Basic Appraisal Procedures Mckissock
advisory opinion-22 - ANS-understanding whihc analysis methods and techniques are
necessary and what data are necessary to correctly complete the analysis is an integral part of
the scope of work decision
Advisory opinions-22 os USPAP - ANS-Accomplishing the first four action steps (SR 1-2(a)
through (d))... ...provides the basis for deciding which of the property's characteristics are
relevant in the assignment
allocation - ANS-land to value ratios based on improved sales comparables
allocation method - ANS-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
applicable approaches to value - ANS-cost, sales comp, income and capitalization appraoches
Appraisal Process - ANS-1. Define Problem
2. Determine scope of work
3. Gather Record & verify dat
4. determine highest and best use
5. estimate land value
6. est. value by all three approaches
7. Reconcile est. value into final opinion value
8. report the final opinion
Appraisers are cautioned to - ANS-identify the exact definition of market value and its authority
applicable in each appraisal completed for the purpose of market value
Arm's-length transaction - ANS-transaction between unrelated parties who are each acting in his
or her own best interest
brownfield - ANS-real property for which the expansion redevelopment of the real estate may be
complicated by the presence of environmental contamination that needs to be remediated to
standards
buydowns - ANS-lump-sum payment to the lender that reduces the interest payments of the
borrower
capitalization rate(R) - ANS-ratio of one year's net operating income provided by an asset to the
value of the asset
common sources of specific data: - ANS-deeds, location maps, tax maps, flood maps,
assessors records, title companies, zoning, MLS
concurrent ownership - ANS-Ownership by two or more persons at the same time
Conditions of sale - ANS-element of comparison in the sales comparison approach; comparable
properties can be adjusted for differences in the motivations of either the buyer or a seller in a
transactio
Contract rent - ANS-The actual rental income specified in a lease
conventional loans - ANS-mortgage neither insured nor guaranteed by an agency although it
may be privately insured
, cost approach - ANS-set of procedures through which a value indication is derived for the fee
simple estate by estimating the current cost to construct a reproduction of the existing structure
cost formula - ANS-reproduction cost new-accrued depreciation+site value=property value
Curable depreciation - ANS-Items of physical deterioration or functional obsolescence that are
economically feasible to cure
deed will provide - ANS-The legal description of the property
The owners of record
Easements of record
Deed restrictions
Chain of title
Deficit rent - ANS-amount by which market rent exceeds contract rent at the time of the
appraisal
defining problem - ANS-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
Depreciation - ANS-appraising, a loss in property value from any cause
depreciation(age life) - ANS-(effective age/total economic life)*total cost
determine scope of work - ANS-the type and extent of research and analysis or appraisal review
assignment
Direct capitalization - ANS-method used to convert an estimate of a single year's income
expectancy into an indication of value in one direct step, either by dividing the net income
estimate by an appropriate capitalization rate or by multiplying the income estimate by an
appropriate factor
direct cost - ANS-expenditures for the labor and materials used in the construction of
improvements
Discounted cash flow analysis - ANS-procedure in which a discount rate is applied to a set of
projected income streams and a reversion
district - ANS-neighborhood characterized by homogeneous land use, e.g., apartment,
commercial, industrial, agricultura
economic life - ANS-period over which improvements to real estate contribute to value
Effective gross income (EGI - ANS-anticipated income from all operations of the real estate after
an allowance is made for vacancy and collection losses and an addition is made for any other
income.
Effective gross income (EGI) - ANS-anticipated income from all operations of the real estate
after an allowance is made for vacancy and collection losses and an addition is made for any
other income
Effective rent - ANS-Total base rent, or minimum rent stipulated in a lease, over the specified
lease term minus rent concessions
entrepreneurial incentive - ANS-amount an entrepreneur expects to receive for his or her
contribution to a project
advisory opinion-22 - ANS-understanding whihc analysis methods and techniques are
necessary and what data are necessary to correctly complete the analysis is an integral part of
the scope of work decision
Advisory opinions-22 os USPAP - ANS-Accomplishing the first four action steps (SR 1-2(a)
through (d))... ...provides the basis for deciding which of the property's characteristics are
relevant in the assignment
allocation - ANS-land to value ratios based on improved sales comparables
allocation method - ANS-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
applicable approaches to value - ANS-cost, sales comp, income and capitalization appraoches
Appraisal Process - ANS-1. Define Problem
2. Determine scope of work
3. Gather Record & verify dat
4. determine highest and best use
5. estimate land value
6. est. value by all three approaches
7. Reconcile est. value into final opinion value
8. report the final opinion
Appraisers are cautioned to - ANS-identify the exact definition of market value and its authority
applicable in each appraisal completed for the purpose of market value
Arm's-length transaction - ANS-transaction between unrelated parties who are each acting in his
or her own best interest
brownfield - ANS-real property for which the expansion redevelopment of the real estate may be
complicated by the presence of environmental contamination that needs to be remediated to
standards
buydowns - ANS-lump-sum payment to the lender that reduces the interest payments of the
borrower
capitalization rate(R) - ANS-ratio of one year's net operating income provided by an asset to the
value of the asset
common sources of specific data: - ANS-deeds, location maps, tax maps, flood maps,
assessors records, title companies, zoning, MLS
concurrent ownership - ANS-Ownership by two or more persons at the same time
Conditions of sale - ANS-element of comparison in the sales comparison approach; comparable
properties can be adjusted for differences in the motivations of either the buyer or a seller in a
transactio
Contract rent - ANS-The actual rental income specified in a lease
conventional loans - ANS-mortgage neither insured nor guaranteed by an agency although it
may be privately insured
, cost approach - ANS-set of procedures through which a value indication is derived for the fee
simple estate by estimating the current cost to construct a reproduction of the existing structure
cost formula - ANS-reproduction cost new-accrued depreciation+site value=property value
Curable depreciation - ANS-Items of physical deterioration or functional obsolescence that are
economically feasible to cure
deed will provide - ANS-The legal description of the property
The owners of record
Easements of record
Deed restrictions
Chain of title
Deficit rent - ANS-amount by which market rent exceeds contract rent at the time of the
appraisal
defining problem - ANS-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
Depreciation - ANS-appraising, a loss in property value from any cause
depreciation(age life) - ANS-(effective age/total economic life)*total cost
determine scope of work - ANS-the type and extent of research and analysis or appraisal review
assignment
Direct capitalization - ANS-method used to convert an estimate of a single year's income
expectancy into an indication of value in one direct step, either by dividing the net income
estimate by an appropriate capitalization rate or by multiplying the income estimate by an
appropriate factor
direct cost - ANS-expenditures for the labor and materials used in the construction of
improvements
Discounted cash flow analysis - ANS-procedure in which a discount rate is applied to a set of
projected income streams and a reversion
district - ANS-neighborhood characterized by homogeneous land use, e.g., apartment,
commercial, industrial, agricultura
economic life - ANS-period over which improvements to real estate contribute to value
Effective gross income (EGI - ANS-anticipated income from all operations of the real estate after
an allowance is made for vacancy and collection losses and an addition is made for any other
income.
Effective gross income (EGI) - ANS-anticipated income from all operations of the real estate
after an allowance is made for vacancy and collection losses and an addition is made for any
other income
Effective rent - ANS-Total base rent, or minimum rent stipulated in a lease, over the specified
lease term minus rent concessions
entrepreneurial incentive - ANS-amount an entrepreneur expects to receive for his or her
contribution to a project
