REAL 5080 MUNNEKE TEST 1 QUESTIONS & VERIFIED
ANSWERS
Characteristics of real estate - Answers - 1) a tangible (physical) asset
2) A bundle of rights
2 types of man-made improvements permanently attached to the land - Answers - -
improvement on the land
- improvement to the land
improvements on the land - Answers - - buildings, fences, walls, decks, and other
structures
- other "fixtures" - items that were personal property until they became permanently
attached to some part of the real estate
improvements to the land (infrastructure) - Answers - - streets, driveways, sidewalks,
etc.
- systems - water, sewer, telephone, etc
land and associated natural features - Answers - - sub surface
- surface
- supra surface
sub-surface - Answers - oil, coal, and other minerals
surface - Answers - soil and vegetation (except mature crops)
supra-surface - Answers - air space (and light)
bundle of rights - Answers - the interests, benefits, and rights inherent in the ownership
of land (real estate)
- use, possess, dispose
appraisal - Answers - - a written statement independently and impartially prepared by a
qualified appraiser setting forth a opinion of defined value of adequately describes
property as of a specific, supported by the presentation and analysis of relevant market
information
- 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
who uses estimates of value? - Answers - Buyers; Sellers; Bankers; Financiers;
Brokers; Government (Ad Volerum Property Tax)
, 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
appraisal process - description of problem - Answers - 1. identification of property rights
to be valued
2. definition of value (ch.2)
3. date of value
4. limiting condition
appraisal process - market and subject property analysis - Answers - 1. location
2. expected or highest and best use
3. property specific characteristics
appraisal process - estimating value: 3 relevant appraisal approaches - Answers - 1.
sales comparison
2. cost
3. income
appraisal process - reconciliation of value estimates and value reporting value -
Answers - 1. final value estimate
2. appraisal report
sales comparison approach - Answers - - equivalent goods should sell at equivalent
prices
sales comparison approach - two basic steps - Answers - 1. collection of info (key
characteristics) of subject and comparable properties
2. adjust prices of comparable properties to account for differences between
comparable
sales comparison approach - complications - Answers - - no perfect substitutes
(heterogenous product)
- often few comparable properties
- which comparable properties to use
- how to use information to make adjustments
cost approach - Answers - the price of an existing property should not exceed the cost
(including normal profit) to purchase a comparable site and have comparable
improvements made (principle of substitution)
cost approach - basic steps - Answers - - estimate the cost of the improvements as if
new
- estimate accrued depreciation on the improvements
ANSWERS
Characteristics of real estate - Answers - 1) a tangible (physical) asset
2) A bundle of rights
2 types of man-made improvements permanently attached to the land - Answers - -
improvement on the land
- improvement to the land
improvements on the land - Answers - - buildings, fences, walls, decks, and other
structures
- other "fixtures" - items that were personal property until they became permanently
attached to some part of the real estate
improvements to the land (infrastructure) - Answers - - streets, driveways, sidewalks,
etc.
- systems - water, sewer, telephone, etc
land and associated natural features - Answers - - sub surface
- surface
- supra surface
sub-surface - Answers - oil, coal, and other minerals
surface - Answers - soil and vegetation (except mature crops)
supra-surface - Answers - air space (and light)
bundle of rights - Answers - the interests, benefits, and rights inherent in the ownership
of land (real estate)
- use, possess, dispose
appraisal - Answers - - a written statement independently and impartially prepared by a
qualified appraiser setting forth a opinion of defined value of adequately describes
property as of a specific, supported by the presentation and analysis of relevant market
information
- 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
who uses estimates of value? - Answers - Buyers; Sellers; Bankers; Financiers;
Brokers; Government (Ad Volerum Property Tax)
, 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
appraisal process - description of problem - Answers - 1. identification of property rights
to be valued
2. definition of value (ch.2)
3. date of value
4. limiting condition
appraisal process - market and subject property analysis - Answers - 1. location
2. expected or highest and best use
3. property specific characteristics
appraisal process - estimating value: 3 relevant appraisal approaches - Answers - 1.
sales comparison
2. cost
3. income
appraisal process - reconciliation of value estimates and value reporting value -
Answers - 1. final value estimate
2. appraisal report
sales comparison approach - Answers - - equivalent goods should sell at equivalent
prices
sales comparison approach - two basic steps - Answers - 1. collection of info (key
characteristics) of subject and comparable properties
2. adjust prices of comparable properties to account for differences between
comparable
sales comparison approach - complications - Answers - - no perfect substitutes
(heterogenous product)
- often few comparable properties
- which comparable properties to use
- how to use information to make adjustments
cost approach - Answers - the price of an existing property should not exceed the cost
(including normal profit) to purchase a comparable site and have comparable
improvements made (principle of substitution)
cost approach - basic steps - Answers - - estimate the cost of the improvements as if
new
- estimate accrued depreciation on the improvements
