Property Valuation & Appraisal Flashcards
6 cards from real BC Real Estate Trading Services Course practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Property Valuation & Appraisal flashcards as text
When a BC appraiser makes a 'positive adjustment' to a comparable sale, it means:
Answer: The comparable is inferior to the subject, so its price is adjusted upward
A positive adjustment means adding value to the comparable's price because the comparable lacks a feature the subject has. The comparable is inferior in that element, so its price is adjusted upward to reflect what it would have sold for with that feature.
In BC, 'functional obsolescence' in property valuation is best described as:
Answer: Reduced value due to outdated or inefficient design features of the building
Functional obsolescence is loss of value due to features of the building itself that are outmoded, inefficient, or undesirable — such as an outdated floor plan, poor ceiling heights, or inadequate electrical service.
In BC residential appraisals, which factors are considered when selecting comparables?
Answer: Recently sold properties that are similar in type, size, location, and condition to the subject
Good comparables are recent sales of similar properties — comparable in type (residential), size, location, age, condition, and features. The more similar they are, the fewer adjustments needed.
Net Operating Income (NOI) for a BC income property is calculated as:
Answer: Effective gross income minus operating expenses (excluding debt service)
NOI = Effective Gross Income (potential income minus vacancy and credit losses) minus all operating expenses, excluding debt service (mortgage payments). NOI is used in the income approach to estimate value.
In BC, a property's BC Assessment value compared to its market value typically:
Answer: May differ — BC Assessment uses a mass appraisal as of July 1, while market value reflects current conditions
BC Assessment uses mass appraisal as of July 1 of the previous year. By the time assessments are published and taxes levied, market conditions may have changed, causing assessed value to differ from current market value.
In BC, the 'gross rent multiplier' (GRM) method estimates value by:
Answer: Multiplying the gross monthly rent by a market-derived factor (GRM) to estimate value
GRM = Sale Price ÷ Monthly Gross Rent. To estimate value: Value = Monthly Gross Rent × GRM. It is a quick comparative method but less precise than full income capitalization as it ignores expenses.