Appraisal || Questions with complete answers.

What is an "Appraisal"? correct answers The process of estimating, fixing or setting the market value of real property. An appraisal may take the form of a lengthy report, a completed form, a simple letter or even an oral report. What is an "Appreciation:"? correct answers An increase in the worth or value of property due to economic or related causes, which may prove to be either temporary or permanent What is an "Assessed valuation"? correct answers The value of real property as established by the state government for purposes of computing real property taxes. What is "Building residual technique"? correct answers A method of determining the value of an improvement, normally used in appraising income property. What is "Capitalization"? correct answers A mathematical process for converting net income into an indication of value, commonly used in the income approach to appraisal. What is "Cap rate (capitalization rate)"? correct answers The percentage selected for use in the income approach to valuation of improved property. The cap rate is designed to reflect the recapture of the original investment over the economic life of the improvement to give the investor an acceptable rate of return(yield) on the original investment and to provide for the return on borrowed capital. Define "Comparables"? correct answers Recently sold properties that are similar to a particular property being evaluated and that are used to indicate a reasonable fair market value for the subject property. Define "Depreciation"? correct answers As related to appraisal, loss in value due to any cause; any condition that adversely affects the value of an improvement What is "Fair Market Value"? correct answers The highest monetary price that a property would bring, if offered for sale for a reasonable period of time in a competitive market to a seller, willing but not compelled to sell, from a buyer, willing but not compelled to buy, both parties being fully informed of all the purposes to which the property is best adapted and for which it is capable of being used. What is "Functional obsolescence"? correct answers A loss in value of an improvement due to functional inadequacies, often caused by age or poor design. What is "Gross income Multiplier"? correct answers A useful rule of thumb to estimate market value of income-producing residential property. The multiplier is derived by using comparable sales divided by the actual or estimated monthly rentals and then arriving at an acceptable average. Define "Highest and best use"? correct answers That use which, at the time of appraising the property, is most likely to produce the greatest net return to the land and/or the building over a given period of time.