Certified General Appraiser flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Fee Simple Absolute

The most complete ownership interest in real property, of potentially infinite duration, with no limitations on the rights of disposition, use, or possession beyond government powers.

Leased Fee Estate

The owner's interest in a property subject to a lease; it includes the right to receive contract rent plus the reversion at lease expiration. Valued separately from the leasehold.

Investment Value

The value of a property to a specific investor based on that investor's requirements, financing, tax position, and risk tolerance. It may differ from market value.

Insurable Value

The value of destructible improvements for insurance purposes, typically excluding land, foundations, and excavation. The policy definition controls rather than a generic cost figure.

Agents of Production

Land, labor, capital, and entrepreneurship/management. Together they generate income; land's return is the residual after the other three are compensated.

Effective Date of Value

The date as of which the appraiser's opinion of value applies. It may precede the date the report is signed and must be stated in the report.

Extraordinary Assumption

An assumption, directly related to a specific assignment, that if found to be false could alter the appraiser's opinions or conclusions. It must be disclosed and labeled.

Hypothetical Condition

A condition that is presumed to exist for the purpose of analysis but is known to be contrary to fact as of the effective date. It requires clear disclosure.

Scope of Work

The amount and type of research and analysis performed to develop a credible appraisal. Determined by the appraiser based on the problem, not dictated by client expectations alone.

Competency Rule

Requires the appraiser to have the knowledge and experience to complete the assignment competently, or to disclose the deficiency and take steps to gain competence before completing it.

Workfile Retention Period

USPAP requires retention of the workfile for at least five years after delivery of the report, or at least two years after final disposition of a judicial proceeding.

Jurisdictional Exception

An USPAP provision allowing noncompliance with a specific Standard when a law or regulation of the jurisdiction precludes compliance. The report must cite the law.

Intended User

The client and any other party the appraiser identifies as an intended user of the report. A report is not necessarily suitable for parties outside that group.

Restricted Appraisal Report

A report that states conclusions with minimal supporting detail and may be used only by the named client. It is not appropriate for other intended users.

Cost Approach Formula

Value equals reproduction or replacement cost new, minus all forms of depreciation, plus land value (or as-is site value). Often most reliable for new or special-purpose properties.

Reproduction vs Replacement Cost

Reproduction cost estimates the cost to replicate the property exactly with the same materials; replacement cost estimates the cost to build a substitute with equivalent utility.

Age-Life Depreciation

A depreciation estimate computed as effective age divided by total economic life, applied to cost new. It is simple but does not separate curable from incurable items.

Functional Obsolescence

A loss in value due to a deficiency or superadequacy in the property's design, layout, or utility relative to market standards. It may be curable or incurable.

External Obsolescence

A loss in value caused by factors outside the property itself, such as neighborhood decline, oversupply, or adverse environmental or economic conditions. Generally incurable by the owner.

Direct Capitalization Formula

Value equals net operating income divided by the capitalization rate (V = NOI / R). The cap rate is derived from comparable sales or band-of-investment analysis.

Band of Investment

A method of deriving a capitalization rate by weighting the cost of mortgage financing and the required equity return by their respective proportions of the total investment.

Gross Rent Multiplier

Sale price divided by gross monthly rent. Value equals the multiplier times the subject's gross monthly rent; used only when rent-price relationships are consistent.

Sales Comparison Adjustment Order

Adjust in sequence for property rights, financing, conditions of sale, market conditions (time), then physical and location differences. Adjust the comparable toward the subject.

Reconciliation

The process of weighing the relevance and reliability of each valuation approach and concluding a single value opinion. It is reasoned judgment, not an average of approaches.

Highest and Best Use

The reasonably probable, legal, physically possible, financially feasible use that results in the highest value. Concluded both as though vacant and as improved.

Four Tests of Highest and Best Use

Legally permissible, physically possible, financially feasible, and maximally productive, applied in that order. A use failing an earlier test is not analyzed further.

Interim Use

A temporary use that is not the highest and best use but is reasonable until a higher and better use becomes financially feasible. It must still be legally permissible.

Market Rent vs Contract Rent

Market rent is the most probable rent in a competitive market; contract rent is the actual rent stated in the lease. The difference creates leasehold or leased-fee advantage.

Exposure Time

The estimated length of time the property interest would have been offered on the market before a hypothetical sale at market value as of the effective date.

Absorption Rate

The rate at which available space or units are leased or sold in a given market over a period. Used to test financial feasibility and support a marketability study.

Marketability Study

An analysis of the likely absorption of a specific project at a specific price or rent. It differs from a general market analysis of supply and demand.

Letter of Transmittal

A cover letter summarizing the assignment, value opinion, and key conclusions. It does not replace the report body or satisfy reporting requirements on its own.