Real Estate Valuation and Market Analysis: PSI Exam Part 1
A set of 25 flashcards covering key concepts in real estate valuation and market analysis for the PSI exam.
An appraisal
An appraisal is a formal opinion of value that a property has, based on supportable evidence, for a specific purpose, party, and property, as of a specific date.
Key Terms
An appraisal
An appraisal is a formal opinion of value that a property has, based on supportable evidence, for a specific purpose, party, and property, as of a ...
Valuation (formal appraisal)
Valuation is the process of forming an opinion of a property's value.
Appraisers follow the Uniform Standards of Professional Appraisal Practice (USPAP) and use these steps:
State the problem
Identify data needed
Gather and analyze data
Determine highest and best use
Estimate the land value
Use one or mor...
Residential properties valued at ___________ or less are exempt from federal appraisal requirements.
$400,000
Does FHA loans should be appraised?
Yes, by a state licensed appraiser.
Does VA loans should be appraised?
Yes, by a VA licensed appraiser.
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| Term | Definition |
|---|---|
An appraisal | An appraisal is a formal opinion of value that a property has, based on supportable evidence, for a specific purpose, party, and property, as of a specific date. |
Valuation (formal appraisal) | Valuation is the process of forming an opinion of a property's value. |
Appraisers follow the Uniform Standards of Professional Appraisal Practice (USPAP) and use these steps: | State the problem |
Residential properties valued at ___________ or less are exempt from federal appraisal requirements. | $400,000 |
Does FHA loans should be appraised? | Yes, by a state licensed appraiser. |
Does VA loans should be appraised? | Yes, by a VA licensed appraiser. |
What does AIR stand for? | Appraiser Independence Requirements of 2010. |
What are the 3 requirements of AIR appraisers? |
|
Market value | Market value is the most probable price a property will sell for in an open market if neither the buyer nor the seller is under duress. |
Value | Value is a property's objective worth and may not equal price or cost. |
What is cost? | Cost is the amount to recreate that property if it disappeared off the face of the earth today. |
What is market price? | Market price is the amount a buyer paid for a property and the seller accepted. |
What is the principle of highest and best use? | The principle of highest and best use refers to a property's legal and feasible use that would be the most profitable. |
What is demand? | Demand is how popular or desirable a property is. |
What is utility? | Utility is the property's function. |
What is scarcity? | Scarcity relates to market supply. |
What is transferability? | Transferability is the ease with which another person can purchase the property; a property with a title defect may suffer a loss of value because of the difficulty of being able to transfer title to another. |
What is value in use? | Value in use is what a property is worth to the person using it. |
What is assessed value? | Assessed value is what the local taxing authority thinks a property is worth. |
What is mortgage value? | Mortgage value is the price at which the property can be loaned on or sold for at a foreclosure sale. |
What is insurance value? | Insurance value is the cost to replace or rebuild a property. |
What is investment value? | A property's value is determined in part by the return on investment it may provide. |
What is the principle of conformity? | A property's value is determined in part by how well it conforms to its surrounding area (how similar it is to other properties in the neighborhood). |
What is the principle of competition? | A property's value is determined in part based on what else is available. |
What is the principle of substitution? | A reasonable person will not pay more for a property if a comparable one can be had for less. |