Property Valuation & Appraisal Flashcards
7 cards from real CCS 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 & Appraisal flashcards as text
A condominium complex has 50 units, all identical. If the entire complex sold for $10 million, what valuation principle cautions against simply dividing to value one unit?
Answer: Principle of contribution
The principle of contribution holds that value of a component depends on its contribution to the whole, not simply a proportional division of bulk sale price.
Which document is the most critical for an appraiser to review when determining a condominium unit's legal description?
Answer: The condominium declaration and plat
The condominium declaration and recorded plat define legal boundaries, unit numbers, and the share of common elements, which are essential for a proper legal description.
When using the income approach for an investor-owned condo, which formula correctly calculates Net Operating Income (NOI)?
Answer: Effective gross income minus operating expenses
NOI equals effective gross income (after vacancy/collection losses) minus all operating expenses, excluding debt service.
A condo unit is in a project where 60% of units are investor-owned rentals. How might this affect the appraisal?
Answer: It may limit financing eligibility and reduce appraised value
High investor concentration can disqualify the project from conventional financing guidelines, limiting the buyer pool and potentially suppressing value.
What is 'effective age' in the context of condominium appraisal?
Answer: The age indicated by the condition and utility of the property
Effective age reflects the property's apparent age based on condition, maintenance, and modernization, which may differ from its actual chronological age.
In a condominium appraisal, 'functional obsolescence' caused by a poor floor plan that cannot be easily corrected is called:
Answer: Incurable functional obsolescence
Incurable functional obsolescence exists when the cost to cure the deficiency exceeds the value added, making correction economically impractical.
What does a 'paired sales analysis' allow an appraiser to do?
Answer: Isolate and quantify the value contribution of a specific feature
By comparing two otherwise identical sales that differ only in one feature, an appraiser can isolate that feature's market value contribution.