AI-GRS flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- USPAP Record Keeping Rule
- Requires appraisers to retain workfiles for at least five years after report delivery or two years after final disposition of a legal proceeding, whichever is later.
- Scope of Work Rule
- Appraiser must determine and disclose the scope of work necessary to produce credible results for the intended use; scope must be sufficient for the assignment.
- Competency Rule
- Appraiser must have knowledge and experience to complete the assignment competently, or disclose lack of competency and take steps to complete it competently.
- Jurisdictional Exception Rule
- If any law or regulation preempts USPAP, the appraiser must comply with the law and disclose the exception in the report.
- Ethics Rule
- Appraiser must not misrepresent value, must not be biased, and must not accept an assignment with a predetermined value or direction in value.
- Standard 3
- USPAP standard governing appraisal review; requires review report to state reviewer's scope, opinion, and basis for opinion.
- Appraisal Review
- Process of forming an opinion about the adequacy and appropriateness of another appraiser's work; not a re-appraisal unless engaged to provide a value opinion.
- Administrative Review
- Review level that checks completeness and compliance with form and reporting requirements, without testing methodology or value conclusions.
- Technical Review
- Review level that tests the methodology, data, and reasoning in the original report to assess credibility and support for conclusions.
- Review with Independent Value
- Review level where the reviewer develops and takes responsibility for an independent value opinion, requiring full USPAP compliance for an appraisal.
- Reviewer's Scope
- The type and extent of review procedures performed, determined by the reviewer based on intended use and purpose of the review.
- Extraordinary Assumption
- An assumption, directly related to a specific assignment, which if found to be false could alter the appraiser's opinions or conclusions.
- Hypothetical Condition
- A condition that is contrary to what exists but is supposed for the purpose of analysis; must be clearly disclosed in the report.
- Sales Comparison Approach
- Value estimated by comparing subject to similar sold properties, adjusting comparable sales to the subject for differences in characteristics.
- Cost Approach
- Value = cost new (replacement or reproduction) minus depreciation plus land value; most reliable for new or unique properties.
- Income Approach
- Value based on present value of future income; direct capitalization uses V = NOI / R; yield capitalization uses discounted cash flow.
- Direct Capitalization
- Method converting a single year's net operating income into value by dividing by a capitalization rate (V = NOI / R).
- Gross Rent Multiplier
- GRM = Sale Price / Gross Monthly Rent; used in sales comparison approach for income-producing properties.
- Highest and Best Use
- The reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive, resulting in highest value.
- Paired Sales Analysis
- Adjustment technique comparing two similar properties differing in one characteristic to isolate the market reaction to that difference.
- Functional Obsolescence
- Loss in value due to a defect in design, superadequacy, or lack of utility compared to market standards; can be curable or incurable.
- External Obsolescence
- Loss in value due to factors outside the property, such as economic or locational influences; generally incurable.
- Band of Investment
- Cap rate derivation method weighting the cost of debt and equity by their respective proportions in the capital structure.
- Reconciliation
- Analytical process of weighing the results of each approach to value to arrive at a final value opinion, considering data quality and relevance.
- Review Report Content
- Must include subject identification, report reviewed, scope, date, reviewer's opinion, basis for opinion, and limiting conditions.
- Reviewer Certification
- Signed statement including independence, competency, compliance with USPAP, and no undisclosed conflicts of interest.
- Confidentiality in Review
- Reviewer must not disclose confidential information from the original report without authorization, except as required by law or USPAP.
- Credibility
- The quality of being worthy of belief; in appraisal review, whether the analyses and conclusions are supported and not misleading.
- Intended User
- The client and any other party identified by the appraiser as users of the appraisal or review report.
- Limiting Conditions
- Statements in a report that define the boundaries of the appraisal or review and disclose assumptions and limitations.
- Reviewer Independence
- Reviewer must be free of conflicts of interest and must disclose any prior involvement with the property or the appraiser.
- Deficiency in Report
- A failure in the original report to comply with standards or support conclusions; reviewer must explain its effect on credibility.