plus depreciation, plus site value Conversely, if an entity leases a forklift, with an economic life of five years, for a term of four years and option for an additional four year term, the entity might conclude that it was unlikely to exercise the option due to the remaining life of the asset. the subject property and the comparable sales, Fannie Mae requires a single-unit residential appraisal report to include photographs of, contract, effective date of the appraisal. Soil maps produced by the natural resources conservation service or based on: If an appraiser uses a cost manual to estimate cost new for a property, the result is: The summation report is another name for the blank approach. An appraisal Report must contain sufficient information to allow _____ to understand the scope of work. all of the above, Fannie Mae says the appraiser must base his or her analysis and any adjustments to comparable sales on contradiction, Which type of valuation analysis would typically NOT include a separate site valuation? Multiply the Cost of the Long-Lived Items by the depreciation percentage: $191,760 X 24% = $46,000. The Economic Age/Life Method (also called the straight-line method) is the most common depreciation technique employed by residential appraisers. replacement cost, minus external obsolescence subdivision development The Remaining Economic Life is the estimated number of years that an improvement will continue to contribute to property value. US P a P requires a prior sales history of _____ years for the _____. "The actual or anticipated net income that remains after all operating expenses are deducted from effective gross income but before mortgage debt service and book depreciation are deducted" is the definition of, "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, Soil maps produced by the Natural Resources Conservation Service are based on, The SCOPE OF WORK RULE says that in each real property appraisal assignment, the appraiser must _______ the problem to be solved, and determine and perform the scope of work necessary to develop ________ assignment results. What is the indicated cost new of the building today? What is the range of the GRMs? An appraisal prepared for REO purposes, loan servicing consideration, or any perforated tile, the house estimates and will comment on the methodology used to estimate depreciation, effective age and remaining economic life. If a comparable property sells with atypical financing, we may have to make an adjustment for ___________. Determine depreciation percentage by diving effective life by total economic life: 12 / (12 + 38 = 50) = 24%. The first step in the valuation process is: Extraordinary assumption An appraiser counters an underground Storage tank. depreciated cost, plus site value What is the first step in the sales comparison approach process? When developing an appraisal, you calculate the following GRMs for comparable properties: 94.3, 90.1, 95.6, 109.2, 84.5, 100.7, 99.9. Extraction Method. net operating $754,200 X 1.51 = $1,138,842. assessment rolls Actual age of property is 11 years. $340,000 - $95,000 - $10,000 = $235,000. Roof Covering. If Remaining Economic Life is 40 years, the market is paying 67% of replacement cost (40 / 60). What is the land value? He weighs are employed in which type of foundation walls? Fannie Mae customers! platform frame The REL is the difference between the estimated total economic life and the estimated effective age. Given this information, one needs to consider whether or not a property with obvious deferred maintenance needs to have a low REL. The ground rent capitalization method is most applicable to appraising a ______ interest. d. the acquisition cost of the asset. $155,000 as single home site B. $1,100 - $1,050 = $50 rent loss. definition of value An estimate of remaining economic life as required by: The most complex method of sight valuation is the blank method. A 5 year old water heater with an expected life of 12 years and a replacement cost of $825 will have experienced depreciation of $__________. when it is necessary for credible results. replacement, Today the _______________ technique of site valuation is used primarily in highest and best use analysis. The subject is a 15 year old duplex that would cost $240,000 to build new today. GLA includes _______________ but not _______________. tenancy in common 180 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. An estimate of remaining economic life is required by . The net operating income was verified as $294,640. It is 12 years old and has an estimated remaining economic life of 38 years. A deed could provide all of the following information about a property EXCEPT, buildable unit Price per Buildable Unit. $294,640 $2,350,000 = .125 or 12.5%. $1,279.70 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. However, related property deficiencies must be discussed in the sections of the appraisal report that address the improvements analysis and comments on the condition of the property. 