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Fundamentals of REA
REA
| Question | Answer |
|---|---|
| refers to assets not intended for use on a continuing basis in the activities of an entity | current assets |
| refers to tangible and intangible assets,such as property, plant, machinery and equipment | non-current assets |
| legal concept, encompassing all the rights, interests and benefits related to ownership which entitles the property owner to a specific interest on what is owned | Property |
| is created by the real estate's utility or capacity to satisfy needs and wants of human societies | value |
| valuation of land, buildings, plant, equipment and machinery generally for incorporation into business accounts | Asset Valuation |
| any person directly engaged as a principal in the business of buying, selling, or exchanging real estate property whether on a full time or part time basis | Real Estate Dealer |
| refers to the best practices in the valuation industry | Generally Accepted Valuation Principles |
| value is the relationship of market price and value. the normal value under conditions of balanced supply and demand. subjectivity, scarcity and utility | Theories of Austrian school |
| value refers to objectivity, value in use, value in exchange | Cost Theory of Adam Smith |
| argued that increases in population would outgrow increases in the means of subsistence. emphasized the supply and demand factor | Scarcity Theory of Malthus |
| argued that the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it, rather than by the use or pleasure its owner gets from it. A mere congelation of homogeneous human factor | Labor Theory of Karl Marx |
| an economic theory and practise where the government seeks to regulate the economy and trade in order to promote domestic industry. subjective desires of the factor in value | Theories of the Mercantilists |
| states that unearned increment of land abolished through taxation. land value increases indefinitely | Social Theory of John Stuart Mill |
| laid the foundation of today's concept of economic rent. agricultural labor | Theories of the Physiocrats |
| The quantity of land is limited, and so is its productiveness, and it is not uniform in quality. determined by scarcity | Rent Theory of Ricardo |
| Factors/Forces that affect Appraisal | Political, Economic, Physical, Social |
| related to population growth, birth control measures and migration or the demographics | Social |
| Characteristics/Determinants of Value in Appraisal | Demand, Utility, Scarcity, Transferability |
| refers to the desire couple with the financial capacity of the buyer to acquire a piece of real property | Effective Demand or Purchasing Value |
| refers to the intended use | Scarcity |
| refers to the quality of the property to be transferred or covered | Transferability |
| the present worth of all the rights and future benefits accruing ownership and use of real property | Principle of Anticipation |
| value of a property will reach its maximum level when the factors of production are in balance. term used to describe a combination of land uses which maximizes land uses | Principle of Balance |
| the inevitable and constant factor affecting the possible increase in the value of the property like cities, neighborhoods, natural phenomenon, changes in market place | Principle of Change |
| refers to the industry competition which arises from profits | Principle of Competition |
| refer to factors/forces where the property cannot be valued on the basis of one use for land and another use for improvements | Principle of Consistent Use |
| refers to the principle of increasing and decreasing returns applied to a portion or the whole of an improvement | Principle of Contribution |
| provides exterior influences of a property that may have a positive or negative effect on its value | Principle of Externalities |
| states that two recently sold properties were selected for their similarities that maybe compared to determine the value of dissimilarities | Principle of Heterogeneity |
| the primary consideration of all the factors that influence market value | Principle of Highest and Best Use |
| states that value of investments chosen can be measured in terms of the value of investment options or opportunities foregone | Principle of Opportunity Cost |
| connotes diminish value through disadvantages anticipated in the future | Principle of Regression |
| refers to the factors/forces where the value is increased if supply is reduced by effective demand, resulting in scarcity | Principle of Supply and Demand |
| net income remaining after the cost of labor, capital and coordination have been paid | Principle of Surplus Productivity |
| the meeting of the desires and requirements of human beings not only the capacity to give satisfaction in use but also the power to excite desire for continued possession | Principle of Utility |
| type of appraisal which is performed by structure of judgment reached by the collection and analysis of relevant data commonly reported in writing thru a narrative report performed by a licensed REA | Formal Appraisal |
| an estimate of value based on untrained knowledge of value, which conclusion was reached using intuition or suspicion, past experience and broad-spectrum knowledge | Informal Appraisal |
| power of goods in exchange for the present worth of future rights to its income or amenities. desirability of a property on account of its absolute or relative use | Value |
| is necessary in the appraisal assignment which will determine the extent of the research and analysis that the appraiser will have to perform on the assignment | Scope of Work |
| law that governs the real estate appraisal in the Philippine Jurisdiction | Real Estate Service Act of the Philippines |
| Appraiser should maintain to possess | competence, skills, integrity, sound judgment, experience, depth study |
| Contributing to such value are real estate's general | uniqueness, durability, fixity of location, relatively limited supply, specific utility |
| reflects the combined influence of all market forces that come to bear upon the value of property | Utility of Real Estate |
| when land is improved by the addition of streets, utilities, sewers and other services, it becomes a | site |
| anything permanently attached to the land. It includes natural things that are attached by roots and man-made things (fences and buildings) | Fixture |
| under the PVS, what are the two types of values? | Economic Value and Market Value |
| items owned and attached to a rented premises/space or building by the tenant and used for business purposes | Trade Fixtures |
