Market Analysis & Valuation Flashcards
7 cards from real CHI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Market Analysis & Valuation flashcards as text
What is the 'cost approach' to property valuation most useful for?
Answer: Appraising unique or special-use properties with few comparable sales
The cost approach is especially reliable for special-purpose or unique properties where market comparables are scarce, estimating value as land plus depreciated improvement cost.
What does a 'price-per-square-foot' metric help a home inspector or analyst determine during a market analysis?
Answer: A normalized comparison of home values across different property sizes
Price per square foot normalizes sale prices across homes of different sizes, allowing for more meaningful comparisons of value across a market.
When a comparable property sold 18 months ago in a rapidly appreciating market, what adjustment should an appraiser make?
Answer: A positive time adjustment to account for market appreciation since the sale
A positive time (market conditions) adjustment is applied to older sales in an appreciating market to bring their prices up to current market levels.
What is 'highest and best use' as applied in property valuation?
Answer: The legally permissible, physically possible, financially feasible, and maximally productive use of a property
Highest and best use is the legally, physically, and financially justified use that produces the greatest value for a property.
A home inspector notices a property has only one bathroom for a four-bedroom home. In valuation terms, this is an example of:
Answer: Functional obsolescence (deficiency)
A deficiency in features relative to market expectations — such as too few bathrooms — is classified as functional obsolescence.
How does a 'buyer's market' typically affect negotiation on a home inspection report?
Answer: Buyers have more leverage to negotiate repairs or price reductions due to ample inventory
In a buyer's market with high inventory and fewer competing buyers, buyers hold stronger negotiating power to request repairs or price concessions after inspection.
Which of the following would most directly increase a property's 'effective age' compared to its actual age?
Answer: Significant deferred maintenance and neglect
Neglect and deferred maintenance cause a property to age faster than its chronological years, increasing its effective age and reducing value.