Term
| Sales Comparison Approach. |
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Definition
| process of deriving a value indication for the subject property by comparing similar properties that have recently sold with the property being appraised, identifying appropriate units of comparison, and making adjustments to the sale prices (or unit prices) of the comparable properties based on relevant, market derived elements of comparison. |
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Term
| To estimate demand appraisers consider... |
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Definition
- the number of potential users of a particular property type
- users purchasing power
- users taste and preferences
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Term
| To analyze supply, appraisers focus on.... |
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Definition
- existing properties on the market...unsold, vacant, constructed, converted, or planned
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Term
| When interest rates drop..... |
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Definition
| market activity tends to accelerate and prices tend to rise because more buyers qualify for higher mortgage amounts |
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Term
| Principal of Substitution |
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Definition
| the value of property tends to be set by the price that would be paid to acquire a substitute property of similar utility and desirability within a reasonable amount of time |
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| What happens if a buyer does not have adequate choices in the marketplace? |
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Definition
| the buyer may have to pay a higher price given te lack of a suitable substitute. |
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Term
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Definition
techniques used to derive quantitative adjustments to comparable sale prices in the sales comparison approach
- Paired data analysis
- Grouped data analysis
- Secondary analysis
- Statistical anaylsis including graphic analysis and scenario analysis
- Cost-related adjustments
- Capitalization of income differences
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Term
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Definition
| a property that has too much land in relation to its improvements |
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Definition
| too many expensive amenities for its location |
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Term
| Procedure for the Sales Comparison Approach |
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Definition
- Similar and Recent: Research Properties that are similar and have recently sold/listed/or are under contract
- Verification: Make sure the information is right and arm's-length
- Relevant: Select most relevant and develop a comparative analysis.
- Adjust for Differences: Look for differences between subject and comparables. Adjust prices for difference
- Value: Reconcile the various value indications produced from the analysis of comparables to a value bracket and then to a single value indication.
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Term
| What sets the stage for the selection of appropriate comparable sales? |
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Definition
- Market Analysis
- Highest and Best Use
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Term
| What is considered the most reliable value indicator in the sales comparison approach? |
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Definition
| data from completed transactions |
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Definition
- public records
- commercially available
- published articles
- interviews
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Term
The USPAP requires appraisers to analyze and report all agreements of sale, options, and listings of the subject property current as of the effective date of the appraisal and to analyze sales that occured within the prior three years.
T/F |
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Definition
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Term
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Definition
| when the appraiser derives all adjustments from within a limited data set, a single erroneous sale price or figure can cause errors in the adjusted sale prices of all the comparable sales, leading to an erroneous indication of value. |
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Term
| How do you prevent inbreeding? |
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Definition
| verification of transactional and property data.....law of large numbers |
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Term
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Definition
the process for accounting for differences between comparables that are not quantified; usually follows quantitative adjustment
- Trend analysis
- Relative comparison analysis
- Ranking analysis
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Term
| Basic elements of comparison |
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Definition
Transactional Adjustments
- Real property rights conveyed
- Financing terms
- Conditions of sale
- Expenditures made immediately after purchase
- Market conditions
Property Adjustments
- Location
- Physical Characteristics
- Economic Characteristics
- Use
- Non-realty components of value
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Term
| Most property types other than one unit residential are adjusted on a ... |
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Definition
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| Two points should be stressed when reconciling. |
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Definition
- The appraiser must ensure that the value concluded is consistent with the intended use of th appraisal and the value indications derived form the other approaches to value.
- Consider any differences in the property rights appraised between the comparable properties and the subject property because the comparable sales may include the transfer of a leased fee interest.
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