BREA Salesperson Exam flashcards
BREA Salesperson Exam · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Market value
- The most probable price a property should bring in a competitive, open market under all conditions requisite to a fair sale, with a willing buyer and seller, both reasonably informed and acting without undue stimulus.
- Value in use
- The value a specific property has to a specific owner for a specific use, which may differ from market value because it reflects the owner's particular needs rather than typical market participants.
- Principle of substitution
- The principle that a buyer will pay no more for a property than the cost of acquiring an equally desirable substitute property with no undue delay, inconvenience, or expense.
- Principle of contribution
- The principle that an item of improvement adds value only to the extent it contributes to the market value of the whole property, regardless of the cost of the item.
- Anticipation
- The appraisal principle that value is created by the expectation of future benefits; present value is the worth today of anticipated future income or amenities.
- Agents of production
- The four inputs that create value: land, labor, capital, and entrepreneurial coordination; land's share of the return is called ground rent.
- Cost approach formula
- Value equals replacement or reproduction cost new, minus total accrued depreciation, plus the value of the land or site.
- Accrued depreciation
- The difference between the cost new of an improvement and its present value, composed of physical deterioration, functional obsolescence, and external obsolescence.
- Economic age-life method
- A depreciation method in which incurable depreciation equals cost new multiplied by the ratio of effective age to total economic life.
- Gross rent multiplier
- The sale price of a comparable divided by its gross monthly rent; multiplied by the subject's gross monthly rent to estimate value.
- Direct capitalization
- A method that converts a single year's net operating income into an indication of value by dividing the income by a capitalization rate.
- Reproduction cost
- The cost to construct, at current prices, an exact duplicate of the subject property using the same materials, design, and workmanship.
- Highest and best use
- The reasonably probable, legal, physically possible, financially feasible, and maximally productive use of a property that results in the highest present value.
- Interim use
- A temporary use of a property that is not its highest and best use but is reasonable and appropriate until a higher use becomes financially feasible.
- Excess land
- Land that is larger than needed to support the existing improvement and that can be subdivided and developed separately under current zoning.
- Surplus land
- Land that is larger than needed to support the existing improvement but cannot be separately developed under current zoning or market conditions.
- Plottage
- The increase in value that results from assembling two or more adjacent parcels into one larger tract with greater utility than the separate parcels.
- Legal nonconforming use
- A use that existed lawfully before a zoning change and may continue despite no longer conforming to current zoning regulations.
- Adjustment direction rule
- In sales comparison, if the comparable is superior to the subject, subtract; if inferior, add, so the adjusted price reflects the subject's characteristics.
- Effective gross income
- Potential gross income minus vacancy and collection loss, plus other income, representing the income the property is expected to actually collect.
- Net operating income
- Effective gross income minus operating expenses; it excludes debt service, depreciation, and income taxes because it reflects property performance before financing.
- Gross income multiplier
- A comparable's sale price divided by its gross annual income; multiplied by the subject's gross annual income to estimate value.
- Operating expense ratio
- Operating expenses divided by effective gross income, used to compare the expense levels of comparables and the subject property.
- Band of investment
- A capitalization rate technique that weights the cost of mortgage financing and the required equity return by their respective proportions of the total investment.
- Competency Rule
- A USPAP rule requiring an appraiser to have the knowledge and experience to complete an assignment competently before accepting it, or to disclose the lack of competency.
- Ethics Rule
- A USPAP rule prohibiting accepting an assignment contingent on a predetermined value and prohibiting misleading or fraudulent conduct and reporting.
- Jurisdictional Exception Rule
- A USPAP rule allowing departure from a standard only when a law or regulation conflicts with USPAP, with the exception disclosed in the report.
- Record keeping rule
- A USPAP rule requiring retention of workfiles for at least five years after the report date, or two years after final disposition of a legal proceeding.
- Extraordinary assumption
- A USPAP term for something the appraiser believes to be true but cannot verify; if it proves false, the value opinion may be affected.
- BREA
- The California Bureau of Real Estate Appraisers, the state agency that licenses and regulates real estate appraisers under the Business and Professions Code.
- Restricted appraisal report
- A USPAP report format that states conclusions with less supporting detail and may be used only by the stated intended user.
- Hypothetical condition
- A USPAP term for something contrary to fact that is assumed to be true for the purpose of the appraisal, such as a completed construction.