Property Valuation and Appraisal Flashcards

What is 'external obsolescence' (also called economic obsolescence) in appraisal?

Answer: Loss of value from factors outside the property, such as neighborhood decline

External obsolescence is a value reduction caused by negative influences outside the property, like a new highway nearby or a declining neighborhood.

Under USPAP (Uniform Standards of Professional Appraisal Practice), appraisers must be free from which of the following?

Answer: Bias, advocacy, or any undue influence on their opinion of value

USPAP requires appraisers to maintain independence, impartiality, and objectivity, free from any external pressure that could bias their conclusions.

What is the purpose of the cost approach in real estate appraisal?

Answer: To estimate value by calculating the cost to reproduce the improvements plus land value, minus depreciation

The cost approach estimates value by calculating land value plus the depreciated replacement cost of the improvements.

Which regulation prohibits lenders from pressuring appraisers to meet a predetermined value?

Answer: Appraiser Independence Requirements (AIR)

The Appraiser Independence Requirements (AIR), established under Dodd-Frank, prohibit lenders and other parties from influencing or coercing appraisers.

What is 'effective age' of a property as used in appraisals?

Answer: The age a property appears to be based on its condition and updates, regardless of actual age

Effective age reflects the apparent age of a property based on its maintenance and upgrades, which may differ significantly from its actual chronological age.

What is a 'desk review' appraisal?

Answer: A secondary review of an existing appraisal report conducted without a property inspection

A desk review is an evaluation of an existing appraisal report for accuracy and compliance, performed by a second appraiser without visiting the property.