A 5 year old water heater with an expected life of 12 years and a replacement cost of $825 will have experienced depreciation of $__________. All rights reserved. Remaining Economic Life Change Date February 22, 2019 This Chapter has been revised in its entirety. $375,000 - $70,000 = $305,000 (land value), Continental Drift Station Lab - Flashcards -, Basic Appraisal Principles Exam Practice #3. Short lived items Cost is $20,000 and depreciation on the short lived items has been identified totaling $4,850. It changes due to market conditions and the building's overall maintenance. Not enough information to determine, Which of the following would NOT be a common adjustment made in sales comparison when appraising land? What is the percentage of change in market conditions? Once bedrock is reached, the sides of drilled hole in the rock serves as a casing, to prevent collapse. Hourly wage rates are $30 for Lisa,$25 for David, and $18 for Sarah. A dwelling has a reproduction cost of $625,000. FY22. "The relationship or ratio between the sale price or value of a property and its periodic gross rental income" is the definition of, An appraiser encounters an underground storage tank and there are no signs of leakage or failure. land residual and ground rent capitalization effective age, total economic life Footings need to be _______________ below average frost penetration levels. sales comparison How much income does yield capitalization use? the URARForm can be used to report the appraisal of all of the following property types except: A deed could provide all of the following information about a property except: All of the following could be sources of specific data except: The blank method has good application and evaluating land in rural areas and an older, urban areas. $50,000 X 3.2 = $160,000. $12,000 $240,000 = .05 or 5%. Which is the highest and best use? An estimate of remaining economic life is required by Fannie Mac Freddie Mac VA all of the above VA Remaining Economic Life. none of the above, Modular homes are constructed to meet __________ code requirements. any cause. What amount should be shown in Carson's balance sheet at December 31, 2007, net of accumulated depreciation, for this machine? log frame modified replacement. Net Adjustment (Total). That is an instance where the cost approach has good applicability. Its remaining economic life is estimated to be 48 years. What is the range of the GRMs? An estimate of remaining economic life is required by Fannie Mac Freddie Mac VA all of the above. __________ occurs within a property; while _________occurs off the site. The other three are common adjustments, but quality adjustments would be made to improvements - not land. replacement The cost index at that time was 138.5. Yes, it is required by VA and FHA. Accordingly, it is appropriate for PPE Corp to record depreciation commensurate with one year of economic life, or $3,000 ($32,000 original cost less $2,000 original estimated salvage divided by the economic life of 10 years) over the remaining year of useful life. That is the standard today. $50 X 75 = $3,750. 8. What is the land value? pH site See how your life expectancy compares to others and what steps you can take to live a longer life. To estimate the number, owners must consider the asset's net present value (NPV), internal rate of return (IRR), and return on investment (ROI). lot, Multiple listing services can be utilized for gathering _______________. The Estimated Remaining Economic Life will automatically be calculated based on the Effective Age of the property in all FHA and VA reports. If appraisers report this information, lenders do not need to consider remaining economic life because any related property deficiencies will be discussed in the sections of the appraisal report that address the improvements analysis and comments on the condition of the property. income capitalization, Curbs, gutters and grading are examples of By extraction, what is the value of the land? $1,186.20 "The total period a building lasts or is expected to last" is the definition of _________ life. What is the most common type of framing currently being used in new homes? required data Once we have the effective age, we can calculate the remaining economic life of the home. grayfield Contract rent and market rent are two different concepts. Real estate property- 935 Bianca Court- current assessed value for year 2021= $379,000. Rocket has a plan to drastically cut costs. The valuation process is a systematic procedure employed to provide the answer to a(n) _______ question about the value of _________. Multiple listing services can be utilized for gathering _______________. The company estimates that 150 hours will be required to complete the project. Comparable houses with air conditioning, rent for $1,100 per month. Maybe equal to, greater then, or less than. Which term best describes her ownership interest in the property? a. So, in this case, let's say that the total economic life of the home is 57 years and it has an effective age of 15 years. cost approach topography. A lender may deny a loan application for the purchase of a property with an FHA guaranteed mortgage if the property has little economic life remaining. Special purpose properties rarely sell in the market and are not normally income producing. Allocation Method. By the capitalized value method, how much is the depreciation attributable to the lack of air conditioning? An old gas station on a good corner location in a desirable older neighborhood recently sold for $375,000. This. There are curable items totaling $45,000. $50 X 85 = $4,250. In short, it is a quick and easy way to estimate straight-line physical depreciation. GBA, interior published tables of adjustments If a comparable property sells with atypical financing, we may have to make an adjustment for ___________. heat pump stick-built indirect In a period of uncertain economic conditions, the estimation of a capitalization rate becomes more difficult . fee simple estate An appraisal Report must contain sufficient information to allow _____ to understand the scope of work. Superfund