a present value of about $200,000, which means that any of them can be the highest and best useThe subject property is a 0.75-acre site with a single-family residence that is located in a FEMA flood hazard area. The site is about 24 inches below the minimum building elevation, which would eliminate any feasible development of the site today. In this area, land in flood hazard areas sells for $10,000 per acre, and buildable residential sites in this market sell for $90,000. What is the value of the site (VL)?$10,000The subject property is a 2.25-acre, non-corner site with 210 feet of road frontage. A single-family home is located on the far east side of the site. The zoning requires one acre of land and a minimum of 100 feet of road frontage, which means that this parcel could be divided into two legal buildable parcels with the house on one site and the other site remaining vacant. This is an example ofExcess land