Assessment Fundamentals for Appraisers - Course 1A Questions and Answers Graded A

Assessment Fundamentals for Appraisers - Course 1A Questions and Answers Graded A What are the 7 criteria the appraiser must apply when determining fair market value of real property? Zoning, use, covenants/restrictions, sales, CUVA easement, restrictions, income, other What are the 3 approaches to value? market approach, cost approach, and income approach What economic principle is the basis for the adjustment process in the market approach to value? Principle of Substitution What is the first step in the appraisal process? define the problem When is the market approach used? when a bank of sales of comparable properties exists. (residential and some light commercial properties) Where is the best source of information? local market What are the 4 forces that affect value? P- Physical E- Economic G- Governmental S- Social What is a bona fide sale? a transaction which has occurred in good faith without fraud or deceit carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his or her own self-interest, including but not limited to a distress sale, short sale, bank sale, or sale at public auction. What is the seller's bill of rights? S- Sell L- Lease U- Use G- Give away E- Enter R- Refuse to do anything Which approach must be considered when determining value? The income approach What are the 3 types of depreciation? Physical, functional, & economic How many square feet are in an acre? 43,560 What are the 4 methods for calculating improvement values in the cost approach? Quantity Survey, Unit in Place, Square Foot / Cubic Foot, Factored Historical Cost What is the calculation to arrive at a value using the cost approach? RCN - D + L = Value Adjustments are always made to the ____________ property never the _______________ property. Adjustments are only made to comparable properties and never to the subject property In the reconciliation process of the appraisal, the appraiser never _________________ the value indications of the comparable properties into a single estimate of value. averages Curable? Cost of repair is offset by the added value. Incurable? Not economically prudent to cure the condition. Depreciation Depreciation is a loss from the upper limits of value from any cause and decreases the value of property. Reproduction Cost New the cost of construction at current prices of an exact duplicate or replica using the same materials, construction standards, design, layout and quality of workmanship. Replacement Cost New the estimated cost to construct at current prices, a building with utility equivalent to the one being appraised using modern materials, current standards, design, and layout What is the highest and best use? What is not considered? the use that will generate the greatest net return to the property over a reasonable amount of time. Not considering what is best for seller Income approach Value is determined by the net earning power of a property Favorite formula? IRV Formula for determining the Gross Rent Multiplyer Sales price/Monthly rent Which principle is the basis for adjustment? Contribution What is the most important step in the appraisal process? Define the problem When do we adjust the subject property? Never What is the level of assessment for tangible property in Georgia? 40% What is eminent domain? Governmental power to appropriate private property, usually with compensation paid to owner. What is an informed opinion of value and who gives it? Appraisal, appraiser Cost approach Value indicated by the current cost of replacing or reproducing a property less any accrued depreciation. Georgia law states that the assessed value of tangible property shall be ______________ of the fair market value. 40% What is the formula to determine sales ratio? assessed value / sales price What are the Georgia Department of Revenue standards for the coefficient of dispersion? less than or equal to 15 percent for residential property and 20 percent for non-residential property What does the COD measure? Uniformity The Georgia Department of Revenue regulations currently allow a C.O.D. of up to ____ for non-residential properties and ____ for residential properties. Non-residential - .20 Residential - .15 Assessment progressivity lower valued properties are assessed at a lower rate than higher valued properties Assessment regressivity higher valued properties are assessed at a lower rate than lower valued properties What is the formula to determine the coefficient of dispersion? COD = Mean deviation/median ratio What is the formula to determine the price related differential? PRD=Mean ratio/Aggregate ratio What does the PRD measure? assessment bias The Georgia Department of Revenue allows a PRD to be between ________ & _________. .95 - 1.10 The standard for assessment level of a class of homogeneous properties will be presumed to have met the measure of central tendency if it is between ______ and ______ percent. 36% - 44%