Basic Appraisal Procedures, Basic Appraisal Procedures Exam Questions and Answers 2024

Basic Appraisal Procedures, Basic Appraisal Procedures Exam Questions and Answers 2024 8 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 3 approaches (if applicable) 7) Reconcile the estimated values into the final opinion of value 8) Report the final opinion of value Defining the Problem: 6 Sub-steps within -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 -partial estates: life estate, easement & encroachment -specialized form of ownership: condo, coop, PUD, & timeshare Effective Date of the Value Opinion -Answer--two dates are essential to an appraisal report -the effective date of value can be a past (retrospective), current or future (prospective) date, in many cases it's the date the appraiser inspects the property; the decision will be made in concert with the client's needs -the date of the report is the date you sign and issue the final report Any Special Limiting Conditions -Answer--two common types are: extraordinary assumption & hypothetical condition 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 -it presumes as fact otherwise uncertain information about physical, legal or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis 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 -it is contrary to known facts about physical, legal or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis -this type of appraisal could be significantly misleading to intended users if the use of the hypothetical condition were not properly disclosed Scope of Work -Answer-*the type and extent of research and analyses in an assignment -understanding which analyses, methods and techniques are necessary and what data are necessary to correctly complete the analyses is an integral part of the scope-of-work decision -the Scope of Work Rule was added to the 2006 edition of USPAP -applies to appraisal reviews assignments as well as appraisals -scope of work includes: -the extent to which the property is identified -the extent to which tangible property is inspected -the type and extent of data researched -the type and extent of analyses applied to arrive at opinions or conclusions -solely the responsibility of the appraiser; ensures credible assignment results, consistent with the expectations of intended users & is consistent with what the appraiser's peers' actions would be in a similar assignment -in a Restricted Appraisal Report the scope of work need only be stated Gather, Record & Verify the data -Answer--need to record the data in a workfile -the workfile must exist prior to issuance of the report -must keep 5 years after preparation or 2 years after deposition, whichever period expires last -workfile includes: -name of client & any other intended users -true copies of all written reports, on any media -summaries of oral reports or testimony -all other data, info & documentation to support the appraiser's opinions or conclusions -a workfile in support of a Restricted Appraisal Report must be sufficient for the appraiser to produce an Appraisal Report -must be made available by the appraiser when required by a state appraiser regulatory agency or due process of law Determine Highest & Best Use -Answer--must be legally permissible, physically possible, financially feasible & maximally productive -may be only one use for the property if vacant and another for a property as it is presently improved Estimate Value by the Applicable Approaches to Value -Answer--3 common approaches to value: cost approach, sales comparison approach & income capitalization approach -don't always use each approach in every appraisal but we must consider the applicability of each approach to the particular appraisal problem at hand General Data -Answer-*Items of information on value influences that derive from social, economic, government and environmental forces and originate outside the property being appraised. -tends to influence all properties in an area equally -usually it is the closer and more proximate influences that exert the greatest pressure Specific Data -Answer-*Details about the property being appraised, comparable sales and rental properties and relevant local market characteristics -it is more direct and applies specifically to the subject of your appraisal assignment 9 Sources of General Data -Answer-1) government 2) trade associations 3) utility companies 4) school districts 5) universities 6) departments of transportation 7) planning boards 8) multiple listing services 9) chambers of commerce 8 Sources of Specific Data -Answer-1) deeds 2) location maps 3) tax maps 4) flood maps 5) assessor's records 6) title companies 7) zoning ordinances 8) multiple listing services Deed -Answer--prime source of specific data about a property that would include: legal description, owners of record, easements, deed restrictions & chain of title -deeds can be obtained from the owners, lender, county courthouse or title company Land versus Site -Answer-*land: the earth's surface, both land and water, and anything that is attached by nature or human hands *site: land that is improved so that it is ready to be used for a specific purpose -land is raw; site is improved Separate Site Valuations -Answer--most residential appraising, we are valuing site rather than land -total property can be viewed as a combination of 2 elements: the value of the site & the value of any building improvements on the site -Include: 1)cost approach 2)assessments and taxation 3)condemnation appraisals 4)certain income capitalization methods 5)highest and best use analysis Brownfields -Answer-*an industrial or commercial site th