CA State Residential License Exam
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| anticipation | A purchase/sale decision based on the perceived future value.
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| assemblage | Act of combining 2 or more parcels.
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| 3 common approaches to value | Sales-Cost-Income
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| 3 components of depreciation | Physical-Functional-External
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| 4 components of change/neighborhood lifecycle | Growth-Stability-Decline-Renewal
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| 4 tests of highest & best use | Legally Allowed-Physically Possible-Financially Feasible-Maximally Productive
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| 4 elements of value (DUST) | Demand-Utility-Scarcity-Transferability
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| 4 great (broad) forces | Economic-Social-Governmental-Environmental
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| ethics rule | Conduct-Management-Confidentiality
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| principal meridians | Imaginary lines that run from north to south on a Gov't/Rectangular Survey
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| balance | Occurs when supply & demand factors are at the point of 'balance'
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| change | Constant physical and economic changes that influence value
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| A-frame roof | Roof whose two sides slope upward at a steep pitch and meet at the top
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| age/life (aka straight-line) method | Most frequently used by residential appraisers. Method of computing accrued depreciation in which cost of bldg is depreciated at a fixed annual percentage rate
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| adjustment guidelines | Per Fannie Mae, a single line item adjustment should not exceed 10% of the sales price of the comparable
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| extraction/abstraction method | Method of determining land value of a comp by deducting depreciated costs of improvements from the property's known sales price. Remaining value = value attributable to the land. Variation on the allocation method/based on same principles
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| allocation method | Allocation of appraised total value between land and improvements. Allocation may be made using a ratio comparing bldg value to total price (or value)
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| airspace | Interior area which an apt, office or condo occupies. Considered real property to a reasonable height.
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| AQB | Appraiser Qualification Board - Part of Appraisal Foundation; establishes minimum requirements for licensed and certified appraisers and licensing/certifying exams
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| ASB | Appraisal Standards Board - Part of Appraisal Foundation; develops, interprets and amends USPAP
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| buyer's market | A market containing more supply than demand
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| seller's market | The market condition in which demand exceeds supply
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| R-value | Rating that measures how well insulation resists heat
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| sublease | A lease given by a lessee
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| township | Six miles square (36 square miles)
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| blanket mortgage | More than one piece of property
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| reliction | When waterline recedes, leaves exposed land permanently dry
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| riparian rights | Rights of landowner whose land is next to natural watercourse to reasonable use of whatever water flows past the property
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| reversionary interest | A future interest. (ex. Right of a landlord to reclaim property at the end of the lease)
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| absorption rate | The rate at which a type of property is either bought or leased (absorbed) by the market
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| littoral | Land bordering a lake, ocean, or sea - as opposed to land bordering a stream or river (running water)
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| deed restrictions | Limitations on the deed to a property that dictate certain uses that may or may not be made of the property
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| discount points | Fees equal to a percentage of the loan amount and used to 'buy down' an effective interest rate
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| real property | Land (air,surface,mineral,water rights), appurtenances, and anything attached and immovable by law. Also included are interests, benefits and 'bundle of rights'
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| pitch | The slope of a roof
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| ridge beam | The highest horizontal point of a roof structure that supports the upper ends of the common rafters
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| ownership in severalty | Property owned by one person or entity
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| tenancy in common | When two or more persons, whose interests aren't necessarily equal, are owners of undivided interests in a single estate
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| tenancy by the entirety | The joint ownership of property acquired by husband and wife during marriage. On the death of one spouse the survivor becomes owner of the property
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| tenancy in partnership | Ownership of two or more persons who form a partnership for business purposes
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| 4 agents of production | Land-Labor-Capital-Entrepreneurship/Coordination
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| non-conforming use | Property does not conform to the current zoning but is legally allowed (grandfathered)
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| hypothetical condition | Defined in USPAP as 'that which is contrary to what exists but is supposed for the purpose of analysis'
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| avulsion | A sudden and perceptible loss of land by the action of water, as by the sudden change in the course of a river
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| acre | 43,560 square feet; 4840 square yards
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| square mile | 640 acres
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| section | One square mile, containing 640 acres
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| mean | Arithmetic average calculated by adding all values in a sample to arrive at a sum and then dividing by the number of items in the sample
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| median | The middle value in a sample of values
