Question 1

The type of appraisal report used, (Self-Contained, Summary, or Restricted Use) should be decided upon in advance between the appraiser and the client.

Accepted Answer

The decision on the type of appraisal report to be used should be made in advance between the appraiser and the client. This helps to ensure that the report meets the needs of the client and provides the necessary level of detail and analysis required for the intended use of the appraisal. The three main types of appraisal reports are self-contained, summary, and restricted use, each with different levels of detail and disclosure requirements.

Question 2

The typical appraisal assignment is to appraise the &#34;fee simple&#34; ownership.

Accepted Answer

The vast majority of appraisal assignments involve appraising the fee simple ownership, which means the complete ownership of the property including both the land and any improvements on it. However, some appraisal assignments may involve valuing other types of ownership interests such as leasehold interests or easements.

Question 3

In simple terms, market value essentially means the most probable sales price in an open market.

Accepted Answer

Market value is defined as the most probable price that a property would bring in an arm's length transaction in a competitive and open market under all conditions requisite to a fair sale.

Question 4

Written appraisals usually consist of a letter, a printed form, or a narrative report.

Accepted Answer

Written appraisals can take different forms such as a letter, a printed form, or a narrative report.

Question 5

The cost approach is normally given more weight in the appraisal of old and substantially obsolete buildings.

Accepted Answer

The cost approach is typically given more weight in the appraisal of new buildings or special-use properties, as it is based on the cost to replace or reproduce the property. For old and substantially obsolete buildings, the income approach or the sales comparison approach is often more relevant.

Question 6

Income and commercial properties are most often appraised by emphasizing the income approach to value.

Accepted Answer

This statement is true. Income-producing properties, such as commercial buildings and rental properties, are often valued based on the income they generate. The income approach to value takes into account the potential income that the property can generate in the future and applies a capitalization rate to derive the property's value. This approach is commonly used by appraisers and investors when determining the value of commercial real estate.

Question 7

In the sales comparison approach, the appraiser adjusts comparable sales by adding or subtracting amounts from their sale price to &#34;improve&#34; their comparability.

Accepted Answer

In the sales comparison approach, the appraiser makes adjustments to comparable sales by adding or subtracting amounts for differences in physical characteristics, location, financing terms, and other factors, in order to enhance their comparability with the subject property being appraised.

Question 8

Well-prepared Restricted Use Appraisal Reports are considered to be less reliable than Self-Contained Appraisal Reports.

Accepted Answer

Well-prepared Restricted Use Appraisal Reports are still prepared by a qualified appraiser and contain sufficient information to support the appraiser's conclusions. However, Self-Contained Appraisal Reports are considered to be more reliable as they provide a more comprehensive analysis of the subject property and its value.

Question 9

Value in use is an objective kind of value that means the value to people in general.

Accepted Answer

Value in use is a subjective measure, reflecting the worth of an asset or service to a specific user in their particular circumstances, rather than to people in general.

Question 10

If you are a state licensed or certified appraiser, in most states your appraisals must always conform to USPAP.

Accepted Answer

Most states require state licensed or certified appraisers to always comply with the Uniform Standards of Professional Appraisal Practice (USPAP).

Deck 3: The Formal Appraisal Process