Property Valuation & Appraisal Flashcards

Which appraisal approach is most commonly used as the primary method for valuing condominium units?

Answer: Sales comparison approach

The sales comparison approach is primary for condominiums because comparable unit sales provide the most reliable market evidence.

When appraising a condominium, what does the term 'fee simple' ownership refer to?

Answer: Ownership of a unit plus an undivided interest in common elements

In condominium ownership, fee simple typically includes the unit plus an undivided interest in common areas, not absolute freehold of all land.

A condominium unit sells for $320,000. The comparable unit next door sold for $300,000 but lacked an assigned covered parking space valued at $15,000. What is the adjusted sale price of the comparable?

Answer: $315,000

Since the comparable lacks the parking space, you add its value to the comp: $300,000 + $15,000 = $315,000.

Which factor most significantly affects the value of a high-rise condominium unit compared to identical lower-floor units?

Answer: Floor level and view

Floor level and the associated views are primary value drivers in high-rise condominiums, commanding significant premiums.

What is the purpose of a 'retrospective appraisal' in condominium transactions?

Answer: To determine value as of a past effective date

A retrospective appraisal establishes value as of a historical date, often needed for estate settlements, litigation, or tax purposes.

In condominium appraisal, 'market rent' is best defined as:

Answer: The most probable rent a unit would command in an open market

Market rent is the rent a knowledgeable landlord and tenant would agree upon in an arm's-length transaction in an open competitive market.

What is 'assemblage' in the context of condominium property valuation?

Answer: The process of combining adjacent properties to create greater value

Assemblage refers to combining two or more contiguous parcels under one ownership, often creating a 'plottage' value increment.