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| mode | The most frequently occurring value in a sample
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| range | The spread between the lowest and highest numbers in a sample
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| statements on appraisal standards | Issued by the ASB to clarify, interpret, explain or elaborate the USPAP
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| income capitalization | The process of estimating value on the basis of net income
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| plottage value | The added value that is created when combining two or more sites into one site or parcel
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| appurtenant easement | Benefits a parcel of land; ownership of the easement rights is attached to ownership of the benefited parcel
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| easement in gross | Benefits only a person or other legal entity, rather than a parcel of land
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| equity | The value which a property owner has in excess of all liens and claims
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| overall capitalization rate (OAR) | Aka 'cap rate'. A market-derived ratio reflecting the relationship between the net operating income a property generates and its value
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| recapture rate | The return OF investment and the rate that an investor recovers invested money. Applicable only to the net income from improvements
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| interest rate | The return ON investment and the rate of interest considered to be a reasonable return on an investment. Applicable only to the net income from the land
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| gross lease | When the lessee does not pay any costs of ownership and pays a given amount of money per period
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| condemnation | The process by which the gov't acquires private property for public use, under its right of eminent domain
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| lis pendens | Aka 'pendency of action'. A recorded notice that indicates pending litigation affecting the title on a property
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| fractional reserve banking | The act of a depositor's money into a bank that does not remain in the bank but is lent to borrowers
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| cooperative | Ownership by a corporation where owners own a share in the corporation plus a lease from the corporation
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| effective gross income multiplier (EGIM) | Value / Effective Gross Income (EGI)
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| going concern value | The value of an ongoing business or project
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| net operating income (NOI) | Effective Gross Income (EGI)- Operating Expenses
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| substitution | The value of a property cannot exceed the value of equivalent substitute properties that are available in the market (reasonable buyers will compare similar properties and choose the least expensive one)
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| operating expense ratio (OER) | Operating expenses / EGI
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| unit-in-place method | Quantities of bldg components are measured and priced based on cost manuals to determine replacement cost
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| interim use | When a property's Highest and Best Use is expected to change from its current use to some other use in the near future
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| reclamation | Any method for bringing wasted natural resources into productive use
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| quitclaim deed | When any interest possessed by the grantor is conveyed to the grantee, without any warranties
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| alluvion | The action of the sea or a river in forming new land by deposition.
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| accretion | Land located next to a body of water increasing due to water depositing additional soil (or waterborne solid material) gradually.
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| accession | Additional property rights that an owner acquires when improvements and/or additions are attached to the property at the tenant's own cost. This legal right means that the owner will acquire any improvements to the property upon termination of the lease.
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| absorption study | An analysis of supply and demand concentrating on the aspects of changes in product inventory when properties are offered and sold. The focus is to identify the proper inventory which creates balance.
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| bilateral contract | A contract where both parties have made promises in exchange to the other party and both parties are willing participants in the contract.
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| bundle of rights | 1. The right to use and occupy 2. The right to sell 3. The right to will or bequeath 4. The right to rent/lease 5. The right to transfer by contract 6. The right to do nothing at all
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| clearing house for mortgages | The original name of the secondary mortgage market.
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| capitalization | The conversion of income into value.
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| capital improvements | Renovations or modifications which change the characteristics of the property.
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| CAM fees | Common Area Maintenance.
The operational and maintenance costs of the common areas.
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| debt service | The amount of the annual loan payment.
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| dividend | Income gained on an equity investment.
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| direct capitalization | Converting one year's income into a value estimate.
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| deed of trust | The agreement between borrower and lender. Ensures 3rd party (trustee) will hold title of borrower until debt is paid to lender.
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| express contract | Involved parties specifically agree on terms and show their intentions in words (either written or oral).
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| exculpatory clause | In a lease, this clause relieves the owner/landlord of liability to the tenant's property or personal injury.
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| net lease | When the tenant contributes in part or in whole to the expenses associated with the tenancy.
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| percentage lease | Common for commercial property. Agrees to pay a specific base amount of rent every month, plus a percentage of any gross sales above a certain amount.
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