site qualitative In the sales comparison approach, sales data on __________ sales should be collected. There are three methods that appraisers can use to estimate depreciation. Depreciation is defined as a loss and property value from blank. $98,000 Overall Capitalization Rate (RO). If the subject is considered typical for the area and trends indicate that properties with deferred maintenance are renovated, it is reasonable to consider that the current improvements and property type will be useful for many years to come. Qualitative Methods. Over 25% year-over-year growth in Solar Energy Capacity Installed Given this information, one needs to consider whether or not a property with obvious deferred maintenance needs to have a low REL. The credibility of assignment results is always measured in the context of the _______________. An asset's economic life can be reduced or ended by several factors. gross rent multiplier square foot Most appraisers do not possess the level of expertise needed to apply the quantity survey method of cost estimating. full interest Either can be used when the property is income producing. net operating income, "The estimated cost to construct, at current prices as of the effective appraisal date, an exact duplicate or replica of the building being appraised, using the same materials" is the definition of _______________ cost. Your estimate of total economic life is 50 years. 5% 10 months = .5% per month. Statistical analysis will be of little use. There is no mode as each number appears just once, expected remaining economic, remaining economic. unit in a PUD. Extraction Method. Real property appraisal reports may be written or oral. Inflation is high, so why arent mortgage rates higher? Two or false: every difference between a subject property and a comparable sale requires an adjustment. greenfield Name of the licensed appraiser, if applicable. If they cost manual us use the result is _____ cost. Events, B4-1.3-05, Improvements Section of the Appraisal Report, How to do a hard refresh in Internet Explorer. Effective age must be a reasoned estimate. The estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout is _____ cost. The method that treats the land value as a percentage of the total value is the __________ method. Determine Cost of Long-lived Items by subtracting deferred maintenance and short lived items Cost from total replacement cost: $212,340 - $670 - $20,000 = $191,670. $1,046,720, $1,046,720 An appraiser has value to subject property at $320,000. All of the following would be considered short-lived items EXCEPT, An estimate of remaining economic life is required by, Cost Data Sources. An entrepreneur is taking on a development project, and by his calculations, he expects to receive a 25% return on his investment in the project. Which site evaluation methods should only be utilized when the subject property is income producing thing by nature? unit-in-place, The ________ approach is particularly applicable in the appraisal of special purpose properties. reliable A comparable new house just sold for $340,000. It is bordered by the Red Sea to the west; Jordan, Iraq, and Kuwait to the north; the . modular Appraisal fees are examples of _______________ costs. cape cod One year of the economic life of the asset will be utilized over the next 12 months. Under USPAP, when is an appraiser required to develop the cost approach in a real property appraisal? $305,000 In addition to the requirements outlined in Chapter 60 of the Freddie Mac Multifamily Seller/Servicer Guide . It has a land area of about 2,150,000 km2 (830,000 sq mi), making it the fifth-largest country in Asia, the second-largest in the Arab world, and the largest in Western Asia. extraction and allocation. A property sold for $250,000. For the most part, this confusion centers on the misunderstanding that REL is reflective of the number of years a physical structure is expected to last. __________ occurs within a property; while _________occurs off the site. version of a page. The net operating income was verified as $294,640. The "summation approach" is another name for the _______________ approach. Comparable houses with air conditioning rent for $1,100 per month. $294,640 $2,350,000 = .125 or 12.5%. index After all, the borrower should be able to sell the property at a reasonable rate as determined by current market conditions at any point during the lifetime of the FHA loan. quantitative reproduction, A partial estate could be created by the existence of all the following EXCEPT If you have additional questions, Fannie Mae customers can visit Ask Poli to get The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 80%. $155,000 as single home site B. What is the amount of long-lived depreciation attributable to the building? The second phase of the neighborhood lifecycle is: True or false: an appraiser can adjust the comparable sale to account for differences and the motivation of the buyer or seller in the transaction. What is the GRM indicated by this sale? extraordinary assumption Hence: . A house has a total cost new of $212,340. In the example, the appraiser. $3,750 $625,000 X .20 = $125,000 depreciation. The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 75%. "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat" is the definition of. $155,000 as single home site; B. A single parcel is valued at $450,000. (For best result, pose your search like a question. Agriculture encompasses crop and livestock production, aquaculture, fisheries and forestry for food and non-food products. Subtracting the residual value -- zero -- from the $10,000 recorded cost and then dividing by the software . Access forms, announcements, lender letters, legal documents, and more to stay current on our selling policies. What is the median of the GRMs? Appraisers often have no work file support for the ratio they use. The URAR sales comparison grid requires you to enter in the _________ age of the subject property and comparables. d. the acquisition cost of the asset. Comparable houses with air conditioning, rent for $1,100 per month. A building was constructed in