Real Estate Appraisal Exam with
Accurate Solutions
Appraisal - ANSWER-formal opinion of value that a real estate appraiser assigns, based
on supportable evidence, for a specific purpose, party, and property, as of a specific
date, and in accordance with Uniform Standards of Professional Appraisal Practice
(USPAP).
Appraisal - ANSWER-ensure that the value of a mortgaged property is sufficient to
support the loan amount.
Appraisers - ANSWER-estimate the value of a building or a piece of land. are typically
hired before a property is sold, mortgaged, or taxed.
Appraisers - ANSWER-They may specialize in appraising either commercial or
residential property.
Valuation - ANSWER-formal appraisal
Valuation - ANSWER-is the process of forming an opinion of a property's value.
1. State the Problem - ANSWER-What is the purpose of this appraisal? What am I
trying to solve? By defining the problem, it informs my approach and what kind of data I
need to gather.
1. State the Problem - ANSWER-Appraising a commercial warehouse for example,
presents a different set of problems than say, a lender wanting to know if a house is
worth what the buyer's agreed to pay for it.
Step 2: List the Data Needed and Where to Find It - ANSWER-The data needed will
obviously change depending on the problem I'm trying to solve.
Step 3: Gather the Data - ANSWER-1.General data
2.Specific data
3.Gather general and specific data for the three approaches for valuation
General data - ANSWER-What's going on in the national economy, the region, the city,
and the neighborhood? Demographics, income level, employers moving in or moving
out, employment figures, cost of living, population growing or shrinking, all of that.
Specific data - ANSWER-The site, positioning on the site, improvements, etc
, Anticipation - ANSWER-The value of the property is based on the income that is
expected to be received in the future.
Competition - ANSWER-related to supply and demand
Conformity - ANSWER-when value is created and maintained based on whether the
characteristics of a property conform to the demands of the market. So a house built in
the middle of a commercial zone (due to zoning changes) would be valued differently
than a house in the middle of a neighborhood comprised of similar houses.
Contribution - ANSWER-when a change in a property impacts the value as a whole.
Does converting a garage into a family room contribute or detract from value? That
would be in the eyes of the buyer.
Highest and best use - ANSWER-based on profitable use that is both legal (in other
words, conforms to zoning) and economically feasible (won't cost more than the
increase in value).
Plottage - ANSWER-an increase in property value caused by the joining or assemblage
of two neighboring land parcels. In such a case, one plus one often equals three, or
even five. So two parcels worth $40,000 separately might be worth $120,000 when
joined.
Regression - ANSWER-when a lower-quality property is adjacent to a higher-quality
property, possibly diminishing the higher-quality property's value.
Progression - ANSWER-the bump in value that a lower-value property gets by being
near a higher-value property.
Substitution - ANSWER-is the principle that a property's value is determined by what it
would cost to purchase a similar substitute property
sales comparison approach - ANSWER-selects comparable properties qualitatively and
quantitatively to help determine adjusted market price.
sales comparison approach - ANSWER-Elements of comparison analyze comparables'
locational/physical property characteristics and transaction differences
Elements of comparison - ANSWER-1. Financing terms and cash equivalency
2. Conditions of sale
3. Market conditions at time of contract and closing
4. Location
5. Physical characteristicsB
Accurate Solutions
Appraisal - ANSWER-formal opinion of value that a real estate appraiser assigns, based
on supportable evidence, for a specific purpose, party, and property, as of a specific
date, and in accordance with Uniform Standards of Professional Appraisal Practice
(USPAP).
Appraisal - ANSWER-ensure that the value of a mortgaged property is sufficient to
support the loan amount.
Appraisers - ANSWER-estimate the value of a building or a piece of land. are typically
hired before a property is sold, mortgaged, or taxed.
Appraisers - ANSWER-They may specialize in appraising either commercial or
residential property.
Valuation - ANSWER-formal appraisal
Valuation - ANSWER-is the process of forming an opinion of a property's value.
1. State the Problem - ANSWER-What is the purpose of this appraisal? What am I
trying to solve? By defining the problem, it informs my approach and what kind of data I
need to gather.
1. State the Problem - ANSWER-Appraising a commercial warehouse for example,
presents a different set of problems than say, a lender wanting to know if a house is
worth what the buyer's agreed to pay for it.
Step 2: List the Data Needed and Where to Find It - ANSWER-The data needed will
obviously change depending on the problem I'm trying to solve.
Step 3: Gather the Data - ANSWER-1.General data
2.Specific data
3.Gather general and specific data for the three approaches for valuation
General data - ANSWER-What's going on in the national economy, the region, the city,
and the neighborhood? Demographics, income level, employers moving in or moving
out, employment figures, cost of living, population growing or shrinking, all of that.
Specific data - ANSWER-The site, positioning on the site, improvements, etc
, Anticipation - ANSWER-The value of the property is based on the income that is
expected to be received in the future.
Competition - ANSWER-related to supply and demand
Conformity - ANSWER-when value is created and maintained based on whether the
characteristics of a property conform to the demands of the market. So a house built in
the middle of a commercial zone (due to zoning changes) would be valued differently
than a house in the middle of a neighborhood comprised of similar houses.
Contribution - ANSWER-when a change in a property impacts the value as a whole.
Does converting a garage into a family room contribute or detract from value? That
would be in the eyes of the buyer.
Highest and best use - ANSWER-based on profitable use that is both legal (in other
words, conforms to zoning) and economically feasible (won't cost more than the
increase in value).
Plottage - ANSWER-an increase in property value caused by the joining or assemblage
of two neighboring land parcels. In such a case, one plus one often equals three, or
even five. So two parcels worth $40,000 separately might be worth $120,000 when
joined.
Regression - ANSWER-when a lower-quality property is adjacent to a higher-quality
property, possibly diminishing the higher-quality property's value.
Progression - ANSWER-the bump in value that a lower-value property gets by being
near a higher-value property.
Substitution - ANSWER-is the principle that a property's value is determined by what it
would cost to purchase a similar substitute property
sales comparison approach - ANSWER-selects comparable properties qualitatively and
quantitatively to help determine adjusted market price.
sales comparison approach - ANSWER-Elements of comparison analyze comparables'
locational/physical property characteristics and transaction differences
Elements of comparison - ANSWER-1. Financing terms and cash equivalency
2. Conditions of sale
3. Market conditions at time of contract and closing
4. Location
5. Physical characteristicsB
