CFE Market Analysis & Valuation Methods Flashcards
6 cards from real CFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CFE Market Analysis & Valuation Methods flashcards as text
When conducting a market analysis for mass appraisal in Florida, which statistical measure is used to assess the uniformity of assessments across properties?
Answer: Coefficient of Dispersion (COD)
The Coefficient of Dispersion (COD) measures the average percentage deviation of individual assessment ratios from the median ratio, indicating assessment uniformity.
What is a 'price-related differential' (PRD) used to detect in assessment ratio studies?
Answer: Regressivity or progressivity in assessments across different value ranges
The PRD indicates whether assessments are regressive (lower-value properties over-assessed relative to higher-value ones) or progressive — a PRD above 1.03 suggests regressivity.
In Florida mass appraisal, what does the term 'sales ratio' represent?
Answer: The ratio of assessed value to the verified sale price of a property
The sales ratio (assessment ratio) is calculated by dividing the assessed value by the verified arm's-length sale price, used to evaluate appraisal accuracy and level.
Which income approach formula is used to convert a single year's income into a value estimate?
Answer: Value = NOI ÷ Cap Rate
Direct capitalization divides net operating income by the appropriate capitalization rate (Value = NOI ÷ Cap Rate) to estimate the property's market value.
What is 'highest and best use' and why is it critical to the valuation process?
Answer: The legally permissible, physically possible, financially feasible, and maximally productive use that produces the highest value
Highest and best use is the foundational concept in appraisal — it defines the use that maximizes property value while meeting all four criteria: legal, physical, financial, and maximum productivity.
In the cost approach, which method estimates depreciation by comparing the total depreciation of a property to its reproduction or replacement cost?
Answer: Market extraction method
The market extraction method derives depreciation by analyzing comparable sales, subtracting land value and reproduction cost new from sale prices to quantify market-observed total depreciation.