Basic Appraisal Procedures – McKissock Exam 2024

Basic Appraisal Procedures – McKissock Exam 2024 Valuation process -Answer-A systematic procedure used in the valuation of real property. Client -Answer-The party or parties who engage, by employment or contract, an appraiser in a specific assignment. Steps in Defining the problem -Answer-Identification and location of the real estate; Identification of the property rights; Definition of value; Purpose and intended use of the appraisal; Effective date of the opinion of value; Any special limiting conditions Real property -Answer-The interests, benefits, and rights inherent in the ownership of real estate. Market Value -Answer-A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Intended Use -Answer-The use or uses of an appraiser's reported appraisal or appraisal review assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment. Intended User -Answer-The client and any other party as identified, by name or type, as users of the appraisal or appraisal review report by the appraiser on the basis of communication with the client at the time of the assignment. Effective Date of the Value -Answer-The ____________ can be a past (retrospective), current or future (prospective) date. This decision will be made in concert with the client's needs. Extraordinary assumption -Answer-An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser's opinions or conclusions. Hypothetical Condition -Answer-A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Scope of work -Answer-The type and extent of research and analyses in an assignment. Workfile -Answer-Documentation necessary to support an appraiser's analyses, opinions, and conclusions Steps in the Valuation Process -Answer-1. Define the problem 2. Determine scope of work 3. Gather, record, and verify the data 4. Determine the highest and best use 5. Estimate the land value 6. Estimate value by each of the three approaches (if applicable) 7. Reconcile the estimated values into the final opinion of value 8. Report the final opinion of value Highest and Best Use Criteria (in order) -Answer-1. Legally permissible 2. Physically possible. 3. Financially feasible. 4. Maximally productive General data -Answer-Items of information on value influences that derive from social, economic, governmental, and environmental forces and originate outside the property being appraised. Specific data -Answer-Details about the property being appraised, comparable sale and rental properties, and relevant local market characteristics. U.S. Bureau of the Census -Answer-The largest repository of demographics Professional or trade associations offering general data -Answer-National Association of Homebuilders; National Association of Realtors; Appraisal Institute Sources of Specific Data -Answer-Deeds; Location maps; Tax maps; Flood maps; Assessor's records; Title companies; Zoning ordinances; Multiple listing services Special Flood Hazard Area Designation -Answer-FEMA Zones A or V Information in Deed -Answer-The legal description of the property; The owners of record; Easements of record; Deed restrictions; Chain of title (when the property was purchased and from whom) Primary intended user for MLS information -Answer-Agents and Brokers Land -Answer-The earth's surface, both land and water, and anything that is attached to it whether by the course of nature or human hands; all natural resources in their original state, e.g., mineral deposits, wildlife, timber, fish, water, coal deposits, soil. Site -Answer-Land that is improved so that it is ready to be used for a specific purpose. Brownfield -Answer-An industrial or commercial site that is abandoned or underused because it suffers from real or perceived continuing contamination. Site Valuation Methods -Answer-SALES COMPARISON; EXTRACTION; ALLOCATION; SUBDIVISION DEVELOPMENT; LAND RESIDUAL; GROUND RENT CAPITALIZATION Extraction Method -Answer-A method of estimating land value in which the depreciated cost of the improvements on the improved property is estimated and deducted from the total sale price to arrive at an estimated sale price for the land; most effective when the improvements contribute little to the total sale price of the property. Allocation Method -Answer-A method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed. Principle of Balance -Answer-Real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium. Principle of Conformity -Answer-Real property value is created and sustained when the characteristics of a property conform to the demands of its market. Basic income capitalization formula -Answer-Value = Income/Rate Summation Approach -Answer-Another name for cost approach Manufactured Home -Answer-A factory-built house manufactured under the Federal Manufactured Home Construction and Safety Standards Act of 1976