Real Estate Appraisal Study Questions and 100% Correct Answers

appraisal "the act or process of developing an opinion of value; an opinion of value." the appraisal process 1. state the problem 2. list the data needed and the sources 3. gather, record, and verify the necessary data mine the highest and best use 5. estimate value by each of the three approaches 6. report the final opinion of market value substitution states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property. plottage value The increased utility and value resulting from the combining or consolidating of adjacent lots into one larger lot cost approach 1. Estimate the value of the land as if it were vacant and available to be put to its highest and best use. 2. Estimate the current cost of constructing the building(s) and site improvements. 3. Estimate the amount of accrued depreciation resulting from physical deterioration, functional obsolescence, and/or external obsolescence. 4. Deduct accrued depreciation from the estimated construction cost of a new building(s) and any site improvements. 5. Add the estimated land value to the depreciated cost of the building(s) and site improvements to arrive at the total indicated value by the cost approach. depreciation any condition that adversely diminishes the value of an improvement to real property; it can be curable or incurable. physical deterioration a loss in value due to wear and tear from use, age, weather, lack of maintenance, or even vandalism economic life the period over which a building can be profitably utilized. functional obsolescence caused by a relative loss of building utility. This loss may be due to a deficiency such as a faulty building design, outmoded equipment, or a poorly arranged floor plan. external obsolescence caused by factors not on the subject property (such as environmental, social, or economic forces) and is incurable