July 2000 for $754,200. Center, Apps What is the land value? Sales change . highest and best use analysis However, this method does not consider individual short-term items like the any cause 201.8 133.6 = 1.51. when it is necessary for credible results. would cost $50,000. The capitalization rate indicated by sale is ____%, The ________ approach is particularly applicable in the appraisal of special purpose properties, In the age-life method of estimating depreciation, the ___________ age is divided by the ____________ life, Fannie Mae says the cost approach ____________________. Another name for the extraction method of sight valuation is: Which method of sight valuation is based on a typical Ratio of land value to total property value? Get answers to your Selling Guide & policy questions with Fannie Mae's AI-powered search tool. contract, effective date of the appraisal. "A method of estimating land value in which the depreciated cost of the improvements on an improved property is calculated and deducted from the total sale price to arrive at an estimated sale price for the land" is the definition of the ___________ method of site valuation. effective Hot Water Heat. The ADU must have basic requirements for living, sleeping, cooking, and bathroom facilities on the same parcel as the primary dwelling. minus depreciation, plus site value, In most residential appraisals, the appraiser values Modified Age-Life Method. would cost $65,000. $197,450 2,448 = $80.66. land residual and subdivision development Why does an appraiser need as much information as he can get about rental comparables? What is the highest and best use? Parging is used on which kind of foundation wall? The total remaining economic life of a home is calculated by subtracting the effective age of the home from its total economic life. cost Cost Data Sources. And modern construction, the most common sub flooring material is: The main support beams for home are called: The most common roofing material currently use in the new construction in the US is: Roof slope is expressed as _____ over _____. Written by Bill Waltenbaugh, as originally published in The Reverse Review. Drilled wells need to use __________ until the drilling enters ___________. The power of data with Mike Simonsen at Gathering of Eagles, Eric Lapin on how consumer-controlled data can change lending, Clear Capital launches UDC to support appraisal modernization. personal opinions income capitalization The most common brownfield contaminant is. The appraisers research indicates that site values in the subject area are typically 20% of property values. cost/benefit quality encroachment The simplest quickest and least accurate method of estimating costs is the _____ method. $126,000 $1,200 = 105. quantity survey Both Appraisals and a praise all review assignments. post and joist, "An element of comparison in the sales comparison approach; comparable properties can be adjusted for differences in the motivations of either the buyer or a seller in a transaction" is the definition of The cost approach formula states that ______________, minus depreciation, _______________, equals property value. condominium. In order to understand what factors cause mental disorders, most psychologists use a ________________. What is the estimated land value? 3. Fill, grading and permits are examples of improvements that create a. Modular homes are constructed to meet __________ code requirements. True or false: expense ratio information is easier to obtain on single unit residential properties than commercial properties. Cost Index Trending Solution. List three prohibited nonaudit services that are considered management responsibilities. Having Issues with Seeing this Page Correctly? personal property It was rented for $1,100 per month but the market rent was $1,200. The new machine has an estimated useful life of nine years and the salvage value was estimated to be $75,000. For things should be at least _____ average frost penetration levels. If a property is assessed at $186,000 and the rate per thousand is $6.45, how much are total property taxes? . A management fee usually is based on a percentage of the _________ income. The Kakaramea Dairy Factory Company paid out 2862 to milk supp cost You calculate the following gross rent multipliers for comparable properties: 121.2, 105.3, 111.2, 150.1, 108.3, 105.3, 109.8, 108.8. J-bolts are used to anchor the _________ to the __________. The method that treats the land value as a percentage of the total value is the __________ method. A house is rented for $1,050 per month, but lacks air conditioning. A property has a cost new of $350,000. The manufactured home construction and safety standards is also known as the: Ranking analysis is a _____ method for estimating site value. $2,980 Lessee Corp is required to pay $500 per month for three years, so the total lease payments are $18,000 ($500 36 months). A property contains 2.4 acres and is worth: A. all of the above, Fannie Mae says the appraiser must base his or her analysis and any adjustments to comparable sales on 4Q21. When valuing real property, the value of the whole ____ the sum of the Estates or the parts. When the home resold it had not been improved at all. $305,000 X .231 = $70,455. Architectural and engineering fees are example of blank costs. The appraiser estimates that $61,000 of income is attributable to the building. GLA includes _______________ but not _______________. Half of Q4 2022 transactions had wire and title fraud risks. The net operating income was verified as $294,640. What is your net adjustment? $350,000 - $45,000 = $305,000. When measuring a condominium you should calculate blank using blank measurements. $299,500. Label the optimum as point A. What type of framing became popular in the 1800s with the advent of the steam-powered sawmill? report the final opinion of value Materials that transfer energy quickly are called __________ and those that transfer energy slowly are called __________. A 5 year old water heater with an expected life of 12 years and a replacement cost of $825 will have experienced depreciation of $__________. $50,000 __________ refers to uncontrollable sleeping that occurs for short periods while a person is awake. And what type of heating system would you find an expansion tank? $305,000 - $70,455 = $234,545. Contractors are overhead and profit is an example of _____ costs. His weekly food budget is $60. It is a generic form, The summation approach is another name for the _______________ approach. Many factors can affect the useful life of an asset, both physical and economic. 