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
In the sales comparison approach to property valuation, what is a 'paired sales analysis' used to determine?
Answer: The dollar or percentage adjustment for a specific property characteristic
Paired sales analysis involves comparing two similar sales that differ in only one characteristic to isolate and quantify the value contribution of that feature.
Which valuation approach is most commonly emphasized when assessing residential properties for Florida ad valorem tax purposes?
Answer: Sales comparison approach
The sales comparison approach is most heavily relied upon for residential property assessment because abundant sales data allows direct market comparisons.
Under the income approach to valuation, what does the term 'capitalization rate' (cap rate) represent?
Answer: The ratio of net operating income to property value
The capitalization rate is the ratio of a property's net operating income (NOI) to its market value, reflecting the return rate investors expect for that property type.
In the cost approach, 'effective age' differs from 'actual age' in that it reflects:
Answer: The age indicated by the property's condition and utility relative to new construction
Effective age represents how old a structure appears based on its actual physical condition and utility, which may be less than or greater than its chronological age depending on maintenance.
What is 'economic obsolescence' in the context of property valuation?
Answer: Loss in value caused by external factors outside the property itself
Economic obsolescence is a loss in value resulting from external forces such as neighborhood decline, adverse zoning changes, or poor economic conditions — factors outside the property boundaries.
Which of the following best describes the term 'just value' as used in Florida property assessment?
Answer: The fair market value of the property as of January 1 of the assessment year
Under Florida law, just value is equivalent to fair market value — the most probable price a property would sell for in an arm's-length transaction as of January 1 of the tax year.