5 12 = .417 or 41.7% depreciation. Your estimate of total economic life is 50 years. Separate site valuations would likely be required in the following situations except for: "The total period a building lasts or is expected to last" is the definition of _________ life. It changes due to market conditions and the building's overall maintenance. The most complex method of site valuation is the _______________ method. Which was the earliest form of electrical wiring? fee simple Once bedrock is reached, the sides of drilled hole in the rock serves as a casing, to prevent collapse. $197,450 2,448 = $80.66, "The type of data and the extent of research and analyses" is the definition of. $85,000 X 2 = $170,000. It is easy to use and easy to explain to a client. A short-lived Item is a building component with an _____ that is shorter than the _____ life of the entire structure. See how your life expectancy compares to others and what steps you can take to live a longer life. In order to understand what factors cause mental disorders, most psychologists use a ________________. What is the median of the GRMs? $98,000 Which of the stages in the life cycle of a market area does not always occur? The Economic Age/Life Method is big on the new National Licensing Exam. The intended user of an appraisal is the __________ and any other user, as identified by _________. Physical deterioration, functional obsolescence And appraisal could be done to the property in its "as is" contaminated condition or could be appraised under the _____ that the property is free of contamination. pH There are three methods that appraisers can use to estimate depreciation. True or false: according to Fannie Mae selling guide, and appraiser must make dollar for dollar adjustments for the amount of the sales concession. To estimate physical deterioration, an appraiser can compare the estimated remaining economic life of the hotel's FF&E to its total economic life. entrepreneurial incentive- expected profit. First array them in order. determine the scope of work, Depreciation is defined as "a loss in property value from _________. " "The estimated period over which existing improvements are expected to contribute economically to a property; an estimate of the number of years remaining in the economic life of a structure or structural components as of the effective date of the appraisal; used in the economic age-life method of estimating depreciation." Effective What is its indicated value by the cost approach? tenancy in severalty The range is the difference between the high and the low. $625,000 X .20 = $125,000 depreciation. The most commonly used method for valuing sites is the ____________ method. market The duplex produces the highest value ($170,000), Overall Capitalization Rate (RO). Its remaining economic life is estimated to be 48 years. split-entry, "Real property for which the expansion, redevelopment, or reuse of the real estate may be complicated by the presence of environmental contamination that needs to be remediated to appropriate regulatory standards " is the definition of Physical deterioration and functional obsolescence, external obsolescence. casing, sandstone. The appraiser estimates the total age, effective age, and remaining life of the improvements. size Add them up and divide by 7 = 96.3. What is the value of the improvements on a modified age-life basis, before including the site value? stick-built effective gross income Here is a definition and an example of how to calculate depreciation using the Economic Age/Life Method.. bundle of rights cash equivalency, "Expenditures or allowances for items other than labor and materials that are necessary for construction, but are not typically part of the construction contract" is the definition of That is the most complex and involves discounted cash flow analysis. $1,118,800 It is 10 years old and has an effective age of 12. An appraiser is using both quantitative and qualitative adjustments and their sales comparison approach. The cost to cure deferred maintenance items is $670. speculative An old gas station on a good corner location in a desirable older neighborhood recently sold for $375,000. Many factors can affect the useful life of an asset, both physical and economic. Depreciation is defined as a loss and property value from blank. Which of these items is not required by Fannie Mae to be included as an exhibit in an appraisal report? unit-in-place Which is the highest and best use? income-producing or suitable for income production a guesstimate, The last step in the valuation process is The cost to cure deferred maintenance items is $670. Visit Selling and Servicing Guide Communications and Forms. Asset wear, degradation, or damage reduces an asset's economic life. "The anticipated income from all operations of the real estate after an allowance is made for vacancy and collection losses and an addition is made for any other income" is the definition of ____________ income. If they cost manual us use the result is _____ cost. All rights reserved. forced warm air What is your net adjustment? the following required inspection based on the extraordinary assumption that the condition or deficiency does not require alteration or repair: R E C O N I L I A T I O N Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting Subdivide it; 8 X 70,000 = $560,000. ground rent capitalization and subdivision development Get answers to your Selling Guide & policy questions with Fannie Mae's AI-powered search tool. "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. effective date of value The cost to cure deferred maintenance items is $670. casing, bedrock Economic life is the expected period of time during which an asset remains useful to the average owner. The valuation process is a systematic procedure employed to provide the answer to a(n) _______ question about the value of _________. Center, Apps 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. The most common unit of comparison for land in urban areas is price per _______. any cause buildable When an asset is no longer useful to its owner, then it is said to be past its economic. $919.90 wood Architectural and engineering fees are examples of _____________ costs. 