Practice Exam #2 Quiz #2: Agents and the New Appraisal Process In this new era of real estate, today’s agent must know more about appraisers and the appraisal process, and know how to turn low appraisals into closed sales. Take this short quiz to find out how well you measure up on the new appraisal process. Q. When most people ask about an appraisal they only want to know one answer: The total square footage The final value The number of bedrooms and baths How many comparables were used in the reportQ. USPAP defines an appraisal as: The professional valuation of personal and/or business property based on current listings An act or process of developing an opinion of value An opinion of value for a specific range of dates An unbiased value based on anticipated property returns and sales closed within one yearQ. Property valuation is: Based on a number that is definable, extractable, and absolute A science Available in most public records An artQ. Regardless of who provides it or where it comes from, once any details are reported in the “closed” or “sold” information within MLS: It is considered part of “the most trusted source of real estate information in the world” All of the above It is instantly viewed as fact It is used by agents, appraisers, insurance underwriters, assessors, and by many others in a wide variety of functionsQ. An appraisal is a series of steps that leads to: A narrow value range A value conclusion An exact, absolute determination of value An absolute guaranteed value, generally valid for three monthsQ. Sometimes after you lose a listing, and then find out it is listed for a much higher price than you recommended: It’s satisfying to watch the listing expire and then have the price reduced to the value you originally suggested, or lower It makes you rethink your CMA process and calculations It helps you to better understand the values in that neighborhood It confirms that value is based on an opinionQ. When three brokers (or appraisers) look at the same house: They will all have the same opinion of value They will all calculate the same square footage They will all view the design and market appeal the same They will each develop their own personal opinion of valueQ. At some point in every loan transaction: You find out if the appraisal is a “go” or a “no” The appraiser and underwriter set the final purchase price The appraiser decides if the transaction is fair and should proceed Buyers and sellers meet to discuss the appraised valueQ. At some point __________can become a deterrent rather than a benefit to value: Square footage Location Age ConditionQ.What is the first line most people look at in an appraisal report? The appraiser’s signature and credentials The legal names listed in the report to verify the information is correct The addresses of the comparables and the pictures The final valueQ. What is NAR’s new “ultimate information resource” set to be released in 2010, which will provide access to tax and assessment data; property data; neighborhood, demographic and psychographic information; maps, trends and reports; and zoning, permits, environmental, neighborhoods, and school districts - and be exclusive to members of NAR? The RPID - Realtor’s Property Information Database The RPR - Realtor’s Property Resource The ABR - Automated Broker’s Resource The UPR - Ultimate Property ResourceQ. Making a determination of value requires: Knowing how to calculate the formula for the effective age of the land A broker’s or an appraisal license The ability to investigate and evaluate large amounts of information and a fundamental knowledge of local real estate The ability to calculate the estimated gross income and depreciated value of the subject propertyQ. After the buyer’s agent gets notified the appraisal is “at or above” the sales price: They briefly scan the report to check which comparables were used Buyers meet with the lender to review the appraisal They thoroughly examine the report to verify its accuracy That’s generally the end of the appraisal discussionQ. Residential property values are typically based on: The principle of substitution The science of real estate The principle of anticipation Local tax assessmentQ. One method of determining a proper per-item adjustment is by the use of: Appraisers experience The “Comp Adjustment” book Kelly Blue Book of Construction Costs Paired Sales AnalysisQ. The circumstances of comparable sales often play a key role in the valuation process and are one of the reasons why local knowledge is imperative: True FalseQ. Being a professional real estate practitioner requires all the following, Except: Forming opinions Explaining to sellers that your value opinion is exactly what their house will sell for The knowledge to research and analyze large amounts of information Estimating property valuesQ. The MLS is one of the most powerful databases in the world, and is: Available to any paid subscriber Used exclusively by Realtor® members Regulated by each local MLS association and the national MLS standards committee Created one sales at a time, by each listing agentQ. Whenever there is an appraisal that comes in below the contract price: The contract is automatically voided The outcome depends on the agents, buyers and sellers, and the lender All parties to the contract must meet and renegotiate The appraiser must complete a new appraisal using different comparablesQ. Agents and appraisers ______ the market, they do not _______ the market. Study – Report Use – Create Report – Create Estimate – AnalyzePlease fill in the comment box below.