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REE 4103 Real Estate Valuation and Appraisal Final Exam
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REE 4103 Real Estate Valuation andAppraisal Final Exam
3 Principles for Estimating Depreciation - ANS-market extraction method, economic
age-life method, breakdown method
3 Purposes of Appraisal Institute Formation (EDF) - ANS-ESTABLISh criteria for
selecting and recognizing individuals with real estate valuation skills who were
committed to competent and ethical practice; DEVELOP a system of education to train
new appraisers and sharpen the skills of practicing appraisers; FORMULATE a code of
professional ethics and standards of professional practice to guide real estate
appraisers and serve as model for other practitioners
actual age and effective age - ANS-actual age is called historical or chronological age;
effective age is the age indicated by the condition and utility of a structure and is based
on an appraiser's judgment and interpretation of market perceptions.
allocation - ANS-the allocation method is based on the principle of balance and the
related concept of contribution.
anticipation and change - ANS-anticipation is fundamental to the income capitalization
approach; all income capitalization methods, techniques and procedures attempt to
consider anticipated future benefits and estimate their present value. this may involve
either forecasting the anticipated future income or estimating a capitalization rate that
implicitly reflects the anticipated pattern of change in income over time
applicability and limitations - ANS-any property that generates income can be valued
using the income capitalization approach, when more than one approach to value is
used to develop an opinion of value for an income-producing property, the value
indication produced by the income capitalization approach
bracketing - ANS-a process in which an appraiser determines a probable range of
values for a property by applying qualitative techniques of comparative analysis to a
group of comparable sales.
Comparative Analysis - ANS-general term used to identify the process in which
quantitative and qualitative techniques are applied to comparable sales to derive a
value indication in the sales comparison approach.
, comparative unit method - ANS-the comparative unit method is used to derive a cost
estimate in terms of dollars per unit of area
Comparative unit method (widely used) - ANS-the CUM is relatively uncomplicated,
practical and widely used
Concessions - ANS-a financial payment, special benefit, or non-realty item included in
the sale contract or rental agreement as an incentive to the sale or lease.
continued occupancy clause - ANS-a lease provision that conditions the continued
occupancy of one tenant upon the occupancy of another, usually an anchor tenant in a
multi-tenant retail center
contract rent - ANS-the actual rental income specified in a lease
cost data sources - ANS-in the absence of construction contract data, local building
contractors and professional cost estimators can be reliable data sources.
cost-estimating services (M&S, FW, RS) - ANS-Marshall and swift public, F.W. dodge
corporation, R.S. Means Company, Inc.
Curable or Incurable? - ANS-items of physical deterioration or functional obsolescence
are economically feasible to cure if the cost to cure is equal to or less than the
anticipated increase in the value of the property. if the cost to cure is more than the
anticipated increase in value, the item is incurable
curable physical deterioration (deferred maintenance) - ANS-curable physical
deterioration, also known as deferred maintenance, applies to items of immediate repair
on the effective date of the appraisal
Data Analysis Techniques - ANS-Paired data analysis is based on the premise that
when two properties are equivalent in all respects but one, the value of the single
difference can be measured to indicate the difference in price between the two
properties.
depreciation - ANS-depreciation is the difference between the contributory value of an
improvement and its cost at the time of appraisal
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