Modern Real Estate Practice 21 st Edition Unit 16 Exam Questions Fully Solved.

Reconciliation - Answer The final step in the appraisal process, in which the appraiser considers the estimates of value received from the sales comparison, cost, and income approaches to arrive at a final opinion of market value for the subject property. Reproduction Cost - Answer The construction cost at current prices of an exact duplicate Functional obsolescence - Answer A loss of value to an improvement to real estate arising from problems of design or utility. Economic life - Answer The number of years during which an improvement will add value to land Substitution - Answer An appraisal principal that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution. Sales price - Answer The amount of money paid to a seller for the product sold Balance - Answer The appraisal principle stating that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land. Gross rent multiplier (GRM) - Answer The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value; usually used for single-family residential property. Value - Answer The power of a good or service to command other goods in exchange for the present worth of future rights to its income or amenities. Net Operating Income (NOI) - Answer The income projected for an income-producing property after deducting anticipated vacancy and collection losses and operating expenses. Depreciation - Answer (1) in appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence, and external obsolescence. (2) in real estate investment, a deduction for tax purposes taken over the period of ownership of income property, based on the property's acquisition cost.