Maria Center

If you've been attending real estate classes, you know that there are many vocabulary terms and understanding each term and concept is essential for the real estate exam. Let's break down a recent discussion for a clearer understanding.

1. Appraisal Reports:
The topic of discussion was the different types of appraisal reports. Of all the options presented, the Narrative Form was highlighted. This form is detailed and contains extensive explanations about the neighborhood, market trends, etc. It's the most exhaustive type of report and is often more than what's usually required.

2. Appraisal Approaches:
Two key approaches are:

  • Sales Comparison or Market Data Approach: Compares the property in question with at least three similar ones that have sold recently.
  • Cost Approach: Used mainly for unique properties like churches, libraries, or new constructions. This method considers the cost to rebuild the property, either as a reproduction (exact replica) or replacement (something similar).

3. Memory Tricks for Appraisals:
The discussion provided a fun mnemonic – Robin Hood. It's about adjusting property values. If a comparable property (comp) is superior, you subtract (rob from the rich). If the comp is inferior, you add (give to the poor).

Another acronym to remember is CIACBS. C.I.A stands for Comp Inferior Add and C.B.S stands for Comp Better Subtract.

4. Cost Approach Details:
Three methods to price out something in the cost approach:

  • Square Foot Method: Least accurate, assumes price per square foot is the same everywhere.
  • Unit In Place Method: Most commonly used, considers the cost of individual units or parts of a house.
  • Quantity Survey Method: Highly accurate, considers even the minutest details, like the number of nails used.

After determining the cost, depreciation is subtracted, and land value (determined by the sales comparison approach) is added.

5. Real Estate Terminologies:
Finally, let's understand some key terminologies:

  • Chattel: A legal term for personal property which is movable.
  • Amenity: A desirable feature of a property or its location. Examples include a pool, gazebo, proximity to a school, or parks.
  • Contract Types: The correct term from the given options is 'Voidable'. A voidable contract is one which can either be affirmed or rejected based on one party's discretion.

About the Author Maria Center

I began my career in real estate in Ohio in 2003 and currently work as a PrepAgent real estate exam tutor/instructor. 
I am licensed in Ohio, Florida, Alabama, Virginia, and Kentucky. I work as a Real Estate Broker at 1st Class Real Estate Expert Realtors in Philpot, Kentucky; Managing Broker at Renwick Realty in Middletown, Ohio; Associate Broker at 1st Class Real Estate Premier Homes in Ashland, Virginia; and as a broker in both Florida and Alabama. I am a licensed real estate instructor in Florida and teach finance and appraisal in Ohio. I look forward to helping you prep for success!

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