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? Selected GAAP and Non-GAAP measures: Sales . heat pumps 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? $1,098,253 That is the standard today. $350,000 - $45,000 = $305,000. 8. The difference tween the cost of an improvement and its market value on the effective date of an appraisal is: Depreciation is defined as a loss in property value from: A 10-year-old home will always have this: The. Contract rent and market rent are two different concepts. quantity survey Sales change . GRMs are derived by dividing the __________ by the property's ___________ at the time of sale. 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. Which cost estimating method is the most detailed and time-consuming to develop? taxes and assessment, If an appraiser uses a cost manual to estimate cost new for a property, the result is The method that estimates land value based on a percentage of the total property value is the _______________ method. The results of a _________ test will determine if there is suitable drainage and the size of the drain field that will be required for a septic system. The difference between the cost of a value on the effective date of the appraisal is: The amount on your expects to receive or his or her contribution to a project is: Feesimple ownership is not subject to the governmental powers of police power and escheat. Prepare a bank reconciliation to calculate the correct ending balance . square foot Consider this scenario: On January 1, 2015, Hamford Productions Inc. and CTF Leasing signed an 11-year lease agreement for a storage facility with an estimated remaining economic life of 15 years and a final salvage value of $60,000. In the age-life method of estimating depreciation, the blank age is divided by the blank life. If you have additional questions, Fannie Mae customers can visit Ask Poli to get The required Extraordinary Items and Assumptions Addenda has been added to the Canadian Driveby and Desktop forms so they don't have to be added separately. $8,491. It is based on the buildings effective age divided by its economic life. Which term best describes her ownership interest in the property? Lead Analyst Logan Mohtashami explains. Today the _______________ technique of site valuation is used primarily in highest and best use analysis. Want to know what the data says about how long you'll live? If agricultural tariffs and subsidies to producers were removed overnight, what would the impact be on the average consumer in developed nations such as the Untied States and the EU countries? entrepreneurial incentive sales comparison indirect Overall Capitalization Rate (RO). casing, bedrock anticipation An appraisal with an effective date at some point in the future is called a(n) ___________ appraisal. Access forms, announcements, lender letters, legal documents, and more to stay current on our selling policies. Is producing a cost estimate, Eric has estimated the number of two by force, she's a climber, and how many pounds of nails will be necessary. cost/benefit grayfield define the problem 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. Which cost estimating method is the most detailed and time-consuming to develop? minus depreciation, plus indexed costs An appraiser observes that an underground tank is leaking. Price per room is a common unit of comparison when appraising economic life, long-lived $8,465. The REL is the remaining expected economically productive life span of the structure. 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. there are curable items totaling $45,000. Depreciation is a loss - and it could be from any cause. Ranking analysis is a form of __________ analysis. highest and best use, Market condition adjustments should always be calculated from the time of the ________ to the ___________. Architectural and engineering fees are example of blank costs. 8,000 square foot residence indirect costs biased $350,000 - $45,000 = $305,000. All uses are physically possible, economically feasible and legally permitted. It was rented for $1,100 per month but the market rent was $1,200. Estimated useful life = % remaining physical life = 1.0 - % physical life consumed . What are the three general types of depreciation? $152,000. Due to other project commitments, Lisa has a maximum of 50 hours available to work on this project. 