BUSI 330 KEY PASSED NEWEST ACTUAL EXAM WITH
COMPLETE QUESTIONS AND CORRECT ANSWERS//
VERIFIED//GRADED A+//
Why real estate appraisal is necessary
To provide a formal opinion of value.
Exert considerable influence on real estate decisions
These decisions are becoming more complex with
growing populations and regulations
Appraiser obligations
Client: unbiased; to help with decision making.
Third Parties: lending institutions; investors in lending
institutions.
Society in general: promote wise and efficient use of
land
Appraisal profession: reinforces the value of the
profession to the above three entities
Peers: adhering to professional standards and establish
positive rapport and trust between all appraisers and
members of the other four groups
Page 1 of 63
,Categories of value
Value in exchange
Amount of goods and services or purchasing power
that an informed purchaser would offer in exchange for
economic goods under given market conditions.
Value in Use
the value of an economic commodity to its owner/user
based on the productivity (income potential, utility, or
amenities) of the economic commodity to a specific
individual. (RECOGNIZED ONLY IN EXPROPRIATION)
Objective Value
is based on the "cost to create", or the cost to build or
manufacture the commodity.
Subjective Value
describes the reasons or rationales in the minds of
purchasers and vendors which underlies the values
they set.
Emotional reasoning that determines why a property
sells for the price it does.
Basis for the comparative process of arriving at a value
estimate (i.e., determining the value of one property by
comparing it to others which have recently sold)
Page 2 of 63
,Dominates real estate appraising.
Investment Value
the value of a specific investment to a particular
investor.
Investment value is value to an individual, and does not
necessarily represent value in the marketplace.
On-going value
is the value created by a proven property operation.
Assessed Value
Applies in real property taxation and refers to the value
of the property for the purpose of calculating real
property taxes.
Core attributes of land
Immobility
Development (change density -> change value)
Durability (mostly lasts forever - value does not)
Divisibility of Ownership - can be divided physically and
legally
Page 3 of 63
, Concept of Land
GSEE
Geographic and environmental (Physical)
-diverse physical characteristics and how they combine
Values can fluctuate due to weather and climate
conditions
- Government and Legal (rights and obligation: fee
simple, uses, legal matters such as easements, use
restrictions, record and conveyance of title)
- Economic -Land is a physical entity with inherent
ownership rights that can be legally limited and a major
source of wealth
- Social (how land is used - different views and
opinions; laws enacted to serve public)
Laws are enacted by the government enacted to serve
the public - building restrictions, zoning and building
ordinances, development and subdivision regulations
and other land use controls.
Canada uses common law
holder has land tender - permission from the crown to
hold the land) rather than complete ownership
Page 4 of 63
COMPLETE QUESTIONS AND CORRECT ANSWERS//
VERIFIED//GRADED A+//
Why real estate appraisal is necessary
To provide a formal opinion of value.
Exert considerable influence on real estate decisions
These decisions are becoming more complex with
growing populations and regulations
Appraiser obligations
Client: unbiased; to help with decision making.
Third Parties: lending institutions; investors in lending
institutions.
Society in general: promote wise and efficient use of
land
Appraisal profession: reinforces the value of the
profession to the above three entities
Peers: adhering to professional standards and establish
positive rapport and trust between all appraisers and
members of the other four groups
Page 1 of 63
,Categories of value
Value in exchange
Amount of goods and services or purchasing power
that an informed purchaser would offer in exchange for
economic goods under given market conditions.
Value in Use
the value of an economic commodity to its owner/user
based on the productivity (income potential, utility, or
amenities) of the economic commodity to a specific
individual. (RECOGNIZED ONLY IN EXPROPRIATION)
Objective Value
is based on the "cost to create", or the cost to build or
manufacture the commodity.
Subjective Value
describes the reasons or rationales in the minds of
purchasers and vendors which underlies the values
they set.
Emotional reasoning that determines why a property
sells for the price it does.
Basis for the comparative process of arriving at a value
estimate (i.e., determining the value of one property by
comparing it to others which have recently sold)
Page 2 of 63
,Dominates real estate appraising.
Investment Value
the value of a specific investment to a particular
investor.
Investment value is value to an individual, and does not
necessarily represent value in the marketplace.
On-going value
is the value created by a proven property operation.
Assessed Value
Applies in real property taxation and refers to the value
of the property for the purpose of calculating real
property taxes.
Core attributes of land
Immobility
Development (change density -> change value)
Durability (mostly lasts forever - value does not)
Divisibility of Ownership - can be divided physically and
legally
Page 3 of 63
, Concept of Land
GSEE
Geographic and environmental (Physical)
-diverse physical characteristics and how they combine
Values can fluctuate due to weather and climate
conditions
- Government and Legal (rights and obligation: fee
simple, uses, legal matters such as easements, use
restrictions, record and conveyance of title)
- Economic -Land is a physical entity with inherent
ownership rights that can be legally limited and a major
source of wealth
- Social (how land is used - different views and
opinions; laws enacted to serve public)
Laws are enacted by the government enacted to serve
the public - building restrictions, zoning and building
ordinances, development and subdivision regulations
and other land use controls.
Canada uses common law
holder has land tender - permission from the crown to
hold the land) rather than complete ownership
Page 4 of 63
