Property Valuation and Appraisal Flashcards
7 cards from real Arkansas Real Estate License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Property Valuation and Appraisal flashcards as text
What does a capitalization rate primarily reflect in property valuation?
Answer: The relationship between a property's net operating income and its market value
The cap rate (NOI ÷ Value) reflects the rate of return an investor expects and is used to convert income into a value estimate.
Physical deterioration that is considered 'curable' means:
Answer: It would be economically feasible to correct the deficiency because the repair cost is less than or equal to the value added
Curable physical deterioration means the cost to cure is less than or equal to the increase in value resulting from the cure, making it economically worthwhile.
When a neighborhood is experiencing 'transition' in an appraisal context, this refers to:
Answer: An area undergoing a change in land use or socioeconomic characteristics
A transitional neighborhood is one undergoing change in use, character, or economic makeup, which can significantly affect property values.
The 'depth table' method in land valuation is used to:
Answer: Adjust lot value based on the depth of the parcel relative to a standard depth
Depth tables provide percentage adjustments to account for the fact that lots deeper or shallower than a standard depth contribute different values per front foot.
In Arkansas, an appraisal report for a federally related transaction must comply with:
Answer: The Uniform Standards of Professional Appraisal Practice (USPAP)
USPAP, established by the Appraisal Standards Board, is the required standard for appraisals in federally related transactions in all states including Arkansas.
An 'as-is' appraisal value differs from a 'prospective' value in that:
Answer: As-is reflects current condition; prospective reflects value upon completion of proposed improvements
An as-is value reflects the property in its present condition, while a prospective value projects value as of a future date, such as after construction or renovation is complete.
Which best describes the 'plottage' value concept?
Answer: The increment of value resulting from combining two or more adjacent parcels into one larger site
Plottage is the increase in value that results from combining adjacent parcels into a single, larger, more valuable site.