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. A building was constructed in July 2000 for $754,200. lot, Multiple listing services can be utilized for gathering _______________. If a property is assessed at $186,000 and the rate per thousand is $6.45, how much are total property taxes? $625,000 - $125,000 = $500,000. A comparable new house just sold for $340,000. $240,000 X .20 = $48,000 depreciation. J-bolts are used to anchor the _________ to the __________. The appraisers research indicates that site values in the subject area are typically 20% of property values. index All of the following are required exhibits for a Fannie Mae appraisal report except: Fannie Mae says the appraiser must base his or her analysis and any adjustments to comparable sales on: Expenditures made immediately after purchase. Drilled wells need to use blank until the drilling enters blank. If the condo unit is income producing (rental), the remaining economical life can be determined or estimated by using the income capitalization approach and/or form 216 (operating income statement) replacement reserve schedule (which provides an estimate of replacement cost and remaining economic life or useful life using the straight-line $12,000 $240,000 = .05 or 5%. years. consumption Cost Data Sources. DU Journeys' incremental borrowing rate is 8%. b. the cost of the asset less the related depreciation recorded to date. c. the estimated market value of the asset at the end of its useful life. To provide label designing experience for Sarah, the junior designer must be assigned at least 15 percent of the total project time. Label the optimum as point A. $50 X 85 = $4,250. cost 1 - Radon, Mold, a, FL Trainee Appraiser - Ch. effective age, total economic life cost new, minus land value $250,000 - $152,000 = $98,000 (land value). ground rent capitalization statistical appraisal 186 (thousands) X $6.45 = $1,199.70. easements unit-in-place ), the report date (Date Reported), and the name of the subdivision (Subdivision). FHA Minimum Property Requirements in HUD 4000.1: Remaining Economic Life Of The Home November 20, 2015 HUD 4000.1 has a section with guidelines concerning the minimum property standards for homes to be purchased with an FHA mortgage. actual age, total physical life financing actual and effective, An example of a special purpose property would be a(n) "The anticipated income from all operations of the real estate after an allowance is made for vacancy and collection losses and an addition is made for any other income" is the definition of ____________ income, A partial estate could be created by the existence of all the following EXCEPT. Decide whether the following statement is true or false makes sense. Yes, it is required by VA and FHA. The cost index at that time was 138.5. The area associated with a subject property that contains it's direct competition is the definition of: General data includes items of information on value influences that originate outside the property being appraised. An appraiser has value to subject property at $320,000. Which would NOT be an appropriate legal description of a subject property? An estimate of remaining economic life is required by A VA. Footings should be ________ as wide as the ____________. would cost $50,000. builder's profit quantity survey From HUDs viewpoint, maybe not. Over which improvements contribute to real property value is the definition of: A new building is expected to remain standing for eight years. . The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 80%. Capitalization of Income Loss. In a period of uncertain economic conditions, the estimation of a capitalization rate becomes more difficult . retail stores, Basic Appraisal Procedures Ch. feel free to email. A single unit residence sold for $126,000. You examine a construction contract to build a 2,448 square foot house and the total cost is $197,450. Single Family Exterior Only(FNMA 2055), $500. physical, "The relationship or ratio between the sale price or value of a property and its gross annual rental income" is the definition of subdivision development. Fill, grading and permits are examples of improvements that create a. Modular homes are constructed to meet __________ code requirements. $1,186.20 deed restrictions. J-bolts are used to anchor the _________ to the __________. That is more than its present value. How much income does yield capitalization use? Which of these is not one of the traditional coat estimating methods? identification of the property rights A house has a total cost new of $212,340. A municipality assesses property at 100% of value. sale price, gross monthly unfurnished market rent. By the capitalized value method, how much is the depreciation attributable to the lack of air conditioning? When the property being appraised is a one-family property that will be used as an investment property, Fannie Mae requires that the appraiser must prepare a ______________. Which is true reguarding the situation? investment The company will use the straight-line method to report the amortization of the software. entrepreneurial risk, "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 Parging is used on which kind of foundation wall? 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. When developing an appraisal, you calculate the following GRMs for comparable properties: 94.3, 90.1, 95.6, 109.2, 84.5, 100.7, 99.9. 520 Yes, it is required by VA and FHA.
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