Asset Appraiser Qualification Exam flashcards
Asset Appraiser Qualification Exam · Build recall with a focused review session.
33 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 and open market under all conditions requisite to a fair sale, with buyer and seller acting prudently and knowledgeably.
- Highest and Best Use
- The reasonably probable use that is legally permissible, physically possible, financially feasible, and results in the highest value of the asset.
- Principle of Substitution
- A prudent buyer will pay no more for an asset than the cost of acquiring an equally desirable substitute with similar utility and without delay.
- Value in Use
- The value of an asset to a specific owner or for a specific purpose, reflecting the asset's contribution to the owner's operations rather than market exchange.
- Going-Concern Value
- The value of a business as an ongoing operation, including assembled workforce, permits, and synergies that exceed the sum of individual asset values.
- Orderly Liquidation Value
- The estimated gross amount realizable from a sale of assets within a reasonable marketing period, with the seller compelled to sell but not under duress.
- External Obsolescence
- A loss in value caused by forces outside the asset itself, such as economic conditions, legislation, or neighborhood change, generally not curable by the owner.
- Functional Obsolescence
- A loss in value from within the asset, arising from excess capital cost, excess operating cost, or a deficiency requiring addition to match modern utility.
- Reproduction Cost
- The cost to construct or acquire an exact replica of the asset using the same materials, design, and methods as of the valuation date.
- Replacement Cost
- The cost to acquire or construct an asset of equivalent utility using modern materials, standards, and methods as of the valuation date.
- Effective Age
- The age indicated by the asset's condition and utility, which may be less or greater than its actual chronological age due to maintenance or obsolescence.
- Curable Deterioration
- A loss in value that can be corrected economically, where the cost of the correction is recovered in added value upon completion.
- Net Operating Income
- Effective gross income less operating expenses, excluding debt service, income taxes, capital expenditures, and depreciation, used in direct capitalization.
- Capitalization Rate
- The rate that converts a single year's net operating income into an indication of value, reflecting risk, growth, and market expectations.
- Gross Income Multiplier
- A market-derived factor equal to sale price divided by gross income, applied to the subject's gross income to indicate value.
- Adjustment Sequence
- The order of comparable adjustments: property rights, financing terms, conditions of sale, market time, location, and physical characteristics.
- Net Adjustment Percentage
- The sum of a comparable's net adjustments divided by its sale price, indicating the direction and relative magnitude of total adjustment.
- Gross Adjustment Percentage
- The sum of the absolute values of all adjustments divided by the comparable's sale price, measuring total adjustment magnitude.
- Reconciliation
- The process of weighing the indications from each approach based on relevance, data quality, and adjustment magnitude to reach a final value conclusion.
- Contract Rent
- The rent amount actually specified in an existing lease between landlord and tenant, which may differ from current market rent.
- Market Rent
- The most probable rent an asset would command in the open market under current lease terms between willing parties at the valuation date.
- Absorption Rate
- The rate at which available units are leased or sold in a market over a period, typically expressed as a percentage of total competitive inventory.
- Ghost Asset
- An asset that remains on the accounting records but is physically missing, disposed of, or no longer in use, overstating recorded value.
- Leasehold Improvements
- Fixtures and alterations made by a tenant to leased premises; ownership and removal rights affect classification and value allocation.
- Intangible Asset
- A non-physical asset such as a trademark, patent, customer relationship, or software, valued separately from tangible assets.
- Extraordinary Assumption
- An assumption, directly affecting the value conclusion, that if found false could alter the appraiser's opinion or direction of value.
- Hypothetical Condition
- A condition that is contrary to what exists but is assumed for the purpose of analysis, such as completion of proposed construction.
- Scope of Work
- The type and extent of research and analysis performed, determined by the problem to be solved and what is necessary for credible results.
- Intended Use
- The purpose for which the appraisal is prepared and the use the client will make of it, which governs report content and scope.
- Administrative Review
- A compliance-level review checking that the report is complete, contains required elements, and conforms to standards, without re-analyzing value.
- Technical Review
- A review that examines the adequacy and appropriateness of the data, analysis, and conclusions to determine whether the value opinion is credible.
- Contingent Fee
- A fee arrangement tied to a predetermined value outcome, loan approval, or result; prohibited because it compromises independence and objectivity.
- Workfile Retention
- The requirement to retain documentation supporting a report for a defined period after delivery, sufficient to support the analysis and conclusions.