221.8 138.5 = 1.60. biased indirect Which would not be a typical source of building costs for the appraiaer? slope 180 If a cost manual is used, the result is _____________ cost. What are the three general types of depreciation? it was built in 2010. . A square contains enough shingles to cover 100 square feet. "Data that relates to the four forces that affect real property valuessocial, economic, governmental, and environmental forces" is the definition of. The duplex produces the highest value ($170,000), Overall Capitalization Rate (RO). bundle of rights The duplex produces the highest value ($170,000). deed restrictions. $754,200 X 1.51 = $1,138,842. credible If they are cured, it will reduce the effective age to 15 years. The most common type of framing in residential construction today is. Appraisal regulatory agencies state that one of the problems with the allocation method is: The extraction method of sight valuation typically has good applicability an older urban areas. The fair value of the car was $15,000 at commencement of the lease. Which of these is not one of the traditional coat estimating methods? This is an example of _____ adjustment. United Nations, What type of framing became popular in the 1800s with the advent of the steam-powered sawmill? Decide whether the following statement is true or false makes sense. Add them all up and the net adjustment is the difference between the total positive and negative adjustments - in this case +$10,000. Keyways are employed in which type of foundation walls? income-producing or suitable for income production, The ground rent capitalization method should only be used when appraising a property that is. The HUD handbook states that the useful life of a building has come to an end when: -The building can no longer produce annual income or services sufficient to offset maintenance expense, insurance and taxes to produce returns on the value of the land. Access to Appraisal Reports VA staff, lenders, agents, servicers, and other requesters with VA issued ID numbers that are associated with the loan number will be able to retrieve the appraisal from E-Appraisal for review, issuance of the Notice of Value (NOV), or other functions. And upon comparative analysis, and appraiser may employ: The quantitative adjustments are usually performed first. sales comparison Which would NOT be an appropriate legal description of a subject property? Physical deterioration, functional obsolescence capitalization rate In highest and best use of analysis, which criterion is applied last? ranch Which entity produces the most commonly-used land appraisal report form? not suitable for construction of a new building, income-producing or suitable for income production, Appraisers are cautioned to identify the exact _______________ of market value, and its _______________, applicable in each appraisal completed for the purpose of market value. $152,000. 10 50 = .20 or 20% depreciation. The party or parties who engage, by employment or contract, and appraiser in a specific assignment is the: When completing an appraisal assignment, comparable sales information that the appraiser gathers would be considered: Information on employment and unemployment trends in the area would be considered: You check the FEMA flood map, and the subject property is located in zone C. Is this a special flood hazard area? years. specific data only Once again judgment will be required in making the assessment. reproduction cost Which was the earliest form of electrical wiring? Remaining Economic Life "Industrial Designs has been awarded a contract to design a label for a new wine produced by Lake View Winery. entrepreneurial profit, Building permits and worker's compensation are examples of __________costs. (Requirements No. This type of data is different for each appraisal assignment. A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a Cup O Soup for$1.50 per meal. Cost Approach Using Age- Life Method. plus depreciation, plus site value (108.8 + 109.8) 2 = 109.3. $1,279.70 2. Execution, Learning direct costs However, to fully understand REL and how users like HUD employ this information, we also need to consider the following: -PHYSICAL LIFE The total period a building lasts or is expected to last -ECONOMIC LIFE The period over which improvements to real property contribute to property value. "The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease" is the definition of _______________. LOCAL and GENERAL. there are curable items totaling $45,000. Since the estimated remaining life is 30 years. Drilled wells need to use blank until the drilling enters blank. A method of valuing property by discounting the anticipated income stream at an appropriate rate, plus discounting the value of the reversion is: How much income does direct capitalization use? What is the indicated cost new of the building today? statistical appraisal $380,000 X .40 = $152,000 (building value). conditions of sale effective age, remaining economic life leasehold interest Marshall and Swift categorizes reinforced concrete frame commercial structures as class blank. square foot When appraising a duplex, an appraiser should use __________ area. That is more than its present value. Time-adjusted internal rate of return - 14%; Cost of capital of Bayan Muna - 16%; The table of present values of P1 received annually for 8 years has these factors: at 14% = 4, at 16% = 4. Which cost estimating method is the most detailed and time-consuming to develop? The Fannie Mae Single Family Comparable Rent Schedule is designated as Form, "A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis" is the definition of.