Market Analysis & Valuation Flashcards
7 cards from real CHI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Market Analysis & Valuation flashcards as text
In a seller's market, which condition is most commonly observed?
Answer: Low inventory with many competing buyers
A seller's market is characterized by limited housing inventory and strong buyer demand, which drives prices upward.
Which of the following best describes the 'income approach' to property valuation?
Answer: Calculating value based on the property's ability to generate rental income
The income approach values a property by capitalizing its net operating income, primarily used for investment and rental properties.
What does 'days on market' (DOM) indicate in a real estate analysis?
Answer: How long a property has been listed for sale before going under contract
DOM measures how long a property was actively listed before receiving an accepted offer, reflecting local market demand.
A home inspector reviewing a property for valuation purposes notices deferred maintenance. How does this typically affect market value?
Answer: It generally reduces market value due to anticipated repair costs
Deferred maintenance signals future repair costs to buyers and appraisers, typically resulting in a downward adjustment to market value.
Which factor is considered an 'external obsolescence' in property valuation?
Answer: A new highway constructed adjacent to the property
External obsolescence arises from outside the property's boundaries, such as nearby nuisances or infrastructure changes that reduce desirability.
What is 'market value' as used in real estate appraisal?
Answer: The most probable price a property would bring in a competitive, open market transaction
Market value is the estimated price a willing buyer and seller would agree upon in an arm's-length transaction under normal market conditions.
When performing a sales comparison approach, an appraiser finds a comparable sale with a superior garage compared to the subject property. What adjustment is made to the comparable?
Answer: A negative adjustment is subtracted from the comparable's sale price
When a comparable is superior to the subject in a feature, a negative adjustment is made to the comparable to bring it in line with the subject's value.