REAL 5080 EXAM 1 VERIFIED STUDY GUIDE
Real estate - Answers - tangible, physical asset
Real property - Answers - a bundle of rights
Bundle of rights - Answers - Use
possess
dispose
RE appraisal - Answers - a.) A written statement independently and impartially prepared
by a qualified appraiser setting forth an opinion of defined value of adequately described
property as of a specific date, supported by the presentation and analysis of relevant
market information
b.) a summary of the appraisal methods and techniques which the appraiser has
applied to factual material, within the framework of the appraisal process, to arrive at a
value estimate
The appraisal process- Description of problem - Answers - -Identification of property
rights to be valued
-Definition of value
-Date of value
-Limiting conditions
AP-Market and Subject Property Analysis - Answers - -Location
-Expected or highest/best use (What should be there)
-Property specific characteristics
AP-Estimating Value Application of Relevant Appraisal Approaches - Answers - -Sales
comparison (mkt)
-Cost
-Income (rent)
AP- Reconciliation of Value Estimates and Value Reporting Value (use and data) -
Answers - -Final Value Estimate
-Appraisal report
Appraisal Process - Answers - -Description of Problem
-Market and Subject Property Analysis
-Estimating Value:Application of Relevant Appraisal Approaches
-Reconciliation of Value Estimates and Value Reporting Value
Sales Comparison - Answers - -equivalent goods should sell at equivalent prices (law of
one price)
, Sales Comparison steps - Answers - -collection of information of subject (comparable)
properties
-adjust prices of comparables to account for differences (adjustment grid)
Sales comparison complications - Answers - -no perfect substitutes
-often few comparables
-which comparable property to use
-how to use info to make adjustments
Cost approach - Answers - -price of existing property should not exceed cost (including
normal profit) to purchase a comparable site and comparable improvements made
-principle of substitution
Cost approach-steps - Answers - -est. the cost of the improvements as if new
-est. accrued depreciation on improvements
-est. land value
(1-2+3)
Accrued depreciation - Answers - -physical deterioration
-functional obsolescence (if i build again, would i build the same way?)
-external obsolescence (external factors around property)
Income approach - Answers - -PV of benefits
-the value of a property is a function of the flow of benefits (income) it is anticipated to
produce
-principal of anticipation
Income approach steps - Answers - -forecast future cash flows of the investment
-apply appropriate income method
Income methods - Answers - -income multipliers
-direct capitalization
-discounted cash flow
Income multiplier - Answers - V=(V/I)*I
-multiplier = V/I
-value relationship
Direct capitalization - Answers - -R=I/V
-one period cash flow (NOI)/rate = value
-V=I/R
Discounted cash flow - Answers - PV of NOI + PV of NSP at certain point in time
-NOI = return to property
-NSP= return from sale
Real estate - Answers - tangible, physical asset
Real property - Answers - a bundle of rights
Bundle of rights - Answers - Use
possess
dispose
RE appraisal - Answers - a.) A written statement independently and impartially prepared
by a qualified appraiser setting forth an opinion of defined value of adequately described
property as of a specific date, supported by the presentation and analysis of relevant
market information
b.) a summary of the appraisal methods and techniques which the appraiser has
applied to factual material, within the framework of the appraisal process, to arrive at a
value estimate
The appraisal process- Description of problem - Answers - -Identification of property
rights to be valued
-Definition of value
-Date of value
-Limiting conditions
AP-Market and Subject Property Analysis - Answers - -Location
-Expected or highest/best use (What should be there)
-Property specific characteristics
AP-Estimating Value Application of Relevant Appraisal Approaches - Answers - -Sales
comparison (mkt)
-Cost
-Income (rent)
AP- Reconciliation of Value Estimates and Value Reporting Value (use and data) -
Answers - -Final Value Estimate
-Appraisal report
Appraisal Process - Answers - -Description of Problem
-Market and Subject Property Analysis
-Estimating Value:Application of Relevant Appraisal Approaches
-Reconciliation of Value Estimates and Value Reporting Value
Sales Comparison - Answers - -equivalent goods should sell at equivalent prices (law of
one price)
, Sales Comparison steps - Answers - -collection of information of subject (comparable)
properties
-adjust prices of comparables to account for differences (adjustment grid)
Sales comparison complications - Answers - -no perfect substitutes
-often few comparables
-which comparable property to use
-how to use info to make adjustments
Cost approach - Answers - -price of existing property should not exceed cost (including
normal profit) to purchase a comparable site and comparable improvements made
-principle of substitution
Cost approach-steps - Answers - -est. the cost of the improvements as if new
-est. accrued depreciation on improvements
-est. land value
(1-2+3)
Accrued depreciation - Answers - -physical deterioration
-functional obsolescence (if i build again, would i build the same way?)
-external obsolescence (external factors around property)
Income approach - Answers - -PV of benefits
-the value of a property is a function of the flow of benefits (income) it is anticipated to
produce
-principal of anticipation
Income approach steps - Answers - -forecast future cash flows of the investment
-apply appropriate income method
Income methods - Answers - -income multipliers
-direct capitalization
-discounted cash flow
Income multiplier - Answers - V=(V/I)*I
-multiplier = V/I
-value relationship
Direct capitalization - Answers - -R=I/V
-one period cash flow (NOI)/rate = value
-V=I/R
Discounted cash flow - Answers - PV of NOI + PV of NSP at certain point in time
-NOI = return to property
-NSP= return from sale
