BREA Salesperson Exam key terms

A written or oral opinion of value for identified real property, stated as of a specific date, prepared by a qualified appraiser following recognized methods and reporting standards.

The most probable price a property should bring in a competitive and open market under fair sale conditions, with buyer and seller acting prudently and knowledgeably, and price unaffected by undue stimulus.

The reasonably probable, legally permissible, physically possible, financially feasible use that produces the highest present value of a property, as supported by market evidence.

A temporary use of land that is not the property's highest and best use but produces some income until a more productive use becomes feasible in the near future.

A valuation method that estimates value by analyzing prices paid for similar properties, then adjusting those prices for differences in features, location, condition, and terms of sale.

A closed transaction involving a property similar to the subject that is used as a benchmark in the sales comparison approach, chosen for proximity, timing, and similarity.

A dollar or percentage change applied to a comparable's sale price to reflect a difference between that property and the subject, applied to the comparable rather than to the subject.

The sum of all positive and negative adjustments made to a comparable sale, used to gauge how similar the comparable is to the subject; smaller totals generally indicate better comparables.

The total of all adjustments to a comparable regardless of sign, calculated by adding absolute values; a high figure signals a comparable requiring heavy adjustment and less reliability.

A valuation method that converts anticipated future income from a property into a present value estimate, typically by capitalizing net operating income or discounting cash flows.

Effective gross income from a property minus all operating expenses, excluding debt service, income taxes, depreciation, and capital improvements; the income stream capitalized in valuation.

A rate expressing the relationship between a property's net operating income and its value or price, computed as net operating income divided by value.

A ratio of sale price to gross rental income, used to compare income properties quickly and to estimate value by multiplying a subject's gross income by a market-derived multiplier.

Potential gross income adjusted for vacancy and collection loss, plus any other income, representing the income a property is realistically expected to produce.

A valuation method that estimates value by adding the current cost of replacing or reproducing improvements to land value, then subtracting accrued depreciation from the improvements.

The current cost to build a structure of equivalent utility using modern materials and methods, as of the appraisal date, without reproducing outdated features.

The current cost to construct an exact replica of the subject improvements using the same materials, design, and workmanship as the original construction.

The total loss in value of an improvement from all causes as of the appraisal date, measured as the difference between cost new and current contributory value.

Loss in value caused by wear and tear, decay, or structural damage to improvements, classified as curable or incurable depending on whether repair cost is recovered in value.

Loss in value caused by outdated design, layout, or features within the property itself, such as poor floor plans or insufficient bathrooms, measured by cost to cure or value loss.

Loss in value caused by factors outside the property boundaries, such as neighborhood decline, traffic patterns, or adverse zoning, generally considered incurable by the owner.

The final analytical step in which the appraiser weighs the indications of value from each approach and selects a single value conclusion supported by the most reliable evidence.

The specific date as of which the appraiser's opinion of value applies, which may differ from the date the report is prepared or delivered.

An assumption, directly related to a specific assignment, that if found false could change the appraiser's opinion of value; its use requires disclosure and client acceptance.

A condition that is contrary to what exists but is assumed for appraisal purposes, such as valuing a property as if a proposed building were complete.

The amount and type of research and analysis an appraiser performs in an assignment, determined by the problem to be solved and the intended use of the report.

The Uniform Standards of Professional Appraisal Practice, which sets minimum ethical and performance requirements for appraisers, including standards for development and reporting of assignments.

A USPAP requirement that an appraiser accept an assignment only after gaining the knowledge and experience needed, or by disclosing the limitation and taking steps to complete it competently.

Promoting a client's position or a predetermined result, which conflicts with the appraiser's obligation to provide an independent, unbiased opinion of value.

A fee arrangement where compensation depends on the value conclusion, a predetermined result, or a loan approval; prohibited for appraisals because it compromises impartiality.

The appraiser's freedom from influence by parties with an interest in the outcome, requiring objective judgment, honest reporting, and refusal to accept pressure on value conclusions.

The legal obligation of an agent to act in the principal's best interest with loyalty, disclosure, confidentiality, and accounting, owed by real estate licensees to clients.

A legal relationship in which a real estate licensee acts on behalf of a client with the client's consent, creating duties of loyalty, disclosure, and confidentiality.

A situation where one licensee represents both buyer and seller in the same transaction, permitted only with the informed written consent of both parties under California law.

A California statutory form on which a seller discloses known material defects and conditions affecting residential property to a prospective buyer before transfer.

California law governing the division of land, requiring local approval of tentative and final maps and setting standards for lot design, improvements, and dedications.

A right held by one party to use another's land for a specific purpose, such as access or utility lines, which can affect value and must be identified in property analysis.

Any right, interest, lien, or restriction attached to a property that burdens its use or transfer, including easements, mortgages, liens, and deed restrictions.

The increase in value created by combining adjacent parcels into one larger site that supports a more productive use than the separate parcels could achieve individually.

The process of combining two or more adjacent parcels into a single ownership or site to achieve greater utility and value than the parcels held separately.