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 unit's value is negatively impacted by a newly constructed highway nearby. This is an example of:
Answer: External obsolescence
External obsolescence (also called economic or locational obsolescence) results from factors outside the property itself, such as nearby nuisances or adverse market conditions.
What does the term 'reconciliation' mean in the appraisal process?
Answer: The process of weighing and correlating value indications from multiple approaches
Reconciliation is the analytical process where the appraiser weighs the results from all applicable approaches to arrive at a final value opinion.
Which of the following would be considered a 'super-adequate' feature in a condo appraisal context?
Answer: A $50,000 custom kitchen in a building where units sell for $150,000
A super-adequacy exists when a feature exceeds what the market demands for that property type, meaning its cost exceeds its contribution to value.
When an appraiser states a value 'as of' a specific date, this is referred to as the:
Answer: Effective date
The effective date is the date to which the value opinion applies, which may differ from the inspection date or the date the report is written.
Which ratio helps an appraiser assess the reasonableness of a condominium income property's value using the income approach?
Answer: Overall capitalization rate
The overall capitalization rate (OAR = NOI / Value) is the primary metric used to convert income into value and benchmark against comparable properties.
A condominium unit is located in a 'non-warrantable' project. What does this mean for an appraisal?
Answer: The project does not meet agency guidelines, limiting conventional financing options
A non-warrantable project fails to meet Fannie Mae/Freddie Mac eligibility criteria, which restricts conventional mortgage financing and affects the buyer pool and value.
What is the significance of the 'arm's-length transaction' requirement in selecting comparable sales?
Answer: The sale must reflect a transaction between unrelated parties acting in their own interests
An arm's-length transaction ensures that the sale price reflects market value, with neither party under undue pressure and both acting in their own best interest.