| are resources controlled by an entity as a result of past events and from which some future economic benefits are expected to flow to the entity | Assets |
| stocks, obligations, short-term investments, real estate inventories for developers, cash in bank, cash on hand | Current Assets |
| assets intended for use in an entity's continuing activities including land and buildings, plant and equipment and other categories of assets less accumulated dep. Tangible | Property, Plant, Machinery, Equipment |
| long-term investment, long-term receivables, goodwill, expenditures, patents, trademarks, management and skill, credit rating, copyrights, franchises, contracts | Intangible Non-current assets |
| adjustments made to the cost of reproducing or replacing the asset to reflect its physical and functional deterioration and external obsolescence in order to estimate the asset/property value in a theoretical exchange | Depreciation |
| is a representation of its market-recognized utility rather than its mere physical status | Market Value |
| can be local, regional, national or international. Each party will respond to the supply and demand relationships and other price-setting factors as well as the party's own capacities and knowledge, understanding of the relative utility of the goods | Market |
| Market place analysis of real estate must include _________ on the area's residence | demographic data |
| refers to the scientific study of population statistics-births, deaths and marriages. | Demography |
| refers to the study of the overall market area | Segmentation |
| standards that conform to the generally accepted valuation principles and internationally accepted standard practices | Philippine Valuation Standards |
| term used for the amount asked, offered, or paid for a good/property service | Price |
| price paid for goods/services or the amount required to create/produce the goods or services | Cost |
| indicates the value of the property traded in the market | Value in Exchange |
| is a use that was legally established and maintained but no longer conforms to the existing zone | legally non-conforming use |
| refers to the sum of the asset accounts less provision, depreciation, depletion and amortization minus the liability accounts shown on the balance sheet | Stockholder's Equity |
| prescribes the adoption of the International Valuation Standards under the Philippine setting known as the Philippine Valuation standards-1st edition | Department of Finance Order No. 37-09 dated Oct. 19, 2009 |
| considered to be the basis of the property valuation procedure and is applicable to the aspect of land reform program and legislative reforms as well as the Appraisers/Valuers professional services or engagement and their cpd | Philippine Valuation Standards |
| provides guidance on specific appraisal /valuation issues and how standards/principles are to be applied in more specific trade and service providing situations | PVS Guidance Notes |
| Perform professional service with | Fidelity, Accountability, Respect, Sincerity, Utmost Integrity, Courtesy |
| Strictly adhere to the code of ethics with | Honesty, Professionalism, Good Conduct, Strong sense of values |
| Standards and Ethics. Endeavor or make an effort to present full disclosure of relevant and material information pertaining to appraisal assignment | As to public relationship |
| Standards and Ethics. Charge and collect the standard professional fees which are fair and reasonable based on the time spent/required to complete the assignment, professional competence, in accordance with professional/industry practice | As to client's relationship |
| Standards and Ethics. Not to use any vital documents relative to the professional conduct of the colleagues without written consent | As to colleagues/fellow professional's relationship |
| Standards and Ethics. Any form of electioneering should not be allowed or toleration | As to the PhilRes-AIPO |
| Real Estate Appraisers should indicate the | Prof Identification card number and validity, PTR number and validity, PhilRES AIPO number and official receipt number (ARN) and its validity |
| Doing table appraisal/valuation | unethical practices |
| Prepares and prescribes the Code of Ethics | AIPO |
| Adopts the Code of Ethics | PRBRES |
| deals with the ethical and competency requirements of the Appraisers/valuers in the real estate appraisal practice | Code of Conduct |
| serves the public interest, sustains the trust of financial institutions. Ensures that the results of appraisal/valuations are reliable, consistent and unbiased | Ethical Conduct |
| The physical environment and its cultural features comprise the | geographic environment |
| the different types of settlements as well as the transportation and production are collectively called | cultural environment |
| also called as Greek word "geographia" means earth description | Geography |
| systematic study of the origin, distribution, and significance of the major physical features of the earth such as land forms, climates, topography, oceans, geographic arrangement of people and natural resources | Physical Geography |
| study of land and water forms as well as the development of irregularities in the surface of the earth | Geomorphology |
| It considers wind movements, cloud formation, temperature changes and precipitation of all kinds | Climatology |
| refers to the accurate measurements of the earth and the calculations of the exact location of points on the earth's surface. ex. exact location of a city in latitude and longitude | Mathematical Geography |
| studies the relationship between plants and animals and their habitat or natural environment | Biogeography |
| study of oceans, wave activity, temperature difference, tides | Oceanography |
| study of relationship between disease-causing organism and their physical environment | Medical Geography |
| deals with the process of soil formation | Pedogenesis |
| studies the soil | Pedology |
| basic soil sampling unit that is often viewed as a soil profile that goes from the surface to a depth where soil meets bedrock | Pedon |
| deals with the study of hydrosphere | Hydrology |
| describes the waters of the earth | Hydrosphere |
| scientific study of the atmosphere and its associated phenomena. | Meteorology |
| vast gaseous envelope of air that surrounds the earth | atmosphere |
| refers to the study of man's imprints upon the earth, such as the distribution of population, various settlement patterns and the features resulting from man's productive activities in earning | Human or Cultural Geography/Anthropology |
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