Property Valuation & Appraisal Flashcards
7 cards from real CRM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Property Valuation & Appraisal flashcards as text
In property tax assessment, what is a 'mill rate' (millage rate)?
Answer: The tax rate expressed as dollars of tax per $1,000 of assessed value
A mill equals one dollar of tax per $1,000 of assessed value; a mill rate of 20 mills equals a tax rate of $20 per $1,000 assessed value.
What is the primary difference between an appraisal and a Broker Price Opinion (BPO)?
Answer: An appraisal is performed by a licensed/certified appraiser under USPAP; a BPO is performed by a real estate licensee and is not a USPAP-compliant appraisal
Appraisals are regulated under USPAP and state appraiser licensing laws; BPOs are informal opinions by real estate agents and cannot substitute for appraisals in most federally related lending transactions.
What is 'highest and best use' in appraisal, and why does it matter?
Answer: The legally permissible, physically possible, financially feasible, and maximally productive use of a property, which forms the basis for market value
Highest and best use analysis determines which legal, feasible, and productive use would generate maximum value, anchoring the entire appraisal process.
When appraising a condominium unit, which adjustment is typically necessary that would NOT apply to a single-family detached home?
Answer: Adjustment for HOA fees and common area quality
Condominium appraisals must address HOA fees, reserve fund health, and shared amenity quality because these directly impact value and buyer financing eligibility.
An appraiser notes that a home's effective age is 15 years, but its chronological age is 25 years. This indicates:
Answer: The property has been well-maintained or renovated, making it appear newer than its actual age
Effective age reflects physical condition and utility; an effective age below chronological age indicates above-average upkeep or recent updates that reduce apparent wear.
Which federal law prohibits appraisers from being pressured by lenders to hit a predetermined value?
Answer: The Dodd-Frank Wall Street Reform and Consumer Protection Act (appraiser independence provisions)
Dodd-Frank's appraiser independence requirements prohibit lenders and other parties from coercing or pressuring appraisers to produce a value that meets a predetermined target.
When a residential property manager orders a rental market analysis to set asking rents, which appraisal concept is most directly applied?
Answer: Market rent estimation using the sales comparison (rent comparison) approach
Setting market rents involves comparing the subject property to recently leased comparable units, which is a direct application of the sales/rent comparison approach.