PSI Exam: Valuation and Market Analysis
Appraisal - ANS- - Is a formal opinion of value that real estate appraisers assigns, based
on supportable evidence, for a specific purpose, party, and property, as of a specific
date, and in accordance with Uniform Standards of Professional Appraisal Practice
Appraisal Practice (USPAP) - ANS- - Appraisals aren't performed or offered by real estate
licensees
Appraisers - ANS- -Estimate the value of a building or a piece of land. They may
specialize in either commercial or residential properties. Appraisers typically appraise a
property before its sold, mortgaged or taxed
Valuation - ANS- - Formal Appraisal
-Is the process of forming an option of a property's value
Uniform Standards of Professional Appraisal Practice (USPAP) - ANS- 1. State the
problem
2. Identify data needed
3. Gather and Analyze data
4. Determine highest and best use
5. Estimate the land value (as if the land were vacant)
6. Use one or more of the 3 approaches
7. Reconcile values to determine final appraised value
8. Develop and Delivery the Appraisal report
State the Problem - ANS- This means to identify the specific property, the rights
associates with it, the purpose of the appraisal and what type of value needs to be
established
Identify data needed - ANS- data needed
Gather and Analyze data - ANS- - Appraisers look at general city, neighborhood,
demographic, and other data, as well as property-specific data
Determine highest and best use - ANS- - What would the best use of the property be if
there were no existing building on it
- This matters more for commercial properties, though residential properties in a
mixes-use neighborhood can be impacted
Estimate the land value (as if the land were vacant) - ANS- If land were vacant
, Use one or more of the 3 approaches - ANS- - use one or more of the 3 approaches to
valuation (sales comparison, cost, or income approach), depending on property type
Reconcile values to determine final appraised value - ANS- - This isn't an average of the
varies estimates calculated through reconciliation (correlation) process.
- the most weight maybe given to one or two of the comparable properties or even to the
appraisal method used (sales comparison, income, or cost approach) and how well it
matches the subject property.
Develop and Delivery the Appraisal report - ANS- - Delivery report to appropriate parties
financial Institution Reform, Recovery & Enforcement Act (FIRREA) - ANS- - 1989
requires that appraisals performed in conjunction with federally related transactions
must be completed by state-certified or locked appraisers
Federally Related Transactions - ANS- -Are not FHA insured or VA guaranteed and will
not be sold to a SE such as Fannie Mae or Freddie Mac
- Residential properties valued at $400,000 or less are exempt from federal appraisal
requirements
Appraiser Independence Requirements (AIR) - ANS- Intent is to ensure that appraisals
reflect an accurate, unbiased property value by requiring that appraisers be:
- Certified or licenses in the satiate which the appraised property is located
- Knowledgeable about the local real estate market
- Qualified to appraised the subject property
Market Value - ANS- Is the most probable price a property will sell for in an open market
if neither the buyer nor the seller is under duree
Value - ANS- Isa property worth and may not equal price or cost
Cost - ANS- Is the amount to recreate that property if it disappeared off the face of the
earth today
Market Price - ANS- Is the amount a buyer paid for a property and the seller accepted
Types of Value appraisers estimate include - ANS- - Market value
- insurable vale
- replacement value
Highest and Best Use - ANS- Refers to a property's legal and feasible use that would be
the most profitable
Appraisal - ANS- - Is a formal opinion of value that real estate appraisers assigns, based
on supportable evidence, for a specific purpose, party, and property, as of a specific
date, and in accordance with Uniform Standards of Professional Appraisal Practice
Appraisal Practice (USPAP) - ANS- - Appraisals aren't performed or offered by real estate
licensees
Appraisers - ANS- -Estimate the value of a building or a piece of land. They may
specialize in either commercial or residential properties. Appraisers typically appraise a
property before its sold, mortgaged or taxed
Valuation - ANS- - Formal Appraisal
-Is the process of forming an option of a property's value
Uniform Standards of Professional Appraisal Practice (USPAP) - ANS- 1. State the
problem
2. Identify data needed
3. Gather and Analyze data
4. Determine highest and best use
5. Estimate the land value (as if the land were vacant)
6. Use one or more of the 3 approaches
7. Reconcile values to determine final appraised value
8. Develop and Delivery the Appraisal report
State the Problem - ANS- This means to identify the specific property, the rights
associates with it, the purpose of the appraisal and what type of value needs to be
established
Identify data needed - ANS- data needed
Gather and Analyze data - ANS- - Appraisers look at general city, neighborhood,
demographic, and other data, as well as property-specific data
Determine highest and best use - ANS- - What would the best use of the property be if
there were no existing building on it
- This matters more for commercial properties, though residential properties in a
mixes-use neighborhood can be impacted
Estimate the land value (as if the land were vacant) - ANS- If land were vacant
, Use one or more of the 3 approaches - ANS- - use one or more of the 3 approaches to
valuation (sales comparison, cost, or income approach), depending on property type
Reconcile values to determine final appraised value - ANS- - This isn't an average of the
varies estimates calculated through reconciliation (correlation) process.
- the most weight maybe given to one or two of the comparable properties or even to the
appraisal method used (sales comparison, income, or cost approach) and how well it
matches the subject property.
Develop and Delivery the Appraisal report - ANS- - Delivery report to appropriate parties
financial Institution Reform, Recovery & Enforcement Act (FIRREA) - ANS- - 1989
requires that appraisals performed in conjunction with federally related transactions
must be completed by state-certified or locked appraisers
Federally Related Transactions - ANS- -Are not FHA insured or VA guaranteed and will
not be sold to a SE such as Fannie Mae or Freddie Mac
- Residential properties valued at $400,000 or less are exempt from federal appraisal
requirements
Appraiser Independence Requirements (AIR) - ANS- Intent is to ensure that appraisals
reflect an accurate, unbiased property value by requiring that appraisers be:
- Certified or licenses in the satiate which the appraised property is located
- Knowledgeable about the local real estate market
- Qualified to appraised the subject property
Market Value - ANS- Is the most probable price a property will sell for in an open market
if neither the buyer nor the seller is under duree
Value - ANS- Isa property worth and may not equal price or cost
Cost - ANS- Is the amount to recreate that property if it disappeared off the face of the
earth today
Market Price - ANS- Is the amount a buyer paid for a property and the seller accepted
Types of Value appraisers estimate include - ANS- - Market value
- insurable vale
- replacement value
Highest and Best Use - ANS- Refers to a property's legal and feasible use that would be
the most profitable
