IAAO Course 101: Chapter 1 Power Point Slides Questions and Answers

Duties of the Assessor - Answer- Discover, List, Value USPAP - Answer- Uniform Standards of Professional Appraisal Practice Formula for a Tax Rate - Answer- Budget-Revenues from other sources/Total Assessed Value Budget - Answer- The numerator in developing a tax rate Total Assessed Value - Answer- The denominator in developing a tax rate Assessment Ratio - Answer- Assessed Value/Market Value EAT Triangle - Answer- Effective Tax Rate Formula Effective Tax Rate - Answer- Tax Rate*Assessment Ratio Classes of Property - Answer- Residential, Commercial, Industrial, Agricultural Classification of Property - Answer- Real Property, Personal Property, Intangible Property Bundle of Property Rights - Answer- S.L.U.G.E.R SLUGER - Answer- Sell, Lease or Rent, Use, Give away, Enter or leave, Refuse to do any of these Government Restrictions on Property Ownership - Answer- P.E.T.E PETE - Answer- Police power, Eminent domain, Taxation, Escheat Two Types of Value - Answer- Value in Use and Value in Exchange Cost - Answer- Sacrifice made to acquire property Price - Answer- Amount of money asked, offered or paid Value - Answer- Monetary worth to buyers and sellers 12 Economic Principles of Market Value - Answer- Anticipation, change, balance, competition, conformity, consistent use, contribution, increasing and decreasing returns, progression and regression, substitution, surplus productivity, supply and demand Principle of anticipation - Answer- Expected future benefits Principle of change - Answer- Market value is never constant Principle of balance - Answer- State of equilibrium Principle of competition - Answer- Availability in harmony with demand Principle of conformity - Answer- Reasonable similarity among improvements Principle of consistent use - Answer- Entire property (land and building) valued with a single use Principle of contribution - Answer- The value of a component depends on its contribution to the whole Principle of increasing and decreasing returns - Answer- After some point, addition of more of something will decrease future incomes or amenities Principle of progression and regression - Answer- Value increased or decreased by association with higher or lower quality properties Principle of substitution - Answer- Market value set by cost of acquiring equally desirable and valuable substitute property Principle of surplus productivity - Answer- Net income remaining after the costs of labor, management and capital have been satisfied Principle of supply and demand - Answer- Goods that producers are willing to sell at a given price and the amount of a commodity that consumers buy at a given price during a specific period Elements of demand - Answer- Consumer tastes and preferences, consumer income, price of related commodities, consumer expectations and price of the commodity Elements of supply - Answer- Cost of production, price of other goods, entrepreneur expectations and number of sellers in the market Equilibrium - Answer- The point at which the demand curve and supply curve intersect Test to determine highest and best use - Answer- Legally permissible, physically possible, financially feasible and maximally productive First step in the appraisal process - Answer- Definition of the problem Questions to define the problem - Answer- Where, what, why, when and how? Second step in the appraisal process - Answer- Determine the scope of work Third step in the appraisal process - Answer- Preliminary survey and planning Fourth step in the appraisal process - Answer- Collect data Fifth step in the appraisal process - Answer- Highest and best use analysis as vacant and improved Sixth step in the appraisal process - Answer- Apply approaches to value Seventh step in the appraisal process - Answer- Determine value Trends affecting property value - Answer- Population, business cycles, price levels, purchasing power, the economy, building costs and financing Four forces or factors of value - Answer- P.E.G.S P.E.G.S - Answer- Physical,Economic, Governmental, Social Ad valorem - Answer- According to value For a property to have value it must have - Answer- Utility, scarcity, desirability and effective purchasing power Highest and best use - Answer- The use that generates the highest net return to a property over a reasonable time period Real estate - Answer- A parcel of land and any structures or improvements that are permanently affixed thereto Typical life cycle of a neighborhood - Answer- Growth, stability, decline and revitalization Contribution - Answer- Basis for adjustments in the sales comparison approach Value in use - Answer- Few simple (absolute) - Answer- Ownership of all legal rights to property The preamble of USPAP provides - Answer- The purpose, which is to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers How many standards are in USPAP - Answer- Ten (however, standard #4 & #5 have been retired) so.. effectively eight USPAP standard six - Answer- Establishes requirements for mass appraisal Mass appraisal - Answer- The systematic appraisal of groups of properties as of a given date, using standardized procedures and statistical testing The property tax - Answer- The means by which local government pays for the services it provides, such as police, fire, schools, roads, parks, libraries and the court system The assessor - Answer- Provides the total assessed value Who must abide by USPAP? - Answer- Appraisers and assessor a who are members of IAAO, or required by law to be State certified Ways tax rates are expressed - Answer- $ per $100 ($0.1) $ per $1,000 ($0.01) Mill rate (10 mills=$10/$1000 = 0.01) Budget - Answer- The amount of money that will be spent by local government for one year The budget for any taxing district may contain funds for - Answer- Bonded indebtedness in addition to operating funds Formula for tax rate - Answer- Budget - Other Revenues(non property tax sources) Assessed Value