Tennessee Affiliate Broker License Exam Flashcards exam with 100% correct answers

Tennessee Affiliate Broker License Exam Flashcards exam with 100% correct answersCapitalization The process of calculating the present worth of a property on the basis of its capacity to continue to produce an income stream Economic age Age of a building determined by its condition and usefulness. Gross income multiplier (GIM) A figure which, when multiplied by the annual gross income from all sources, not just annual rent, equals the property’s market value. Scarcity Less availability of a commodity in the marketplace resulting in increased value when demand exceeds supply. transferability The ability to transfer ownership of an item from one person or entity to another. Comps A term used by real estate agents and appraisers to mean comparable properties Depreciation Loss in value from any cause Cap Rate A term sometimes used to refer to capitalization rate Principle of Substitution The market value of a property is affected by the cost of obtaining an equally desirable and valuable property as a substitute. Cost Represents expenses in money, labor, material, or sacrifices in acquiring or producing something Value The power of goods or services to command other goods in exchange for the present worth of future benefits arising from ownership Effective Demand The desire coupled with purchasing power. Capital Improvements Any permanent improvement made to real estate for the purpose of increasing the useful life of the property or increasing the property's value Supply The total amount of an item that is for sale or lease, at various prices, at any given point in time. Accrued Depreciation The difference between the cost to replace the property and the property's current appraised value Fiscal Year A year as reckoned for taxing or accounting purposes Principle of Anticipation The market anticipates the future benefits that are to be derived from the property. Variance An exception granted to existing zoning regulations for special reasons Effective Age The years or age shown by the condition and utility of a structure, rather than its actual or chronological age Vacancy Factor Lost income because of a vacant unit Calendar Year This starts on January 1 and continues through December 31 of the same year. Gross Rent Income (figured annually) received from rental units before any expenses are deducted Reproduction Cost The current cost of building a replica of the subject structure using similar quality materials; refers to exact duplication of the buildings; usually costs more than replacement costs Economic Life The estimated period over which an improved property may be profitably used to yield a return Book Value The initial cost of the property plus capital improvements and minus the total accrued depreciation Appraisal Report A written report setting forth an appraiser's estimates of value of a subject property Functional Utility The combined factors of usefulness with desirability. Actual Age The real age of a building Net Income Sometimes known as net operating income. The remaining income after operating expensed have been subtracted from the gross income of a property Improvements Any buildings or structures on a lot Market Value The price the property would bring if freely offered on the open market with both a willing buyer and a willing seller Cost approach An appraisal method that estimates replacement cost of the improvements, deducts estimated accrued depreciation, and then adds market value of the land. “DUST” The 4 elements that create value: Demand, Utility, Scarcity, Transerability Demand The desire to buy or obtain a commodity Corner lot A lot found at the intersection of two streets Deferred Maintenance Negligent care of a building Effective Gross Income The anticipated income resulting from estimated potential gross income from a rental property less an allowance for vacancy and bad debts Appreciation An increase in value Replacement Cost The cost of replacing improvements with modern materials and techniques Front Footage The width of a property along the street